Åland's economy: a tax border in the Baltic and the ships that use it

How a tax border keeps ferries calling at Åland

Finland could not bring Åland into the European Union without the consent of the Parliament of Åland, and the terms of that consent were written into the Åland Protocol in 1994. One of its two derogations exempts the islands from the union's tax harmonisation. nordics.info, describing the negotiation, says the exemption was primarily about letting ferries to and from Åland go on selling tax-free goods. The Lisbon Treaty of 2009 declared the protocol valid in the new treaty order.

The protocol produced a border that exists only for tax. Åland belongs to the EU customs territory and customs union and stands outside its tax area. A ferry that stops at Mariehamn or Långnäs is sailing to a place outside that area, and it may sell goods on board without the value added tax and excise that apply on either shore. The same rule covers sales at Mariehamn airport. Customs duties apply to goods entering the islands, so the border runs through Åland's own trade as well as through the ferries' shops. The rules sit in Finnish law in the act on exemptions for Åland from value added tax and excise legislation of 1996.

Passenger numbers show what the arrangement is worth. Statistics and Research Åland, the islands' statistics office, counted more than nine million passengers a year on the tax-free routes to and via Åland from the start of the 2000s, and Itameri.fi gives more than 9.5 million for 2018. The pandemic cut the figure to just over two million in 2020. It had recovered to about 5.6 million in 2024, short of the earlier level.

Charlotta Björklund, a project coordinator at the Government of Åland, wrote for the Finnish Baltic portal Itameri.fi that tax-free sales account for about half of the Åland shipping companies' turnover, in an article whose fleet figures are for 2018. Viking Line, she added, ran seven ferries on routes linking Turku, Åland, Sweden and Estonia.

Most of those passengers never stay. In 2025, 1,213,000 travellers arrived in Åland, 876,000 of them from Sweden and 230,000 of those on cruise liners, while the islands' accommodation recorded 404,550 guest nights. The English Wikipedia article on Åland describes most of the roughly two million visitors it counts each year as staying a few hours during a ferry stopover or transfer.

What shipping adds to Åland's output

Gross domestic product was €1,549 million at market prices in 2023 and €1,400 million at basic prices, which is the measure the industry shares below are taken from. Per head it came to 41,600 euros in purchasing power standards in 2023, the artificial currency Eurostat uses to remove differences in price levels. Wikipedia cites a Eurostat figure for 2006 that put Åland's GDP per person 47% above the EU average.

Source: Statistics and Research Åland, Åland in figures 2026. Figures for 2023.

Shipping's share in that table, for 2023, is 18.2%. The English Wikipedia article on Åland says shipping makes up about 40% of the economy, gives no year and does not say what it measured. The two numbers describe the same fleet, and the difference between them is a question about definitions that neither source answers.

Shipping moves the total. Preliminary calculations for 2023 put GDP growth at 6%, and the statistics office named the sharply increased operating surplus in both passenger and freight shipping as by far the main cause. Surpluses stayed high in 2024, and a passenger ship reflagged from the Swedish to the Finnish flag that year added to output. The office forecast growth of 2% in 2025 and none in 2026 or 2027, on the assumption that the shipping surplus falls part of the way back while construction, trade and services recover with household demand.

Company accounts show the scale. In 2024 enterprises in sea transport turned over €780 million and made a profit of €62 million, against €663 million and €40 million for the whole of manufacturing. In the first half of 2025 transport turnover was 12% above the same period of 2024 and its wage bill almost 9% higher. Wikipedia records that the pandemic caused a sharper fall in Åland's output than in mainland Finland or Sweden.

Who owns Åland's fleet and which flags it flies

After the middle of the nineteenth century several large shipowners settled in Mariehamn, and part-owned shipping companies, in which dozens of owners shared the risk and the profit of one vessel, became common. The peasant shipowners' vessels traded in the Baltic at first and reached the North Sea and the Mediterranean as the ships grew. In 1865 the barque Preciosa from Eckerö became the first Åland ship to cross the Atlantic. The sailing fleet of Gustaf Erikson, which Åland: history follows, carried the trade into the 1940s, and in the 1960s the owners enlarged and renewed their fleets with steam and motor ships.

In 2025 companies registered in Åland owned 38 vessels of 999,000 gross tonnes. Twenty-five of them, with 385,000 gross tonnes, flew the Åland or Finnish flag: eight passenger ships, seven archipelago ferries, seven roll-on roll-off cargo ships and three others. The other thirteen, with 614,000 gross tonnes, were under foreign flags, and ten of them were tankers with 587,000 gross tonnes between them. Most of the tonnage owned from Åland is in tankers under foreign flags, and most of the ships under the home flag are ferries.

The register kept in Åland counts something else: every ship entered there, including ships owned elsewhere. It held 39 vessels in 2024, three fewer than in 2023, against an average of 43 since the series began in 2006. Tonnage moved the other way, to 780,000 gross tonnes in 2024 from 521,000 in 2006, and much of the increase came in 2014, when Finnlines reflagged five of its ships to Åland.

Sea transport employed about 10% of everyone working in Åland in 2008. Between 2011 and 2019 the share moved between 6 and 7%, it fell below 5% in the first pandemic year of 2020, and it was 5.6% in 2022, the latest year the statistics office has published. Women made up about 30% of that workforce before the pandemic, 23% at the end of 2021 and 26% in 2022. Counting Finnish crew on Åland-registered ships owned by Åland companies, the office put shipping employment at 1,983 people in 2016.

Viking Line employed 2,016 people in 2024 and turned over €421 million. Rederi Ab Eckerö employed 145 people and turned over €50 million, and the freight operator Trailer-Link 145 people and €26 million. The Autonomy Act leaves merchant shipping to the state, but a new merchant shipping lane in Åland may only be opened with the consent of the Government of Åland. Maritime training is coordinated through the Alandica Shipping Academy in Mariehamn.

How Åland's banks and gambling earn their share

Financial services and real estate produced €275 million of value added in 2023, 19.7% of the total. The Bank of Åland, Ålandsbanken Abp, has its headquarters in Mariehamn and employed 285 people in 2024. Crosskey Banking Solutions, classed as information and communication, employed 290 people that year with a turnover of €44 million.

The statistics office publishes the financial sector's combined accounts. Net interest income rose from €56 million in 2015 to €64 million in 2020 and €105 million in 2025, and net fee and commission income from €39 million to €69 million and then €88 million. Total assets were €4,955 million in 2015, €6,622 million in 2020 and €5,824 million in 2025, and own funds grew from €229 million to €409 million over the decade. In its autumn review of 2025 the office described the sector as profitable in 2024 and stable in the first half of 2025, with falling interest rates beginning to hold back net interest income, lending up slightly, low credit losses and good capital adequacy.

Gambling is run from Mariehamn as well. The Government of Åland owns Paf, a gambling operator based in Mariehamn, and World Autonomies lists e-gambling among the sectors through which the islands have grown since the early twentieth century. Ålands penningautomatförening employed 129 people in 2024 with a turnover of €11 million. Some of the money returns through the tax system. The state's tax retribution to Åland for 2024 rose markedly, mainly on lottery tax, higher capital income tax and high corporate tax, and the office forecast the equalisation amount and tax retribution together at €332 million for 2025. The politics article sets out how those transfers work.

Private individuals in Åland declared total income of €1,128 million in 2024, of which €613 million was wages and €152 million capital income. Taxes and charges took €215 million, 19.0% of total income, and €118 million of that was municipal income tax.

What Åland's farms and fish farms produce

Britannica attributes the yields on Åland's farms to a mild climate and fertile soil, and describes small, highly mechanised farms with fruit orchards and dairy herds dominated by Ayrshire cattle. The main island is rugged granite to the north and rich farmland to the southeast. In 2025 there were 319 active farms working 13,700 hectares of arable land, 2,700 hectares of it farmed organically.

Source: Statistics and Research Åland, Åland in figures 2026. Figures for 2025.

Apples were worth more than milk in 2025. Agricultural subsidies that year came to €15.5 million, about half the value of everything the farms sold. Agriculture employed 511 people in 2023, 4% of those in work, and the share is higher away from the main island: in the archipelago municipalities 22% of employed men worked in farming, forestry or fishing.

The sea produces more than the fields. The 27 fish farms raised 5,649 tonnes of fish worth €38,992,000 in 2025, more than the whole of agriculture. The wild catch was larger by weight and much smaller by value, 7,580 tonnes worth €2,899,000, and 7,369 tonnes of it was Baltic herring and sprat. Forestry delivered 203,000 cubic metres of roundwood worth €6.7 million in 2025.

Food processing turns much of this into Åland's manufacturing. Turnover in the food industry grew from €169 million in 2019 to €342 million in 2025, while manufacturing as a whole went from €342 million to €526 million. Orkla Finland employed 112 people in Åland in 2024 with a turnover of €66 million. Autumn 2025 figures from the statistics office show food as the source of what little growth manufacturing had in the first half of that year.

How wind turbines changed where Åland's electricity comes from

Åland used to buy most of its electricity from Sweden. In 2000 the islands consumed 242 GWh, of which 194 GWh came from Sweden and 14 GWh from Finland; they generated 34 GWh themselves, 20 GWh of it from oil and 15 GWh from wind. By 2010 wind produced 53 GWh, and by 2020, 57 GWh.

The change came after that. In 2025 total supply was 351 GWh and Åland's own production was 219 GWh, of which 202 GWh came from wind and an estimated 16 GWh from solar panels. Imports from Sweden fell to 127 GWh and imports from Finland to 4 GWh, and the statistics office recorded an export of 47 GWh, where its figure for 2020 shows none. Wind covered 52.2% of the islands' electricity needs in 2023 according to Wikipedia, which adds that there are plans to reverse the direction of transmission to the mainland.

Who works on Åland and who may trade there

In 2023, 14,423 people were in work, 7,244 women and 7,179 men, and the employment rate was 77.9%. The public sector employed 36% of them. Public services alone accounted for 4,875 jobs, 34% of the total, and 3,789 of those jobs were held by women. Trade and hotels employed 1,890 people, transport 1,321 and manufacturing 1,176.

Unemployment was about 4.3%, seasonally adjusted, from the start of 2023 to May 2024 and then rose. It was 5.1% in August 2025, or 5.3% seasonally adjusted, and averaged 5.2% for the year. The office counted 410 long-term unemployed in August 2025, almost 90 more than a year earlier and almost 140 more than two years earlier. Prices fell 0.2% in 2025. Average monthly earnings in the private sector were €4,098 in 2024, €3,793 for women and €4,261 for men, and the office estimates that real wages reached their low point in 2023.

Most firms are very small. Of 2,681 enterprises in 2025, 2,420 had fewer than five employees and ten had a hundred or more.

Who may set one up is decided in Åland. Section 11 of the Autonomy Act lets an Act of Åland limit the right of a person without the right of domicile to practise a trade for gain in the islands, and exempts a resident who works alone or with a spouse and minor children and has no business premises. World Autonomies summarises the practice: people without the right of domicile who have not lived in Åland for five years in a row, and all companies, need permission from the Government of Åland to start a business there. The Åland Protocol allows the restrictions in force on 1 January 1994 to continue, provided they are not extended and are applied without discrimination.

Where Åland's overnight visitors come from

Accommodation establishments recorded 404,550 guest nights in 2025, 3% fewer than in 2024 and fewer than the 562,571 of 2000. The kind of stay has changed. Hotels took 225,919 nights in 2025, up from 187,991 in 2000, while cottage villages fell from 193,438 to 70,784 and camping sites from 138,462 to 67,128.

Guests from Finland accounted for 48% of the nights in 2025 and guests from Sweden 37%. Germany followed with about 14,000. Russian guests spent 5,402 nights in Åland in 2010 and 143 in 2025. July alone held 30% of the year's nights, and 84% fell between May and September. Nights spent on business trips rose 14% on 2024 while leisure nights fell.

Hotels and restaurants turned over €73 million in 2025. Against the 1,213,000 travellers who arrived that year, the islands recorded about one guest night for every three arrivals.