The Finnish Ministry of Finance has published its draft State Budget for 2027, which includes several proposed tax measures aimed at supporting economic growth, investment, entrepreneurship, and employment. Key proposals include a reduction of the corporate income tax rate, changes to the taxation of employee stock options in unlisted companies, and further relief for earned income taxation. The proposals will be considered during the Government’s budget negotiations before a final budget proposal is submitted to Parliament.
Reduction of corporate income tax rate
The draft budget proposes reducing Finland’s corporate income tax rate from 20% to 18% as of 2027. According to the Ministry of Finance, the measure is intended to strengthen Finland’s attractiveness for investment and support economic growth.
Changes to employee stock option taxation
One significant proposal concerns employee stock options granted by unlisted companies. Under current rules, taxation generally takes place when the option is exercised. The proposed change would defer taxation until the underlying shares are transferred. This would help address the issue of a “dry” tax charge, in which tax arises before any cash proceeds are received, and would provide individuals with greater flexibility. As the proposal increases the attractiveness of equity-based incentive arrangements, it may be viewed positively by many stakeholders.
Earned income tax relief
The draft budget includes measures aimed at reducing the tax burden on individuals. These include:
These measures are intended to support purchasing power and encourage work and entrepreneurship.
The Ministry of Finance’s proposal represents the starting point of the budget process and does not yet constitute final legislation. The Finnish Government is expected to review and negotiate the budget proposal before submitting a final budget to Parliament for consideration.
If you or your employees may be affected by these changes, please get in touch. We can help you understand the tax and employer compliance implications of employee share incentives, whether in a purely domestic context or in more complex cross-border situations involving multiple jurisdictions.
Our tax team is available to support with key personnel tax-related questions and withholding tax card applications as well as advising employers on the impact of the upcoming changes.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Lena Nymark-Akerele
Director
Michael Strawson
Senior Manager
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