VAT Change 2026: Reduced Rate Drops

VAT change occurs on 1.1.2026.

What’s Changing?

VAT change takes effect on January 2026. Finland’s reduced VAT rate will decrease from 14% to 13.5%. The change applies to the same goods and services currently taxed at 14%, such as:

  • Food and restaurant services
  • Medicines and animal feed
  • Sports and cultural services
  • Books (printed and digital)
  • Passenger transport and accommodation

Effective Date and Impact

The change takes effect on January 1, 2026. The applicable VAT rate depends on the delivery or performance date, and for advance payments, the decisive factor is the payment date.

Impact on prices

For example, a 50 € restaurant bill will drop by about 0,25 €. While the change is small, it offers consumers slight relief and supports domestic consumption.

What Should Businesses Do?

  • Update pricing and POS systems
  • Review invoice templates and contracts
  • Reflect the change in accounting and VAT reporting

Updating VAT Settings in Isolta

The new VAT rate (13.5%) will be updated in Isolta at the end of December 2025. Prepare your account before the change takes effect on January 1, 2026.

Steps to Update VAT Settings

Update VAT for all saved products and services before the change.

• Use the Pricing Tool for bulk updates or edit items individually.
• The Pricing Tool will appear at the top of the product list when the VAT update is applied.
• If the default VAT on invoice line items is 14%, change it under Settings → Invoicing Settings.

Tip: Make these changes early to avoid incorrect VAT on invoices after January 1, 2026

Why Is This Change Happening?

The government aims to strengthen purchasing power and support domestic demand. For the state, the change means an estimated €145 million annual loss in tax revenue, but for consumers, it brings modest relief to everyday costs.

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