Blunt response

The data sector’s response to Finland’s tax reform proposal was blunt and immediate. XTX Markets, the London-based algorithmic trading company, warned that it was re-evaluating a €1bn investment to build a mega-sized datacentre in Finland.

Michael Irwin, XTX’s chief operating officer, said it had placed its long-term investment roadmap for Finland under review “due to the proposed changes in electricity taxation”.

The MoF’s tax reform deliberations are being closely watched by global companies like Google Cloud Platform, Amazon Web Services and IBM, all of which have invested heavily in Finland’s fast-growing datacentre sector. Other interested investors, including private equity groups and hedge funds, are also monitoring the MoF’s future actions. 

The government proposal under review by the MoF includes the abolition of electricity tax breaks for datacentres, together with an amendment to change the energy rate charged to the sector’s facilities from its current low level of €0.0006 per kilowatt-hour (kWh) to the standard Finnish industry rate of €0.0225/kWh.

In addition, the MoF is also reviewing a separate advantage available to datacentre operators that provides accelerated depreciation allowances to new build projects. This provision allows for the write-off of capital investments at a greater speed for companies, offering datacentre builders and operators the opportunity to boost early-stage cash flow.

The MoF is collaborating on the proposed tax reform bill with the Ministry of Employment and Economy. Together, the two ministries are working to prepare a new and broader tax model that will alter how datacentres are taxed in the future.

Silver lining?

A possible silver lining for datacentre operators and investors comes in the form of a September statement by finance minister Purra that the MoF is open to applying specific tax rates to different types of datacentres depending on their size and energy usage. Purra said a redefinition of datacentres for tax purposes, against the backdrop of a government plan to conduct a wider cross-industry tax appraisal, was “overdue”.

The uncertainty shadowing the government’s tax reform proposal will hinder the country’s ability to attract new datacentre capital investment projects, said Jouni Salonen, a senior advisor at Business Finland, the state agency for trade and investment promotion.

“As long as the taxation issue remains unclear, it is difficult to contemplate any investment decisions being made. The electricity tax has such a significant impact on the operational costs of datacentres that decisions are difficult to make in this situation,” said Salonen, who leads Business Finland’s communications, mobility, software and datacentre department.

Finland’s tax reform deliberations are taking place alongside a separate initiative by the Orpo government to appoint Veli-Matti Mattila, a technology industry career professional, to produce a national roadmap to evaluate the role of datacentres in the greater Finnish economy.

Mattila, a former chief executive of the Finnish telecom group Elisa, is expected to present the datacentres national roadmap report in November 2025.

The mission tasked to Mattila involves a deep dive into the positives and negatives of having a substantial datacentre presence in a small-sized European economy like Finland.

The Mattila-headed national roadmap analysis, which will also examine taxation around tax centres, sets out to scrutinise the advantages and challenges of developing Finland as a major Nordic hub. The final report will examine the impact of a large datacentre presence on key areas of economic concern, including the sector’s effect on energy production, consumption and prices.

The Mattila report will also investigate the state’s future role as both a legislator and “stakeholder-investor”. This is to ensure that increased industry demands for electricity are met by forward-planning and cost-efficient capital investment schemes that can match production to future demand by scaling up supply capacity.

Grid review

Fingrid, the Finnish state-owned energy company responsible for electricity infrastructure, is conducting a review of the national grid’s capacity to handle the surge in demand that would emerge from a future political decision to grow the presence of datacentres, including new-build high-capacity artificial intelligence (AI) gigafactories. Fingrid has linked its national grid and electricity transmission infrastructure (NGETI) review to the government’s proposed AI infrastructure hub strategy.

The Fingrid NGETI review contemplates a heightened role for the renewable and nuclear power industries in the delivery of electricity to leading technology sector branches, including datacentres.            

Finland’s reputation as an attractive cold climate Nordic location for datacentres surged in 2023 when the Swedish government decided to remove tax breaks on the sector. The policy change in Sweden shifted the global industry’s Nordic new-build focus to Finland, triggering a spate of capital investments in new projects in 2024 and 2025.

Global investor interest in Finland as a cold climate location sparked in 2014 when the then government, led by Conservative prime minister Jyrki Katainen, moved to reduce the electricity tax for all datacentres with a capacity of 5MW (megawatts) and above. The tax break proved a game changer for Finnish efforts to develop the country as a Nordic hub for medium- to large-sized datacentres.

Global players, among them Google and IBM, were quick to seize on the opportunity to invest in Finland-based datacentre facilities to drive the new era of digital transformation, artificial intelligence and cloud innovation.

According to research conducted by the Confederation of Finnish Industries (CFI), between 15 and 20 new-build datacentre projects were initiated in Finland in 2025. The CFI calculated the number of datacentres opened in Finland in 2024 at an unprecedented 22. Moreover, the CFI estimated the country had some 50 construction-ready sites for new datacentre builds at the end of the first half of 2025.

With the tax break abolition proposal currently looming over the industry like a dark shadow, Finland risks losing the investment momentum it has gained since 2014. Investors and datacentre operators remain puzzled by the fiscal logic behind the MoF’s proposal, especially given that the ministry estimates that the sector’s capital investment value to the Finnish economy alone since 2014 has exceeded €6.2bn.

Despite the potential loss in tax status, some Finnish experts believe that foreign-owned datacentres in Finland promise much but deliver only minimal economic benefit over the long term to the national economy in terms of tax revenue and job creation, according to Jukka Manner, a professor of networking technology at Aalto University in Helsinki.

“My concerns about the negatives of datacentres deepen. The analysis suggests the demand needs of the sector lead to large increases in energy consumption. Although there are efforts to transition to renewables as their main source of energy, a lot of the electricity used by datacentres is still produced from fossil fuels,” said Manner.