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Finland electricity VAT cut to 10% and public transport to 0% ends

Five-month emergency VAT rate cut ends on electricity from 24% to 10% until 30 April 2023; public transport reduced to 0%

Finland’s President temporary VAT rate cut on domestic electricity in its 2023 Budget has ended. This was from the 24% standard rate to the reduced rate of 10%. This was between 1 December 2022 and 30 April 2023.

At the same time, public transport VAT wasreduced from 10% to 0% from 1 January until 30 April 2023

The cost of the measures, which include electricity bill-based deductions on income tax or a direct subsidy for low-income groups, will amount to roughly 800 million euros in next year’s budget.

Finland’s June inflation rose to 7.8% from May’s 7.0%. Electricity inflation is running at over 22%.  These are the highest inflation rates in almost 40 years.

European VAT inflation cuts have been widespread since the end of 2021 when inflation began to rise.

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EU VAT rate setting freedoms

From April 2022, EU agreed reduced VAT rate setting freedoms. This includes to cut rate below 5% for the first time on a limited range of supplies.


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