The VAT Rate Decreases from 14% to 13.5% at the Start of 2026 – What Entrepreneurs Need to Know

Table of Contents

1. Introduction: Good News for Entrepreneurs and Consumers
2. What Changes and When?
3. Who Does the Change Affect? Check Your Industry
4. Timing Is Everything: When Does the New VAT Rate Apply?
5. Pricing and Margin Calculations: A Strategic Choice for Entrepreneurs
6. Practical Steps: An Entrepreneur’s Checklist
7. Light Entrepreneurship Perspective: How Does the Change Affect Invoicing?
8. Summary: A Small Change, a Positive Impact

Introduction: Good News for Entrepreneurs and Consumers

Everyday life as an entrepreneur is often full of changes, but we rarely get news about lighter taxation. This time, however, there are positive winds ahead! At the beginning of 2026, a change will come into force that affects a huge number of Finnish businesses, light entrepreneurs, and consumers.

The VAT rate that has so far been 14% will decrease to 13.5%.

While a half–percentage-point change may sound small on paper, it has meaningful effects on pricing, margins, and day-to-day financial administration. Especially in industries with high volumes—such as the restaurant business or passenger transport—this change is very welcome.

In this blog post, we’ll go through in depth what the change means in practice, how you should prepare for it, and how you can turn it to the advantage of your business or your light-entrepreneur activity. Whether you’re an experienced veteran or just starting out, this guide will help you navigate the change smoothly. At Bisse.fi, we want to make sure entrepreneurship is as effortless as possible, so we’ve gathered everything essential in one place.

Let’s take a look at what’s coming!

What Changes and When?

In simple terms, this is about a reduction in the reduced VAT rate. The current 14% VAT rate will be lowered to 13.5%.

The change takes effect on 1 January 2026.

This is part of a broader tax package, but from an entrepreneur’s perspective the key point is that this is a permanent change, not a temporary trial. The reduction is a government measure intended to support purchasing power and the vitality of certain sectors.

Why is 0.5% significant?

You might wonder whether half a percent really matters. The answer is absolutely yes.

“Small streams make a big river. When VAT decreases, it directly affects the final price of a product or service—or the entrepreneur’s margin.”

In the restaurant industry, for example, where margins are often tight, every tenth of a percent helps. And for consumers who use a lot of services, lower prices can add up noticeably over the year.

The change won’t happen by itself—it requires action from entrepreneurs. POS systems, online stores, and invoice templates must be updated. Fortunately, there’s still plenty of time to prepare, but it’s worth getting familiar with the topic now so that the start of 2026 goes smoothly without panic.

Who Does the Change Affect? Check Your Industry

The rate reduction does not apply to all products and services. It applies specifically to goods and services currently subject to the 14% VAT rate. The standard VAT rate (25.5%) and the lower VAT rate (10%) remain unchanged (or have their own separate rules), but this specific change applies to the following groups.

Check below whether your business—or your light-entrepreneur work—falls into these categories:

1. Foodstuffs and animal feed

This is likely the biggest and most visible group. It includes food and drinks bought from stores (excluding alcohol and tobacco).

• Grocery stores
• Bakeries
• Food kiosks

2. Restaurant and catering services

If you run a lunch restaurant, café, or catering business, this change is highly relevant.

• Restaurants
• Cafés
• Catering entrepreneurs
• Staff canteens

3. Sports and cultural services

This category affects many light entrepreneurs and small business owners. If you sell tickets or participation fees, you likely fall into this group.

• Gyms and sports centers
• Theatres, circuses, and opera
• Tickets to sporting events
• Ski resorts

Note: Guided exercise is often a matter of interpretation (is it teaching or a sports service?), but generally providing access to a sports service falls under this category.

4. Books

Both printed and electronic books fall under this VAT rate.

• Bookstores
• E-book sellers
• Audiobooks

5. Passenger transport

This is an important change for the transport sector.

• Taxi entrepreneurs
• Bus companies
• Rail transport

6. Accommodation services

The tourism industry benefits directly.

• Hotels and motels
• Campsites
• Professional accommodation activity similar to Airbnb

7. Medicines

In pharmacy operations and the sale of medicines, the VAT rate will also decrease.

If your activity falls into one of the categories above—congratulations! Your taxation becomes lighter. Next, however, you need to understand how the change is applied, because the transition period has its own rules.

Timing Is Everything: When Does the New VAT Rate Apply?

In taxation, timing is critical. The wrong date on an invoice can lead to unnecessary explanations with the tax authorities. Luckily, the main rule is clear, though there are exceptions.

Main rule: Accrual principle (based on supply/performance)

As a rule, the VAT rate is determined by when the goods are delivered or the service is performed.

• Performance before 1 Jan 2026: apply the old 14% VAT rate.
• Performance on or after 1 Jan 2026: apply the new 13.5% VAT rate.

This means the invoice date or the moment the contract is signed is not decisive; what matters is when the customer receives the goods or service.

Example 1: Restaurant dinner
If a customer eats at your restaurant on New Year’s Eve, 31 Dec 2025, the VAT on the food is 14% even if they pay after midnight (though typically payment is immediate). If they come for brunch on 1 Jan 2026, VAT is 13.5%.

Example 2: Delivery of goods
If an online merchant ships a book to a customer on 30 Dec 2025 and hands it over to the carrier, 14% VAT applies even if the customer receives the package in January. The decisive moment is when the goods are handed over.

Advance payments – an important exception!

Advance payments are a situation where entrepreneurs must be careful. Under the VAT Act, VAT must be accounted for when an advance payment is received, if it is received before delivery of the goods or performance of the service.

If you receive an advance payment in 2025 for a service delivered in 2026, the VAT rate at the time of payment applies—i.e., 14%.

If the advance payment is received in 2026, the new 13.5% rate applies.

Rule of thumb: If the money hits your account or cash register in 2025, use the 2025 VAT rate (14%). If the money comes in 2026, use the new rate (13.5%), assuming the service is produced then or later.

Continuous services

Many light entrepreneurs and businesses sell ongoing services such as gym memberships or cleaning contracts. For continuous services, the performance is considered completed at the end of each billing period.

If the billing period is a calendar month:

• December 2025 services: 14%
• January 2026 services: 13.5%

This is straightforward. But if the billing period spans the year-end (e.g., 15 Dec 2025 – 15 Jan 2026), VAT should in principle be split correctly over time unless it’s treated as one single whole. Most commonly, it’s recommended that billing periods be aligned to end at year-end for clarity.

Pricing and Margin Calculations: A Strategic Choice for Entrepreneurs

When VAT decreases, entrepreneurs face a strategic decision. How should the change be reflected in prices? In practice, there are two options, each with pros and cons.

Option A: Pass the reduction on to consumer prices

In this model, you reduce your product or service price to reflect the new VAT rate.

• Pros: Customers like it. It can increase demand and give your business a fair image. In highly competitive sectors (like grocery retail), pressure to lower prices is strong.
• Cons: Your margin in euros stays the same, but the work of updating prices is significant.
• Best for: Grocery stores, online shops, highly competitive consumer services.

Option B: Keep prices unchanged

In this model, you keep the VAT-inclusive final price the same. Because the VAT portion of the price decreases, the VAT-free price you receive (and thus your margin) increases.

• Pros: Improves profitability without increasing sales. A 0.5% increase in margin is pure bottom-line income.
• Cons: Consumers are very aware today. If a competitor lowers prices and you don’t, you may lose customers.
• Best for: Service sectors with “round-number pricing” (e.g., lunch €12.00 or a ticket €20). It’s unlikely a lunch restaurant would change the price to €11.95 just because of a VAT change.

Example calculation: Lunch restaurant

Assume you sell lunch for €12.00 (incl. VAT).

In 2025 (VAT 14%):

• VAT-free price: €10.53
• VAT: €1.47
• Margin (VAT-free sales): €10.53

In 2026 (VAT 13.5%) – price kept at €12.00:

• VAT-free price: €10.57
• VAT: €1.43
• Margin (VAT-free sales): €10.57

Difference: You gain €0.04 per lunch. If you sell 100 lunches per day, that’s €4 per day—around €80–€100 more per month as “free” extra money. Over a year, that’s already over a thousand euros purely thanks to the VAT change.

At Bisse.fi, we recommend thinking about pricing as a whole. Sometimes it’s wise to round prices for clarity, and this VAT change can be a good moment to review your price list more broadly as well.

Practical Steps: An Entrepreneur’s Checklist

To make the year-end 2025–2026 transition smooth and stress-free, adopt this checklist well in advance.

1. Update POS systems

If you have a physical shop or restaurant, your POS system must be configured with the new 13.5% VAT rate. Check with your system provider whether this happens automatically or whether you need to order an update.

2. Check your invoicing software

If you create invoices manually or use invoicing software, make sure invoices issued from 1 Jan 2026 onward include the correct VAT percentage.
Tip: In Bisse.fi, VAT rates are updated automatically or are very easy to select when creating an invoice, so our users have it easy here.

3. Update your online store

In an online store, prices and VAT rates must be updated. If prices change, remember to also update product feeds (e.g., Google Shopping or Facebook ads) so that the price shown in ads matches the price on your site.

4. Contract templates

Do you have long-term contracts that mention a fixed price including VAT? Check the terms. In B2B trade, prices are usually quoted VAT-free (+ VAT), in which case the change doesn’t require contract updates. In consumer business, the situation may require communication.

5. Marketing materials

If you have printed price lists, brochures, or menus with prices, they will need updating. Digital materials are easier to update, but they still require work.

6. Bookkeeping

Communicate with your accountant. Make sure receipts and entries are posted to the correct accounts from the start of the year.

Light Entrepreneurship Perspective: How Does the Change Affect Invoicing?

Light entrepreneurs often work in fields affected by this change: the cultural sector (performers, musicians), fitness (personal trainers, yoga instructors), and the restaurant industry (freelance chefs, waitstaff).

As a light entrepreneur, you don’t need to worry about heavy POS systems, but you do need to be careful with invoicing.

What do you need to do?

1. Identify your VAT rate: Make sure your service falls under the 13.5% rate. For example, graphic design is usually subject to the standard VAT rate (25.5%), while a performing artist’s fee may be VAT 0% or a reduced rate depending on the situation. Fitness instruction is typically within the reduced rate.
2. Creating the invoice: When you invoice work performed in January 2026, choose the correct VAT rate.
3. Pricing: Decide whether you keep the customer’s total price the same. As a light entrepreneur, you receive the VAT-free price minus service fees and taxes. If you keep the customer price unchanged, the VAT-free portion increases → you take home more pay.

Example for a light entrepreneur:
You are a personal trainer and sell a 10-session package to a client for €500 (incl. VAT).

• Old situation (14%): VAT-free price approx. €438.60. Your pay is calculated from this amount.
• New situation (13.5%): VAT-free price approx. €440.53.

The difference is almost €2 per package. That goes directly to you as extra income if you don’t lower the price.

Light entrepreneurship services such as Bisse.fi make this easy. The system calculates taxes for you—as long as you select the right category. Your job is simply to focus on what matters: doing your work and serving your customers.

Summary: A Small Change, a Positive Impact

The VAT rate reduction from 14% to 13.5% at the start of 2026 is a rare and positive piece of news. It affects a wide range of Finnish service and retail sectors—from food to fitness and accommodation.

Even though the change requires a bit of technical work—updating systems, checking price lists, and learning new VAT percentages—it also offers an opportunity.

As an entrepreneur, you can:

1. Improve your margin by keeping prices unchanged.
2. Improve your competitiveness by lowering prices.
3. Clarify your pricing and refresh your marketing.

The most important thing is to stay alert early. When you prepare properly well before the end of 2025, you can raise a toast to the new year with peace of mind—whether your glass contains a soft drink sold with a 13.5% VAT rate or something stronger (which, of course, remains under a different VAT rate!).

Are your invoicing matters in order for the coming year? Check out Bisse.fi, designed to make everyday life smoother for entrepreneurs and light entrepreneurs. We take care of the tech so you can take care of business.

Good luck and success in 2026!