Your guide to electricity price and tax benefits in Finland

As everybody has noticed the electricity price in Finland (and elsewhere) has skyrocketed this autumn. Now is the time to save on energy consumption and take all possible action to keep costs down.
But what are the tax and other benefits for households when it comes to the high electricity price in Finland?

1 Getting familiar with the electricity price in Finland

Consumers in Finland typically pay for two things: electricity transmission (siirto) and sale (myynti). The electricity transmission price is fixed whereas one can in principle make an electricity contract with any selling company. Therefore it is not unlikely to receive an invoice from the energy provider and another invoice from the seller. There can be huge differences in prices and terms for electricity sale.

When analyzing electricity contracts it is important to compare different sale offers with identical contract terms. You can do that f.ex. on the website of the Finnish Energy Agency (available in English). Remember that you will pay the fixed price for electricity transmission (see above) on top.

Contract types:

2 Tax benefits on electricity price in Finland

2.1 Reduced VAT rate

The Finnish government has reduced the VAT rate on electricity sale from 24% to 10% for the period of 01.12.2022 to 30.04.2023. Please note the reduction does not affect costs for electricity transmission (see above). Consequently the total reduction is around 11% on a consumer’s electricity bill for above period. 

2.2 Tax credit for electricity

Who can receive the newly introduced tax credit for electricity and how to calculate it?

• During 1.1. – 30.4.2023 you may be entitled to receive a tax credit for household expenses exceptionally for electricity expenses in your home. Costs are eligible for the tax credit if they exceed 2 000€ and are max. 6 000€ for the four month period.
• You can receive 60% of the amount exceeding 2 000€ as a tax credit. The entire tax credit cannot be higher than 2 400€.
• Eligible costs are only expenses related to electricity sales incl. monthly fees, but costs for electricity transmission are out of scope.
• The credit is applicable directly to taxes (not to taxable income)
• If you are able to obtain the tax credit, apply for it in your tax return or already in your 2023 tax card! File it under the section Tax credit for household expenses. You will find more info on the tax credit for household expenses in the eBook on saving taxes (see below). This temporary household deduction does not affect eligibility for other household deductions, such as for renovations.

 Example: appartment

Eligible costs out of the four month period with above consumption is under the threshold of 2 000€ (4 x 136€ = 544€). Unfortunately no tax credit can be granted.

Example: house with electric heating

Eligible costs out of the four month period with mentioned consumption is above the threshold of 2 000€ (4 x 664€ = 2 656€). The tax credit is thus 60% of the amount exceeding 2 000€, i.e. 60% of 656€ = 393,60€.
Consequently the person will pay 393,60€ less income tax if he or she applies for the tax credit. It always makes sense to file the costs in MyTax already when ordering a revised tax card, and not only in the tax return.

2.3 Electricity subsidy from Kela

Low-income households that have trouble paying their electricity bills may receive subsidies from Kela. Accordingly they can receive a reimbursement over 60% of the portion of electric bills exceeding 400 euros. As for the tax credit above transmission costs are not eligible in the calculation and the period in question is again January to April 2023.

According to an estimation 100 000 households might be in the scope of the Kela subsidy. More info on the subsidy and examples with different electricity costs ares available on Kela’s website in English.

If one does not know whether the tax benefit or Kela’s subsidy apply, he/she should probably pay the invoices first and make the relevant application later. Make sure to keep the bills for evidence. 

3 Check available offers regularly and save

At the moment electricity is extremely expensive. Nevertheless have a regular look at current offers from services like the Finnish Energy Agency to find a suitable electricity contract.
Do also check the offering company’s background as there have been cases of bankruptcies and service suspension; it might pay out to stick with more established companies.