On 19 March 2026, the Finnish Government submitted to Parliament a legislative proposal (the “Proposal”) on property taxation for offshore wind farms. The Proposal seeks to amend the property tax legislation with the aim of aligning the property tax burden on offshore wind farms with that applicable to onshore wind farms. In addition, the amendments to tax legislation are planned to remove any remaining ambiguity regarding Finland’s right to levy property and income tax within its exclusive economic zone (the “EEZ”).
Current rules for calculating property tax on wind farms
The property tax values of taxable components of wind turbines — the foundations, the tower, and the nacelle — are valued based on construction costs. Specifically, the property tax value of a wind turbine is set at 75 per cent of the construction costs of its taxable parts. This value is adjusted annually in line with changes in the construction cost index. The taxable value is subject to annual age-related depreciation of 2.5 per cent up to 60% in aggregate value. Onshore and offshore wind farms are currently valued in the same way.
Municipal councils set their property tax rates annually in each municipality. The general property tax rate must fall between 0.93 and 2.00 per cent. However, municipalities may separately adopt a special power plant rate of up to 3.10 per cent — a rate that a significant proportion of Finnish municipalities have chosen to introduce.
The property tax problem
The property tax values of wind turbines are based on actual construction costs for both onshore and offshore projects. Offshore wind turbines are, however, generally significantly more expensive to construct than their onshore counterparts, owing to the demanding conditions at sea — including water depth, distance from shore, seabed quality, wind conditions, wave action and ice. Costs vary considerably between different sea areas and even within the same wind farm. According to the estimate set out in the Proposal, the investment costs underlying the taxable value of an offshore wind turbine are approximately ten times higher than the corresponding costs for an onshore wind turbine.
As a result, the current valuation method applied to wind turbines means that the property tax burden on offshore wind farms is significantly higher than that on onshore wind farms. The taxable values of onshore and offshore wind turbines therefore do not accurately reflect their relative lifetime electricity generation capacity.
The proposed changes
Reduction of the property tax value — the key change
The Proposal would set the property tax value of offshore wind turbines at 35 per cent of respective construction costs, compared to 75 per cent for onshore wind turbines. This reduction is targeted to treat broadly both onshore and offshore wind turbines equally per unit of energy produced.
The 35% property tax value would apply to power plants constructed or installed at sea primarily from a vessel, where the foundations are in a water area and are either permanently submerged at theoretical mean sea level or are floating. These requirements are designed to confine the relief to genuine marine installations that incur the specific additional costs associated with vessel-based offshore construction. Where, however, a power plant is to be constructed in a sea area but its construction or installation has been carried out predominantly from shore using techniques comparable to those employed in the construction of onshore wind turbines — such that there is no significant difference in construction costs — there are, according to the Proposal, no grounds for reducing the property tax. The amended valuation provisions will also apply to power plants constructed in Finnish territorial waters.
It is important to note that the provision is drafted in a technology-neutral manner and, in our view, should not — despite the title of the Proposal — be limited solely to offshore wind farms. The Proposal should thus also be applicable to other forms of renewable offshore power plants should such technology be applied in Finland.
The provision will, however, only apply to offshore power plants whose construction commenced on or after 1 January 2025.
A weighted property tax rate for the exclusive economic zone
Power plants located in Finland’s EEZ would be subject to a weighted average power plant rate, calculated as the average of the rates most recently confirmed by Finnish municipalities for the special power plant rate, weighted by the taxable values falling within each municipality’s rate. Based on the most recently confirmed property tax assessments, the weighted average special power plant rate would currently stand at approximately 3.09 per cent.
Power plants built in territorial waters, by contrast, would be subject to the applicable rates set by the relevant municipality.
Resolving the unclear legal status of the EEZ
The Proposal will include the EEZ within the territorial definition of Finland, which then rectifies the ambiguity relating to Finland’s right to tax property and income.
Distribution of property tax revenue between the state and municipalities
The Proposal provides that 80 per cent of the property tax revenue generated within Finland’s EEZ would accrue to the state, with 20 per cent allocated to municipalities. The rationale for including municipalities as beneficiaries is that large-scale offshore wind projects in the EEZ may have significant impacts on coastal areas, potentially causing disruption to maritime activities, the local environment, and nature more broadly. Directing part of the tax revenue to coastal municipalities located in proximity to offshore farms is a sensible measure — and one that is likely to enhance the broader social acceptance of offshore wind development.
Planned timetable
The legislation is intended to come into force during 2026, but will be phased in as follows:
Tax value of offshore wind turbines at 35% is to be applied for the first time when determining the 2026 taxable values.
EEZ is to be regarded as part of territorial definition of Finland as of 2027 tax year for income tax purposes, but respective property tax will be applicable as of 2030 tax year.
HPP has assisted Renewables Finland in commenting on the legislative process leading to the Proposal. HPP is monitoring the debate on the Proposal in the Finnish Parliament, and we will be posting updates on this forum regarding the progress of the legislative amendment and any changes to the current Proposal.
