The Finnish Government submitted a legislative proposal on 14 October 2026 to expand the corporate interest deduction limitation for certain critical infrastructure projects. Under current Finnish tax law (Business Tax Act Section 18a), net interest expenses are deductible only up to 25% of taxable EBITDA, with a €500,000 de minimis threshold. The proposal introduces an exemption for debt financing directly attributable to projects designated as critical infrastructure by the Ministry of Economic Affairs and Employment, such as energy transition investments, digital connectivity, and transport networks. Qualifying projects would be allowed to deduct net interest expenses in full, without the EBITDA cap, provided they meet strict criteria including state aid compliance and additionality requirements. The measure aims to lower the cost of capital for strategic investments supporting Finland’s green and digital transition. The proposal is expected to enter into force on 1 January 2027, subject to Parliamentary approval and EU State Aid clearance.
Key Takeaways
- Full Interest Deductibility: Eligible critical infrastructure projects can bypass the 25% EBITDA interest deduction cap, significantly improving project financing economics.
- Strict Qualification Criteria: Projects must be officially designated as critical infrastructure, demonstrate additionality, and comply with EU State Aid rules to benefit from the exemption.
- Effective Date Target: If enacted, the rules apply from 1 January 2027, allowing companies to structure 2027 financing arrangements to maximize the benefit.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement