Tax credit for major green transition investments approved by the Finnish Parliament
The Finnish Parliament has approved the legislation concerning a tax credit for certain types of green transition investments, which is expected to attract new green transition investments into Finland. Companies contemplating applying for the tax credit should start preparations as soon as possible, since the window for submitting applications is relatively short. In this article, we take a closer look at recent developments related to the tax credit and its application process.
For further information on the main contents of the draft bill and eligible projects, please read our previous article: Finland introduces tax credit for major green transition investments.
No major changes to the investment types or the prerequisites for the tax credit
The qualifying investment types consist of:
- investments accelerating the rollout of renewable energy and for energy storage,
- investments related to the decarbonisation of industrial production processes and for energy efficiency measures, and finally
- investments in certain sectors strategic for the transition towards a net-zero economy.
The credit is 20% of qualifying investment costs and a maximum of EUR 150 million. The qualifying costs must be at least EUR 50 million for the investment to be considered as a major investment in the scope of the tax credit.
The main prerequisites for the tax credit remained unchanged during the legislative process. However, some smaller changes were made, such as, the removal of the restriction that changes in the ownership of the company could lead to forfeiture of the tax credit.
Applications for the tax credit must be submitted by August 2025
The organisation charged with determining eligibility, Business Finland, has just opened a call for credit applications, which it is accepting until 29 August 2025. The window for submitting the application is short and thus we recommend that any projects that contemplate applying for the credit commence preparations for applying as soon as possible.
New draft state aid framework may enable extension of the tax credit
According to the new Finnish legislation, the authorities must make the decisions approving any tax credits during 2025. An extension to this deadline may, however, be possible since the European Commission has recently published a draft of a new state aid framework concerning green investments (Clean Industrial Deal State Aid Framework). According to the draft, member states would be able to grant state aid to investments related to, for example, accelerating the roll-out of renewable energy, deploying industrial decarbonisation, and ensuring sufficient manufacturing capacity of clean tech. This new framework is set to replace the current temporary crisis and transitional framework that enables the Finnish tax credit discussed above.
The new framework would be adopted by June 2025 and would be in force until the end of 2030, providing Finland with an opportunity to decide to extend the applicability of the new tax credit beyond the initially anticipated period. We will monitor any legislative developments closely.
Please contact our Tax and Energy practices' experts to discuss any questions you may have regarding the eligibility of your project for the tax credit and the application process.
