New Act on Interim Profit Tax Act for Electricity Sector (“Profit Tax”) has entered into force on 24 March 2023 in Finland. The Profit Tax is currently in force only in FY 2023.
The Profit Tax is 30% of FY 2023’s profit of the relevant company’s electricity business which exceeds 10% annual return calculated on 2022 equity. The Profit Tax is calculated practically in a similar manner as normal corporate tax, but e.g. Finnish interest deduction limitation rules are not applied. The 30% Profit Tax is paid separately and in addition to the normal 20% corporate tax.
The relevant electricity business includes respective production and distribution (sale and resale). However, retail sale of electricity is excluded from the Profit Tax if neither the relevant company itself, nor a group company, has any electricity production activities. Additionally, electricity business between group companies, transmission of electricity and small-scale electricity business is excluded from Profit Tax.