Growing tax-free sales offer Finland an opportunity – the current system requires a reform

In January–April 2025, approximately 40 per cent more Asian tourists stayed in Finland overnight than in the corresponding period a year earlier. When looking at all foreign tourists staying in Finland overnight, the share of tourists from outside the EU was 39 per cent during the same period.

The growing tourism is also reflected in the commerce sector. Tax-free sales have become increasingly important, especially in specialty goods trade, where tourists are a significant customer group. The tax-free procedure only applies to tourists arriving from outside the EU.

”However, the current tax-free sales model prevents the full potential of tourists from being utilised, as it is complicated and inefficient for both tourists and shops. Despite its name, tax-free sales are not actually tax-free, as a tourist from outside the EU pays for their purchase, VAT included, at the checkout. It is only possible to apply for a VAT refund when leaving the EU,” says Toni Jääskeläinen, Chief Policy Adviser of the Finnish Commerce Federation.

The VAT refund is usually handled by an external refund operator, who deducts their service fee from the refunded amount. As the VAT is only refunded when the tourist leaves the EU, significant benefit potential is not utilised. In addition, the low competition among refund operators has increased service fees, which reduces the savings that the tourist receives from tax-free shopping.

A lighter and more digital model as the solution

”The current tax-free sales model should be renewed so that the tourist can buy the product tax-free already in the store. This would simplify the process in shops and provide the tourist with concrete savings immediately at the time of purchase. At the same time, the tourist would have more money to spend in Finland and elsewhere in the EU,” says Jääskeläinen.

Utilising the tax exemption in the store requires digital solutions that can ensure, for example, that goods leave the EU. Digitalisation of the tax-free procedure has already begun in several EU countries.

”The growth of tourist sales is a significant opportunity for Finland, and the modernisation of the system could benefit both shops and the society at large. The reform would be urgently needed, as competition for tourists is fierce,” emphasises Jääskeläinen.

After the pandemic, tourism exports to countries outside the EU have grown faster than tourism exports to the EU countries, and the same development continued in the first quarter of this year.

For further information, please contact: Toni Jääskeläinen, Chief Policy Adviser, Finnish Commerce Federation, tel. +358 (0) 50 533 0619, toni.jaaskelainen(at)kauppa.fi

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