Finland proposes interest relief for critical infrastructure projects

How the deduction would work

Proposed section 18c of the Business Income Tax Act (360/1968) would allow additional deductions after normal interest limits. Relief would equal disallowed project net interest multiplied by the share paid to lenders other than private owners. The private-owner definition includes their group companies; public bodies and wholly publicly owned entities are excluded.^[1]

Eligibility and documentation

Applicants would need critical-entity status under Act 310/2025 or equivalent sector obligations. The operator, borrowing costs, assets and income must be in the EU. Project and other activities would require separate allocations and documented methods, with accounting records retained for at least 15 years. Other activities below 10% of turnover would be absorbed into the project treatment.^[1]

Timing remains proposed

The government intends commencement on 1 January 2027 and first application for tax year 2027. Qualifying undeducted 2026 interest could be claimed in 2027. An election would apply throughout the project; losing eligibility would restore general rules from the next tax year. Parliament has yet to enact the bill.^[1]

EU framework and group financing

Article 4(4)(b) of Council Directive (EU) 2016/1164 permits an exception for borrowing costs financing long-term public infrastructure when the operator, costs, assets and income are in the EU. The Finnish proposal develops that option for critical infrastructure. For an MNE, the financing mix matters: private shareholder and related-group debt can restrict the additional deduction. A group-level critical designation would also need to be shown to cover the particular taxpayer and project.^[1][2]