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The awaited initiative to further improve Finland's investment attractiveness by clarifying the taxation of offshore wind farms in Finland's exclusive economic zone ("EEZ") is moving forward with the new legislation proposed to enter into force at the beginning of 2026.
In May, we published a blog post on Finland Introducing Focused Tax Reforms to Boost Economic Growth describing, among other things, the contemplated legislative amendments to the taxation of offshore wind farms located in the EEZ of Finland. The Ministry of Finance has now published the draft government proposal.
The Finnish Real Estate Tax Act does not currently apply in the Finnish EEZ, whilst, due to the absence of an explicit definition of Finnish territory in the Finnish Income Tax Act, the application of the law in the Finnish EEZ is unclear. Therefore, according to the draft government proposal, the aim now is to make use of Finland's taxation right in the Finnish EEZ, within the limits of the United Nations Convention on the Law of the Sea, with regard to property and income taxation. Further, clarification of the regulation aims to improve investment certainty for offshore wind projects planned in the Finnish EEZ.
According to the draft proposal, the aim is to ensure that buildings and structures located in the Finnish EEZ and activities carried out in the zone are subject to property and income tax legislation. Property tax is proposed to be paid on buildings and structures within the Finnish EEZ to the extent they are valued as buildings or structures for property tax purposes. Further, a definition concerning Finland's territory is proposed to be added to the Finnish Income Tax Act.
Buildings and structures belonging to power plants would be subject to property tax at the weighted average power plant percentage, and other buildings and structures would be subject to property tax at the weighted average general property tax rate for buildings. In accordance with the current municipal tax rates and the taxable values under the most recent property tax, the weighted average power plant rate would be 3.09% and the weighted average general property tax rate for buildings would be 1.14%. It remains to be seen what the actual tax rates will be once the new legislation enters into force.
In addition, the draft government proposal aims to bring the tax burden on offshore wind farms more in line with that of onshore wind farms. The draft proposal recognises that construction of an offshore wind farm is generally more expensive than for an onshore wind farm, as an offshore wind farm's investment and project costs are higher due to the requirements imposed by marine conditions. The replacement value of offshore wind farms under the Finnish Valuation Act is proposed to be set at 35% of construction costs, while onshore wind farms would be valued at 75% of construction costs.
The new legislation is proposed to enter into force on 1 January 2026. The amendments to the Finnish Valuation Act would apply for the first time when assessing the taxation value for 2025. However, to allow sufficient time for the Finnish Tax Administration to plan and implement required IT changes, amendments to the Finnish Real Estate Tax Act would apply for the first time in the taxation carried out for the tax year 2030. Based on the draft government proposal, property tax revenues are indeed expected to accrue from the Finnish EEZ starting from the 2030s.
Based on the latest information, the government proposal should be published as soon as possible, but there is currently no more specific information on the timing.
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