October 23, 2025
Plans for a new Google data center in Finland have been suspended due to a proposed government tax change that could drastically increase electricity costs for data center operators. The move places a significant billion-dollar investment in jeopardy.
The American technology conglomerate had acquired 1,400 hectares of land in the municipalities of Kajaani and Muhos in northern Finland last November, earmarking the site for a major data center development. However, according to sources cited by the Finnish newspaper *Helsingin Sanomat*, the project is now on hold. The governing National Coalition Party is reportedly concerned that Google will not proceed with the investment until the scale of a potential electricity tax hike is clarified.
Further reports indicate that Google is actively lobbying senior members of the Finnish government to reject the proposed rate increase. The government is scheduled to deliberate on the matter in a meeting today.
The potential tax change was announced in March by Finland's Finance Minister, Riikka Purra, as part of the government's 2026 budget proposal. A legislative amendment to the Act on Excise Duty on Electricity and Certain Fuels would reclassify data centers, forcing them to pay the standard electricity tax rate. This would surge from the current reduced rate of €0.0006 ($0.0007) per kWh to €0.0225 ($0.0226) per kWh—a 40-fold increase. If approved, the new tax would take effect on January 1, 2026.
Google has formally opposed the hike. In an April statement submitted during a public consultation on the amendment, the company revealed it had "not yet made an investment decision regarding the Kajaani and Muhos sites." It emphasized that "regulatory stability and predictable operating conditions" are critical factors for its investment decisions. Antti Jarvinen, Google's Finland country manager, reiterated this position to *Helsingin Sanomat*, confirming that "no investment decision has been made yet."
Google is not the only company expressing concern. Algorithmic trading firm XTX Markets, which is planning a second data center in Finland, has also stated that the proposed tax would impact its "longer-term investment roadmap," which remains under review.
Finland has become an attractive hub for data centers due to its cool climate, ample land, and affordable green energy. The Finnish Data Center Association projects that the country's live data center capacity will grow from 285MW in 2025 to 1.5GW by 2030. While the capital, Helsinki, hosts most existing facilities from operators like Verne, Equinix, and atNorth, new players are planning developments across the country. The outcome of the government's tax decision is now being closely watched by the entire industry.
SOURCE DCD
