Legal Alerts/4 Oct 2022

Finland to Adopt a New Mining Tax Framework

The Finnish Ministry of Finance issued a draft government bill in late September 2022 that proposes the implementation of royalty-type taxes on minerals extracted in Finland. Two different types of tax levels are proposed for metallic and industrial minerals.

The new law is proposed to enter into force in the beginning of 2024.

Royalties for metallic minerals

The draft government bill proposes a royalty of 0.6% to be levied on the taxable value of a listed group of mostly metallic minerals that will be limited to a list covering precious minerals such as platinum, palladium, gold and silver, base metals such as copper, nickel, cobalt, zinc and lead as well as iron, lithium and uranium. In addition, sulphur is on the list as a non-metallic mineral.

The taxable value of a given mineral would be based on international trading prices, gathered from sources such as the London Metal Exchange and the London Bullion Market. Tax would be determined at the point the mineral is fed into a mineral processing plant. The proposal does not regulate to what extent taxable minerals that are not commercially utilised, e.g., sulphur-content ending up as tailings through the processing plant, will be excluded from the taxable value.

The taxable value would be calculated as an arithmetic average of the daily prices of a given mineral during a calendar year. The Finnish Tax Administration would confirm the taxable values in advance based on the previous year’s pricing information. For example, taxable values for 2024 would be based on the average prices in 2023. Values for each starting year would be confirmed at the latest by 1 February.

The available sources for pricing information, and the exact method for calculating the royalty, are to be confirmed separately in a government decree.

Royalties for industrial minerals

The draft government bill proposes a royalty of EUR 0.2 per extracted tonne for other (non-metallic) minerals, such as apatite, lime, talc, and soapstone.

The tax would be determined at the point when the mineral is extracted from the ground.

Tax liability and process

The tax liability will concern mining companies that extract minerals from Finnish bedrock. The new legislation would apply to both existing mines and new mines. Exploration would not fall under the scope of the new tax, as it is not subject to the same permits as actual mining activities and extraction of minerals. For example, the small amount of minerals acquired based on drilling or test mining in the exploration phase should not be taxable.

Companies falling within the scope of the mining tax would have to register as taxpayers. The tax would be self-assessed, and taxpayers would be liable to submit a tax return from each fiscal period. The fiscal period would correspond to a calendar year. Taxes would be calculated based on the past year’s pricing information and / or the amount of minerals extracted.

Each taxpayer would submit a single tax return, encompassing the types of minerals extracted and related information, such as pricing. If the taxpayer has multiple mining projects, information on each mine would be given separately in their respective tax returns. The tax return(s) would have to be submitted and the tax paid annually for the past year at the latest by 12 March (for example, the tax return on fiscal year 2024 would have to be submitted and the tax paid by 12 March 2025).

Next steps

The draft government bill ended up proposing royalties in lieu of net income-based taxes, contrary to the proposal by the mining industry and critique by the Finnish VATT Institute for Economic Research. The royalties will negatively impact the bottom-line of mining companies in Finland and will decrease their profitability. This impact is heightened during a downcycle, where a mining company may find its margins increasingly thinner. This could lead to a situation where minerals, some of which are essential to e.g., the de-carbonization of private and public transport, go unutilised in comparison to a net-income based tax.

On the other hand, a royalty-type tax may not sufficiently capture profits during an up-cycle, creating political pressure to increase rates. There is a risk that these rates could continue to linger during a later downturn.

How can we help your business

The draft government bill is open to statements until 17 October 2022. Borenius has been analysing the preparation and enactment process of the new mining tax closely and advising clients on the impacts of the new law on their mining operations in Finland.

We are happy to discuss and hear further thoughts on how the implementation of the proposed law will look like from an operational perspective and on any amendments that should be introduced to the proposed legislation.

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Additional information

Max Malinen

Senior Associate


Casper Herler

Managing Partner


Einari Karhu