Electricity tax and its categories
Both consumers and companies pay electricity tax. The tax is based on consumption and is charged on the electricity distribution bill. Some companies are eligible for a tax reduction. Read this article to find out which types of companies fall under the lower electricity tax category.
Electricity tax
Every electricity user pays an electricity tax to the government, also known as the electricity excise duty.
The electricity tax is collected by the local electricity distribution company and is included in the customer’s electricity distribution bill.
The electricity distribution company then pays the tax to the government. The electricity tax is consumption-based, meaning its amount depends on how much electricity is used. A price per kilowatt-hour has been set for it.
electricity tax categories
There are two electricity tax categories. Most electricity consumers belong to the higher electricity tax category, with some exceptions for certain companies.
Electricity tax categories and prices:
- Electricity tax category 1: The tax is 2.827515 cents per kWh. It consists of the energy tax (2.24 cents/kWh), the security of supply fee (0.013 cents/kWh), and 25.5% VAT.
- Electricity tax category 2: The tax is 0.079065 cents per kWh. It consists of the energy tax (0.05 cents/kWh), the security of supply fee (0.013 cents/kWh), and 25.5% VAT.
Who is entitled to the lower electricity tax category?
The tax discount on electricity is available to companies that require a lot of electricity. This lighter taxation supports business operations in Finland.
Businesses in certain industries are eligible for the lower tax category. The tax category is determined by the business’s industry, not by the amount of electricity the company uses.
Category 2 electricity tax applies to electricity used in:
- Industry
- Data centers
- Heat pumps, electric boilers, and circulation pumps in geothermal power plants with a capacity of at least 0.5 MW
- Professional greenhouse farming
Electricity tax category 2 in industry
For an industrial company to qualify for the lower tax category, its operations must fall under the C or B main categories of the Finnish Industry Classification or the subclass 38329 of main category E. You can find more details about the industry classification on the Statistics Finland website.
Register as an excise tax aid recipient
If a company belongs to the lower electricity tax category, it must register as an excise tax aid recipient. This can be done through the Finnish Tax Administration’s online service.
Eligible for the lower tax category? Notify the electricity distribution company.
A business must inform its local electricity network company if it belongs to the lower electricity tax category 2.
For customers in the Vaasan Sähköverkko distribution area, contact:
You will receive a pre-filled form by email, which you can sign to confirm that your business belongs to tax category 2.
If you are unsure which tax category your business belongs to, ask your electricity distribution company for advice.
Electricity Tax Refund
The company itself is responsible for knowing to which electricity tax category it belongs.
If a company eligible for tax category 2 has paid the wrong tax rate, it can retroactively apply for a refund of the difference through the Finnish Tax Administration’s online service. The refund can be requested for the current year and the three previous calendar years.
Do I have to pay electricity tax on electricity production?
In most cases, electricity tax does not apply to small-scale electricity production.
You become liable for electricity tax only when your production capacity exceeds 100 kilovolt-amperes and produces more than 800,000 kilowatt-hours of electricity per year.
Most consumers and comapnies do not need to worry about exceeding these limits with their own solar panel production.