Finnish government introducing a tax subsidy to bolster the green transition

On 28 June 2024, the Finnish government published key details of a planned tax subsidy for large industrial investments. The initiative seeks to accelerate investments in the green transition, with the government bill expected to be presented to the Parliament in October 2024.

Finland is taking full advantage of the temporary state aid framework adopted by the European Commission in spring 2023 to support the green transition across EU member states. This tax subsidy is part of Finland’s broader efforts toward a sustainable future and provides significant investment opportunities for companies in the country.

The proposed tax subsidy is targeted at investments that accelerate the green transition and reduce dependency on fossil fuels. Although renewable electricity production projects are excluded, other renewable energy initiatives, including those related to green hydrogen, will be eligible. Additionally, projects involving the storage of electricity and heat are included as well as the storage of renewable hydrogen, biofuels, bioliquids, biogases and biomass fuels, the decarbonisation of industrial production processes, energy efficiency measures, and the production of equipment (e.g. batteries), key components and related critical raw materials essential to the transition to a net-zero economy.

The scheme is targeted at large projects with a minimum investment of €50 million. Eligible investments can receive a relief from corporate tax covering up to 20 percent of the investment costs, with a cap of €150 million per company. The tax subsidy must be granted by the end of 2025, but the final investment decision can be completed later. The tax relief could be first used in the year when the investment is completed, however, no earlier than in 2028.

This initiative highlights Finland’s commitment to sustainability and provides a wide range of investment opportunities, including opportunities for foreign companies.