Fazer's plan to build a €750 million state-of-the-art chocolate factory in Lahti faces uncertainty due to Finland's proposed sweets tax. CEO Christoph Vitzthum told Helsingin Sanomat that the tax changes create a climate of unpredictability, making it difficult for the company to proceed confidently with the investment in Finland.
The Finnish government has proposed increasing VAT on sweets and chocolate from 14% to 25.5%, a move expected to take effect in June 2025. The legislative process is set to begin after Christmas. Fazer plans to challenge the tax at the EU level if enacted.
Vitzthum emphasized that such a significant tax change could impact the long-term viability of the project in Finland. Alternatives under consideration include moving the investment to Sweden or scaling down the factory's scope in Finland.
Fazer's business has faced multiple challenges in recent years. Russia's invasion of Ukraine disrupted markets, and the long-term rise in cocoa prices has significantly increased costs. Cocoa is a critical raw material in chocolate production, making price volatility a significant issue for Fazer.
The factory, if realized in its full scale, would represent one of the largest investments in Finland’s confectionery industry, promising significant local economic benefits. Losing the project to Sweden or seeing it reduced in scale would be a setback for Lahti’s economy and Finland’s industrial development.
Fazer intends to closely monitor the progress of the sweets tax legislation while preparing to escalate its concerns to the EU if necessary. Meanwhile, the company is evaluating its options and may shift its focus to more favorable regulatory environments, such as Sweden.
This decision highlights the broader challenges businesses face when navigating regulatory changes and underscores the potential for cross-border competition in securing major industrial investments.
