- Finland's government submitted Government Proposal HE 151/2026 to parliament in October 2026, proposing to reduce the corporate income tax rate from 20% to 18% from tax year 2027. It has not yet been enacted; parliament must pass it.
- The rate reduction applies to all corporate taxable profit, regardless of company size or ownership structure. A Finnish Oy earning EUR 100,000 in taxable profit would pay EUR 18,000 instead of EUR 20,000 in corporate tax from 2027.
- Withholding tax on dividends, interest, and royalties paid to foreign corporate entities would also fall to 18% under the proposal. Tax treaty rates, where lower, continue to take precedence over the domestic rate.
- The loss carry-forward period would extend from 10 years to 25 years, covering losses incurred from tax year 2026 onward. Losses from before 2026 remain subject to the 10-year rule.
- Prepayment adjustments will be made automatically by the Finnish Tax Administration once the law is enacted. Companies on self-calculated prepayment schedules should update their 2027 models to reflect the new rate once confirmed.
Finland's government submitted Government Proposal HE 151/2026 to parliament in October 2026. If enacted, the corporate income tax rate drops from 20% to 18% from tax year 2027, and the period for carrying forward business losses extends from 10 years to 25. Here is what it means in practice, and what you should be doing before January 2027.
What has actually been decided (and what hasn't)
Let's be precise, because this matters. As of 30 October 2026, the Finnish government has submitted Government Proposal HE 151/2026 to parliament. This is a formal government bill, not a plan or an intention. Parliament must pass it for it to become law.
The legislative calendar and the proposal's content make passage very likely. The proposal is part of the Orpo government's 2027 budget framework and has been in development since 2025, when the outlines were first announced. The Finnish Tax Administration has already communicated that, once enacted, the changes require no separate action from companies: the lower rate will apply automatically through the tax return, and the extended loss period covers losses from tax year 2026 onward.
What this means for your planning: treat the 18% rate as highly likely for 2027, but do not treat it as enacted until parliament votes. Do not make irreversible financial decisions on the basis of a rate that has not yet passed. Check the Finnish Tax Administration's website (vero.fi) for confirmation once the parliamentary session concludes.
The 20% to 18% rate change: what it affects
The proposed 18% rate would apply to both domestic and non-resident corporate entities taxable in Finland. The 2 percentage point reduction is a flat-rate change: it applies to all taxable profit, regardless of sector, company size, or ownership structure.
To put it in concrete terms: a Finnish Oy that makes 100,000 euros of taxable profit in 2027 would pay 18,000 euros in corporate income tax instead of 20,000 euros. The saving scales linearly with profit.
The rate change also affects withholding tax at source on dividends, interest, and royalties paid from Finland to foreign corporate entities. Those will also fall to 18%, assuming the proposal passes in its current form. For foreign shareholders receiving income from a Finnish Oy, this is directly relevant.
Treaty rates may already be lower: Finland has tax treaties with most major trading partners that set withholding tax rates on dividends, interest, and royalties independently of the domestic rate. If your country of residence has a treaty with Finland, the treaty rate likely already applies to you and may be lower than 18%. Check with your accountant before assuming the domestic rate applies.
The 25-year loss carry-forward: who benefits
The second part of the proposal extends the period during which corporate entities can carry forward business losses from 10 years to 25 years. This change applies to losses incurred in tax year 2026 and later.
Losses from before 2026 continue to follow the 10-year rule under which they were generated. You cannot retrospectively apply the 25-year period to pre-2026 losses.
Who does this matter for? In practice, it is most relevant to:
- Companies in early-stage or growth phases that are investing heavily and running losses while building revenue. A 25-year window gives far more flexibility to use those losses against future profits.
- Companies in capital-intensive sectors (construction, technology, manufacturing) where large initial losses are common and take many years to recover.
- Foreign-owned Finnish subsidiaries that have been established recently and have accumulated losses while establishing their Finnish market position.
For a profitable, established Oy, the 25-year rule has little immediate impact. For a company that has been running at a loss since 2024 or 2025, it could be the difference between eventually using those losses fully and having them expire unused.
Prepayments and cash flow: the practical impact
Finnish corporate income tax is collected in advance through prepayments (ennakkovero). The Finnish Tax Administration calculates prepayments based on your previous year's tax liability. Once the 18% rate is enacted, the Tax Administration will adjust 2027 prepayments to reflect the new rate.
According to the Finnish Tax Administration's communication on HE 151/2026, this adjustment happens automatically. Companies do not need to file a separate request.
In practice, this means that if your 2026 prepayments are based on a 20% rate, and the law passes before your 2027 prepayments are calculated, you will see slightly lower prepayment demands for 2027. For a Oy that currently pays 10,000 euros per year in corporate tax, the reduction is 1,000 euros, which goes back to your cash flow rather than sitting with the Tax Administration until the final tax assessment.
Action point: if your Finnish Oy is on a prepayment schedule that you calculate yourself (rather than relying on the Tax Administration's default estimate), update your 2027 model to reflect 18% once the law is confirmed. Do not overpay and then wait for a refund.
Dividends and withholding tax for non-resident shareholders
Most foreign-owned Finnish Oy companies are owned by a single person or a holding company based outside Finland. When profits are distributed as dividends from the Finnish Oy to a non-resident shareholder, Finnish withholding tax applies unless a tax treaty provides a lower rate.
Under the current rules, Finland's domestic withholding tax rate on dividends to foreign corporate shareholders is 20%. The proposal reduces this to 18%.
However, as noted above, tax treaties typically override the domestic rate. If you receive dividends from your Finnish Oy and are resident in Estonia, the Estonia-Finland tax treaty provides a 0% withholding rate on dividends paid to Estonian companies owning at least 10% of the Finnish company. If you are a private individual, the treaty rate is typically 15%.
| Situation | Current withholding rate | Proposed rate from 2027 |
|---|---|---|
| Domestic dividend rate (no treaty) | 20% | 18% |
| Dividends to Estonian company (10%+ shareholding) | 0% (treaty) | 0% (treaty, unchanged) |
| Dividends to Estonian private individual | 15% (treaty) | 15% (treaty, unchanged) |
| Dividends to UK company (Parent-Subsidiary Directive equivalent, post-Brexit check required) | Check treaty | Check treaty |
Treaty rates are not affected by the domestic rate change. If your treaty already provides a lower rate, that lower rate continues to apply.
What to do before the rate changes
There is no dramatic restructuring needed for most foreign-owned Oy companies. The change is mechanical: you pay a lower rate on your 2027 profits. But there are a few things worth doing before January 2027.
1. Review your 2026 loss position
If your Finnish Oy has accumulated losses in 2024 or 2025, those losses will soon benefit from the 25-year carry-forward period (for 2026 losses) or the 10-year period (for pre-2026 losses). Check with your accountant what losses are on record and whether any are at risk of expiring. The 10-year window for losses from 2015 or earlier is closing.
2. Update your tax model for 2027
If you use a profit or cash flow forecast, update the corporate tax line for 2027 from 20% to 18%. This affects your net distributable profit and dividend planning.
3. Confirm the withholding tax rate that applies to you
If you plan to distribute dividends from your Finnish Oy in 2027, confirm whether you are on a domestic rate or a treaty rate. Your accountant should have this in your file, but it is worth a quick confirmation, particularly if your ownership structure or residence has changed.
4. Watch for parliamentary confirmation
The Finnish parliament is expected to pass HE 151/2026 before the end of 2026. Once it passes, the effective date and final wording will be published in the Finnish Statute Book (Suomen saedoskokoelma). The Finnish Tax Administration will update its guidance at vero.fi to reflect the confirmed rules.
Common questions
Does the 18% rate apply to my Finnish Oy's 2026 profits?
No. The 18% rate applies to tax year 2027 and later. Your 2026 profits are taxed at 20%. The 2026 corporate tax return, due in spring 2027, will still use the 20% rate.
My Finnish Oy has no employees and very little activity. Does any of this affect me?
If your Oy has taxable profit, yes, the rate affects you. If it operates at a loss or has minimal activity, the rate change is not material, but the extended loss carry-forward could matter if losses accumulate over time.
I own my Finnish Oy through an Estonian holding company. How does this work with the corporate tax rate change?
The corporate income tax is paid by the Finnish Oy on its Finnish profits. When that Oy distributes dividends up to your Estonian holding company, Finland applies withholding tax at the treaty rate (0% for qualifying Estonian companies, per the Estonia-Finland tax treaty). The 18% change affects the Finnish Oy's own tax, not the withholding rate on upstream dividends.
Will the Tax Administration contact me about adjusted prepayments?
The Tax Administration has said that once the rate change is enacted, prepayments will be adjusted automatically. You should not need to do anything. However, it is worth checking your prepayment schedule after the law is confirmed to make sure the adjustment has been applied to your account.
Sources: This article draws on Finnish Tax Administration (vero.fi), Government Proposal HE 151/2026, and PwC Finland's tax alert. As of publication (30 October 2026), the proposal is before parliament and has not yet been enacted. Confirm the final rules at vero.fi once parliament has voted.
About this article
Written and reviewed by the 1Office Finland advisory and accounting team. All corporate tax rates, withholding tax rules, loss carry-forward provisions, and prepayment guidance reflect Finnish law and Finnish Tax Administration (Verohallinto) guidance as of October 2026. Government Proposal HE 151/2026 is before parliament and has not yet been enacted; confirm the final rules at vero.fi once parliament has voted.
Published October 2026 · 1Office Finland · Veturitie 24 A 66, 00520 Helsinki · [email protected]
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