Marketing expenses in Finland: tax deductions, VAT and examples
Marketing costs (markkinointikulut) are generally deductible in full for income tax in Finland, and their VAT is deductible to the extent the purchase serves activities that give a right to deduct. That is the big difference from entertainment (edustus), where only half the cost is deductible and no VAT comes back. The hard part is the line between the two.
What the law says
The Business Income Tax Act names advertising expressly: costs of advertisements, customer publications, customary promotional gifts and promotional events are deductible (EVL 7 and 8 §). The same section limits entertainment to 50 %.
For VAT, a business deducts the VAT on purchases made for its taxable business (AVL 102 §), but not on goods and services used for entertainment (AVL 114 §). Income tax and VAT classify entertainment on largely the same principles, but deductibility is assessed separately for each tax. Keep the two on separate accounts in the books.
Common marketing costs and their treatment
In the VAT column, "deductible" means to the extent the purchase serves deductible activities.
| Cost | Income tax | VAT |
|---|---|---|
| Online and print ads | deductible in full | deductible |
| Brochures, flyers, business cards | deductible in full | deductible |
| Website | deductible; see below | deductible |
| Customary promotional gifts | deductible in full | deductible |
| Gift selected for one customer or contact | generally entertainment, 50 % | not deductible |
| Event or support | Income tax | VAT |
|---|---|---|
| Open marketing event, light refreshments | generally deductible in full | deductible |
| Invited customers, marketing programme, coffee or buffet lunch | generally deductible in full | deductible |
| Dinner, cocktails or evening programme afterwards | entertainment, 50 % | not deductible |
| Visibility bought through sponsorship | advertising cost | deductible if VAT is charged |
| Donation with nothing in return | generally not deductible | none |
Website. A cost that brings in income for three or more tax years is deducted in equal annual instalments over its probable effective life, or over ten tax years if that life is longer than ten years (EVL 24 §). A larger website build can fall under that rule.
Promotional gifts. A customary promotional gift is a low-value item given at the same time and in the same form to several recipients, often with your company name on it. The Tax Administration accepts a VAT-inclusive purchase price of up to 50 euros as customary. An individually selected gift to a customer or business contact is generally entertainment, and goods given to staff are not promotional gifts.
Samples and alcohol. Giving away samples of your products is not taxable own use for VAT (AVL 25 §), and the Tax Administration counts sample shipments as customary promotional gifts. Alcohol is not a customary promotional gift; alcohol a microbrewery, winery or similar producer makes itself can be one only when the general conditions are met.
Sponsorship. When you get agreed visibility in return, such as a logo on a team's shirts, that part is a purchase of advertising: the Tax Administration's VAT guidance calls visibility given in return an advertising service. Its VAT is deductible when the seller correctly charges VAT and the purchase serves your deductible business; a seller outside the VAT register charges none. Hospitality in a sponsorship package is assessed separately, as entertainment. Keep the contract that shows the visibility.
Donations. Support with nothing in return is generally not deductible. In its guidance for the 2025 tax year, the Tax Administration accepts small cash or in-kind donations to a public-benefit purpose that is also local or closely connected with the company's industry as deductible relationship costs, up to 850 euros per recipient. A donation for a political purpose is not deductible at all. Separately, a limited company can deduct cash donations of at least 850 euros to universities, or to organisations the Tax Administration has designated for supporting science, art or Finnish cultural heritage (TVL 57 §).
Marketing or entertainment: three questions
The Tax Administration's guidance on marketing and entertainment events looks in particular at the following:
- Who is the target? Marketing makes the company and its products widely known, often to an unselected audience with free entry. Entertainment is hospitality towards specific outsiders, such as clients, to build or keep business relationships.
- What is the actual purpose and content? A product presentation, training or demonstration points to marketing. Where hospitality is the main thing, it is entertainment despite a short presentation; the time of day alone decides nothing.
- Is there hospitality, and of what kind? Serving that is ordinary and subordinate to the programme, such as coffee or a buffet-type lunch with a meal drink, is generally not entertainment. A dinner, cocktails or free socialising after the programme generally is.
Inviting only certain customers does not by itself make an event entertainment: the Supreme Administrative Court has accepted targeted marketing to a limited group, such as teachers or doctors, when the programme was marketing and the serving was ordinary (KHO 2013:63, 2013:64 and 2013:65). An event can also be split between marketing and entertainment. In VAT, the Tax Administration's guidance allows the costs of targeted marketing only for the people the marketing is meant to influence: if spouses or other family members can attend, their share is not deductible. For the entertainment side of the line, see our article on entertainment expenses.
Google, Meta and other foreign platforms
Ads bought from Google, Meta or another seller abroad usually arrive without VAT. You report the Finnish VAT yourself and deduct it on the same return where you are entitled to: see our article on reverse charge.
What the paperwork should show
To deduct VAT you need the seller's invoice with the entries the VAT Act requires (AVL 102 a §); our article on invoice requirements lists them. The burden of proof is on the business, so add a short note to the receipt:
- for an event: the invitation, the programme with times, who came and what was served
- for promotional gifts: what was given, the price per item and to whom
- for sponsorship: the contract and proof of the visibility
Two worked examples
Example 1: branded mugs. Your Oy orders 100 mugs printed with its logo and hands them out to customers at a trade fair. The invoice is 1 004 euros including VAT at 25.5 %. At about 10 euros each, the same for everyone, they are customary promotional gifts. You deduct VAT of 204 euros, and the remaining 800 euros is fully deductible in income tax.
Example 2: a customer seminar with dinner. You invite 20 customers to a two-hour presentation of your new service. The venue and equipment cost 1 000 euros plus VAT of 255 euros. Coffee during the programme is billed separately, not included here, and treated like the seminar. Afterwards you take everyone to a three-course dinner with wine, which costs 1 600 euros including VAT. The seminar is marketing: the 255 euros of VAT comes back and the 1 000 euros is fully deductible. The dinner is entertainment: no VAT comes back, and 800 euros of the 1 600 is deductible.
What we do
We sort marketing and entertainment costs every month in the bookkeeping. For a limited company we charge 199 euros a month up to 240 000 euros of turnover and 249 euros above that, and for a sole trader from 69 euros a month, all plus VAT 25.5 %, with software and the year-end included and no limit on receipts. We are based in Helsinki and work online across Finland. Book an introduction.
Sources
- Tax Administration: marketing and entertainment events in VAT, detailed guidance (in Finnish)
- Tax Administration: entertainment expenses in income taxation, detailed guidance (in Finnish)
- Tax Administration: VAT guidebook, sections 1.3.4 and 8.2 (in Finnish)
- Tax Administration: VAT on own use, including promotional gifts, detailed guidance (in Finnish)
- Tax Administration: unification guidance for the 2025 tax year, section 3.2 (in Finnish)
- Tax Administration: donation deduction for corporate taxpayers, detailed guidance (in Finnish)
- Tax Administration: the Government proposes broader deductibility of donations (29 September 2026)
- Finlex: Business Income Tax Act 360/1968, sections 7, 8 and 24 (in Finnish)
- Finlex: Value Added Tax Act 1501/1993, sections 25, 84, 102, 102 a and 114 (in Finnish)
Please note: this is general information about Finnish rules, not advice for your own situation, and the rules change. Ask us before you act on it.
VAT returns off your desk?
We keep the books, file the VAT return by its due date and tell you the amount before it is due. A sole trader pays from 69 € a month and a limited company from 199 €, plus VAT.
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