Proposed new tax incentive for large green industrial investments

On 16 April 2024, the Finnish Government introduced its General Government Fiscal Plan for the period 2025-2028. As part of its growth package, the Government is planning to introduce a temporary tax credit for large-scale industrial investments that support the transition to a net zero economy, for example, investments in battery storage and hydrogen projects and fossil-fuel free steel industry. The incentive has been enabled by the EU’s Temporary Crisis and Transition Framework which is designed to support the economy in the context of Russia’s war against Ukraine and to speed up investment and financing for clean tech production in Europe.

The proposal is that the tax credit would equal 20% of the total investment amount, up to a maximum of EUR 150 million per project. The tax credit would be granted only for new investment projects upon which a final investment decision has been made by the end of 2025. Under the tax credit scheme, a company could deduct a portion of its investment costs from its future corporate tax liability, meaning the tax credit would only benefit successful projects. The tax credit could be applied against the corporate tax payable at the earliest from 2028 onwards, once the project is completed.

More detailed requirements for obtaining the tax credit, such as the definition of new green investment, final investment decision and the period during which the credit must be used, will only become clear once the Ministry of Finance starts its legislative preparation. HPP will provide updates as the legislative process progresses and clearer details of the final scheme are clarified. In the meantime, HPP’s Tax team would be happy to answer any questions regarding the planned tax credit or any other Finnish tax matters.

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