7.4.2025

Tax credit for major clean transition investments passed in Parliament – application period until 29 August 2025

The Finnish Parliament passed a bill concerning tax credits for large investment aiming at a climate neutral economy.

Companies must apply for this tax credit from Business Finland before commencing work on the investment project.

This refers to the commencement of investment-related construction works or the first legally binding equipment order commitment or other such commitment that renders the investment irrevocable, whichever occurs earlier. However, land purchases and preparatory work, such as obtaining permits and carrying out preliminary feasibility studies, would not be considered as commencing work. The application period for the tax credit started on 24 March 2025 and it will end on 29 August 2025.

Who can apply for the tax credit?

The tax credit is granted upon application to companies that carry out a major investment of at least EUR 50 million aiming at a climate neutral economy in Finland.

Eligible companies can deduct the investment costs directly from their corporate income tax. The tax credit will be deducted on the basis of a separate claim in euro made by the (eligible) company.

What types of investments are credited?

The tax credit may be granted if the investment concerns one of the following:

• energy production from renewable sources, including the production of renewable hydrogen and fuels based on renewable hydrogen, but excluding electricity generation;

• electricity or thermal storage and, under certain conditions, storage of renewable hydrogen, biofuels, bioliquids, biogas, biomethane or biomass fuels;

• decarbonisation of industrial production processes and improvement of energy efficiency.

In addition to those listed above, the tax credit may be granted for investments:

• in sectors that are strategic for the transition to a climate-neutral economy, such as the production of relevant equipment for the transition to a climate neutral economy, and the production of related components, or the production or recovery of related raw materials.

The plant or equipment on which the tax credit is based must be completed and operational within 36 months of the date on which the tax credit was granted. Failing this, the amount of the tax credit will be reduced by one (1) per cent for each month exceeding this period.

The maximum amount of the tax credit is EUR 150 million per company

The amount of the tax credit is 20 per cent of the costs eligible as the basis for the tax credit. The amount credited is deducted directly from the company’s corporate income tax before the tax is paid. However, the tax credit may be deducted up to a maximum of 10 per cent of the total amount of the credit per year or the amount of the company’s income tax for the tax year in question. The maximum amount of the tax credit is EUR 150 million per company. If the company belongs to a group, the maximum amount of the tax credit is calculated for each group.

The maximum time limit for using the tax credit is 20 years

The calculation of the time limit starts from the tax year beginning in calendar year 2028 or from the year of completion of the investment if the investment is completed after the tax year 2028. The tax credit can be used for the last time in a tax year starting in calendar year 2047.

The tax credit is a very welcome incentive to help channel industrial investment and help build a green transition in Finland. However, we recommend that you take a closer look at the conditions and restrictions for claiming the tax credit before applying for it.

Our experts in tax, energy and green transition, and capital markets will be happy to assist you with any questions or uncertainties regarding the tax credit.

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