New tax deduction system for donations in Finland

The decision was made at the Finnish government’s recent budget framework session to extend tax deductions for donations to include those made to youth, culture, sports, and certain qualifying children’s organizations starting in 2026, EFA member VaLa has shared.

The public finance plan was approved on April 25, 2024. The specific details, such as how eligible donation recipients will be defined or what the lower and upper limits for tax-deductible donation amounts will be, will become clear once the preparation work for the reform is completed. VaLa aims to be involved in the preparation work.

The current situation

Until now, private individuals in Finland have been able to receive tax deductions only for donations to universities, with donations qualifying for deductions ranging from 850 to 500,000 euros. Additionally, companies have been eligible for tax deductions on donations ranging from 850 to 250,000 euros for contributions to science, art, or the promotion of Finnish cultural heritage.

Positive move

The proposal from the budget framework session acknowledges the significance of donations to the nonprofit sector’s work and moves the regulation of tax deductions for donations in the right direction; earlier this spring, the Finnish government decided to cut funding for nonprofit organizations, so compensatory measures are needed. Experiences from other countries suggest that broader tax deduction eligibility encourages more people to donate. It also increases trust in fundraising among citizens and businesses.

Limits of eligibility

However, the most popular donation causes among Finns are excluded from the tax deduction eligibility. These include helping the most disadvantaged in the home country, humanitarian aid and disasters, environmental and nature conservation, animal welfare, and disease prevention and treatment. VaLa has long advocated for extending tax deduction eligibility to include all entities with a fundraising permit, which is managed and supervised by the National Police Board in Finland.