How do changes in EU and tax legislation affect small businesses? - An expert's view

Changes in EU and tax legislation affect all businesses, but especially small businesses, for whom administrative obligations can mean significant additional work. The reforms that will enter into force in 2026, both at EU level and in Finland, will affect reporting, taxes and financial management requirements.

In this expert view, we open up, which changes are important for small businesses, how to prepare for them and what impact they can have on everyday life.

1. New EU reporting obligations - transparency and digitalisation

The EU continues to digitise financial management and strengthen common reporting standards. Several reforms aim to make business data comparable, real-time and automatable.

Key impacts for small businesses:

• e-invoices becoming mandatory for B2B use

The EU's move towards mandatory e-invoicing means that businesses must use e-invoices in compatible formats.

For a small entrepreneur, this means:

• • the phasing out of paper and PDF invoices
  • the need to update the financial management programme if it does not support the EU standard
  • the possibility to automate accounting more extensively

• Real-time reporting pilots

The EU's planned reporting automation projects aim to ensure that VAT data moves in real time between businesses and authorities.
Although the reform will first apply to larger companies, small entrepreneurs are likely to be involved in a phased approach.

2. VAT changes - harmonisation and clarification

The EU aims to simplify VAT internal trade and cut unnecessary red tape. This will also bring changes to invoicing and reporting for small businesses.

The main impacts of the VAT changes on small businesses:

• Clearer rules for Community trade

If your company sells services or goods to other EU countries, the changes mean:

• • clearer rules on where land tax is paid
  • for a broader OSS system (One Stop Shop) use
  • fewer separate tax returns to different countries

This makes it particularly easy to online traders and service entrepreneurs.

• Clarifications on VAT thresholds for small businesses

The EU is working to harmonise VAT thresholds in member states, which may mean in Finland:

• • reducing the administrative burden for light entrepreneurs and micro-enterprises
  • any changes to the limit after which a business must register for VAT

The Finnish government's policies and the implementation of the EU directive will determine the timetable, but changes are likely between 2026 and 2027.

3. Finland's tax changes 2026 - what should small business owners be aware of?

The government has prepared a number of changes aimed at improving the profitability of work and supporting the competitiveness of businesses. Some of the changes will directly affect small businesses.

Key tax implications for the small entrepreneur:

• Adjustments to VAT rates

For 2026, there are discussions on a review of tax rates, which could have an impact:

• • pricing in services sectors
  • on consumer prices
  • accounting and invoicing changes

If the tax rates change, the entrepreneur must update:

• • price lists
  • cashier system
  • financial automation

• Changes in employer contributions

The government has examined the overall system of employers' social security contributions.
This can mean:

• • changes in wage costs
  • increases or reductions in charges for start-ups
  • the impact on when it is financially feasible to hire the first employee

• Investment incentives for small entrepreneurs

Possible corporate tax reliefs, such as depreciation flexibility or investment deductions, can ease the tax burden on SMEs and facilitate equipment purchases.

4. Impact on the entrepreneur's daily life - what does this mean in practice?

Both the EU and Finland are moving towards economic governance:

• electricity
• common standards
• automation-based reporting

From a small business owner's perspective, this means:

• Less manual work

When invoices, receipts and reports are transferred electronically, financial management is streamlined.

• Need to upgrade software

With the new obligations, a company's financial management system must support EU standards.

• Clearer rules for international trade

For online traders and service providers, this is a major relief.

• Possible cost changes

Tax changes can increase or decrease costs depending on the sector.

5. Expert tips - How to prepare for change

1. Make sure your financial management software is EU-compatible

This is highlighted by e-invoicing and automated reporting.

2. Update your price lists and contracts in time

Especially if there are changes in VAT rates or wage costs.

3. Plan your investments according to the tax changes

Potential tax incentives can save a company considerable sums of money.

4. Talk to your accountant

A professional accountant will keep up to date with changes and ensure that your business complies with the rules correctly and cost-effectively.

Konkretia Kirjanpito actively monitors changes in financial management and helps entrepreneurs prepare in time - without extra stress.