Swedish fuel tax cuts drive 80-cent price gap with Finland

Fuel prices on the Swedish side of the western border have been up to 80 cents per litre cheaper than on the Finnish side, Yle reports.

The gap is primarily due to tax differences. Finland’s excise duty on 95 E10 petrol is about 68 cents per litre, while Sweden temporarily cut its rate to 14 cents in July under an EU exemption valid until the end of September.

Sweden’s finance ministry said the exemption was sought to counter rising fuel prices caused by the war in Iran. The excise duty will return to 44 cents in December.

Value-added tax also widens the gap. Finland applies a 25.5% rate, compared to Sweden’s 25%.

Greater competition among Swedish retailers and distributors further lowers prices, with local competition estimated to reduce costs by 10–20 cents per litre. Finland’s stricter biofuel blending mandate—19.5% this year, versus Sweden’s 10%—also adds to the price difference, contributing an estimated 20–25 cents per litre in Finland.

Sweden’s stronger public finances and upcoming parliamentary elections in September have enabled the tax reductions. The country has also introduced support for high household electricity bills and cut VAT on food.