As we approach the year 2025, there are significant taxation updates on the horizon that individuals and businesses need to be aware of. Effective January 1, 2025, several changes will be implemented, affecting everything from tax cards to VAT rates. Let’s delve into the most crucial adjustments that will shape the tax landscape in the coming year.
New Tax Card System Launches
Starting next year, tax cards will officially be valid from January 1, a change from the previous commencement date of February 1. Importantly, the income ceiling specified on tax cards will now be calculated for the entire year, simplifying the tracking of tax rates for taxpayers. This adjustment has come in response to long-standing requests from the public for greater transparency and ease in tax planning.
Changes to Household Expense Credits
The credit for household expenses will experience several significant modifications. The maximum allowable credit will decrease to €1,600, and the percentage of eligible expenses will also be reduced. Additionally, the credit threshold will increase from €100 to €150, though taxpayers will still benefit from enhanced credits for replacing oil heating setups.
Commuting Expense Deductions Remain Unchanged
Taxpayers will be pleased to know that the deduction for commuting expenses will remain stable at €7,000, with the credit threshold staying at €900. This consistency provides a continued benefit for those commuting for work.
Earlier Filing Deadlines
A notable shift in the filing schedule for pre-completed tax returns is set to take effect in 2025. The deadlines will be moved to April 15, 22, and 29, with pre-completed returns made available to taxpayers via MyTax by March 27. Those not signed up for electronic communication will receive their documents through traditional mail. Moreover, comments on real estate tax returns will be due by April 15, maintaining a streamlined approach.
Increased Late-Payment Interest
Late-payment interest rates are also undergoing adjustments. Inheritance tax payments past the deadline will incur an 8% late fee, while other tax types will see their late-payment interest increase to 11.5%. A special rate of 6.5% will apply to those benefitting from relief.
VAT Rate Updates
Starting January 1, 2025, certain VAT changes will take effect:
- Goods and services currently charged a reduced VAT rate of 10% will increase to 14%, except for newspapers, magazines, and public broadcasting services.
- Sanitary products and diapers will see a reduction in VAT from 25.5% to 14%.
- Conversely, the VAT on candy and chocolate is slated to rise from 14% to 25.5% starting June 1, 2025.
Additionally, the turnover threshold for corporate VAT liability will increase to €20,000, marking a shift in how small businesses manage their tax obligations. Furthermore, from 2025 onward, small businesses within the EU will have access to a new VAT scheme, allowing greater tax efficiencies.
Incremental Increases in Excise Duties
Excise duties on products such as cigarettes and spirits will be increased gradually over the next few years, starting in 2025 and extending into 2027.
For Further Information
To stay fully informed about the changes in taxation for 2025, you can visit the official Finnish tax administration website: vero.fi/changes.
As we prepare to navigate these changes, it is crucial for taxpayers to stay informed and adapt accordingly, ensuring compliance and maximizing their benefits under the new tax regime.
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