The ruling upheld a decision by two lower courts, which ordered taxi driver Lauri Luotonen to pay copyright fees on the music he played to his customers.
The decision is likely to set a precedent for the nearly 9,500 cab drivers in Finland.
Under Finnish law, royalty fees have to be paid on almost all music played in public - even in the back of a cab.
People also pay royalties when buying blank recordable compact discs, cassettes, videotapes and MP3 recorders.
Quieter cabs
Mr Luotonen refused to pay his bills from the Finnish Copyright Society, Teosto, in 1997 and 1998.
The court ordered him to pay 22 euros (about US$22) annually for playing music when a client is in the car.
"The sum is fairly small... but, of course, higher expenses result in higher prices for customers," said Nina Nizovsky of the Finnish Taxi Association, the country's taxi driver union.
Mr Luotonen warned that the ruling was likely to force most drivers to keep their radios off.
Teosto argued that playing music for customers in a taxi was similar to playing music in a public setting, such as a restaurant or pub.
"Almost all taxis play music, so we are now expecting to collect as many payments as there are taxis," said Kalle Jamsen, a Teosto spokesman.
Teosto said it would meet the taxi union to work out methods for enforcing the ruling and collecting the royalties.