New tax credit for clean transition investments under preparation

In 2025, Finland introduced a temporary tax incentive for large-scale clean transition investments. At the time, a total of 40 investment projects were granted tax credits managed by Business Finland, amounting to €2.3 billion.

“Tax credits are widely used globally, making them an effective tool for Finland as well to attract clean transition projects. The tax credit accelerates investments that create new industrial value and reduces dependence on fossil fuels. Business Finland is ready to open the call and implement the new tax credit scheme as soon as the necessary decisions and approvals are in place,” says Lassi Noponen, Director General of Business Finland.

A government proposal regarding the extension of the tax credit (in Finnish) is currently being drafted and was sent out for public comments on May 8, 2026. For the tax credit to take effect, the European Commission must approve it as state aid compatible with the single market. 

Business Finland will communicate further details on the terms and timeline of a potential new call once the national preparation progresses and the prerequisites for the tax incentive are confirmed.

“The Government proposal currently under consultation suggests that, regarding projects related to production of renewable energy and storage, the scope of the investment tax credit would cover the production of renewable transport fuels as well as long-term storage of electricity and heat. The production of low-carbon fuels could be included under certain conditions. For investments aimed at reducing greenhouse gas emissions from industrial processes and improving energy efficiency, the scope is broader than in the 2025 tax credit scheme,” says Leading Expert Sini Uuttu from Business Finland. 

The draft Government proposal includes other changes compared to the previous scheme. For example:

• The proposal does not limit decarbonisation technologies to direct electrification and hydrogen use but is based on a technology-neutral approach.
• For investments targeting emission reductions in industrial processes and energy efficiency improvements, it is proposed that the minimum investment size (€50 million) could be assessed at the level of a company or group investment programme. One programme could include up to five individual plant-level investment projects, each with a minimum size of €10 million.
• The scope of investments related to manufacturing capacity for clean technologies has expanded to cover a significantly wider range of technologies. The tax credit would be limited to large-scale investments with a €50 million threshold, assessed at the plant level.

The right to the tax credit must be applied for in advance from Business Finland, and it must be granted by the end of 2027. The application must be submitted before work on the investment begins.

The right to the tax credit is granted, upon application, to a company implementing in Finland an investment that meets the conditions defined in the Act on tax credits for certain large-scale investments contributing to a climate-neutral economy.

The company can utilise the tax credit once the investment has been completed, the facility has been taken into operation in accordance with environmental and other permits, and the resulting profitable business generates taxable income.