Taxes in Finland

Written by Lais Cattassini Moderated by Oleksandra Dosii

Lais Cattassini

Lais is a Brazilian journalist and copywriter with over 17 years of experience, writing about things she knows really well (travelling, cinema, social media trends) and things she loves learning about.

Oleksandra Dosii

Oleksandra is a dedicated marketer with a passion for growing HR-tech products. She believes content marketing is about delivering high-quality content that provides value—not just generating leads. Since 2016, Oleksandra has been involved in tech talent relocation.

Last update: September 15, 2024

Next update: Scheduled for February 1, 2025

In Finland, the tax system is designed to support a comprehensive welfare state, and income tax plays a significant role. The Finnish Tax Administration (Verohallinto) oversees tax collection and enforcement.

The country employs a progressive tax system for national income tax, and residents must also pay municipal tax, which varies by municipality but typically ranges from about 17% to 23%.

Employers usually withhold taxes from salaries and submit them directly to the tax authorities. Individuals must also file annual tax returns to accurately report all income and deductions.

What is the income tax in Finland?

Finnish income tax rates are progressive, meaning higher income levels are taxed at higher rates. The exact amount of taxes an individual will pay will depend on annual income, municipality, religious affiliation, and the type of deduction to which they are entitled.

For 2024, the national income tax rates for someone living in Helsinki would be:

Social Security contributions

Social security contributions in Finland are a key part of the welfare system, designed to provide comprehensive coverage for pensions, healthcare, unemployment benefits, and other social services.

Employees contribute to the Employee Pension Insurance scheme, which funds retirement pensions. For 2024, the employee contribution is 7.15% of gross wages. The employer also contributes, with the total contribution rate (including the employer’s share) being approximately 25% of wages.

Employees also pay a health insurance contribution, which includes a daily allowance for sickness and maternity benefits. The contribution rate is around 1.3% of wages. There is also a contribution to unemployment insurance, which provides benefits in case of job loss, of 0.9% of wages.

Accident Insurance covers work-related accidents and occupational diseases. The rate varies depending on the risk level of the work but is typically covered by the employer.

Self-employed individuals must pay into the Self-Employed Pension Insurance (YEL) scheme, which provides for retirement pensions and other benefits. The contribution rate for 2024 is 24.1% of the entrepreneur’s estimated income.

For employees, social security contributions are typically withheld directly from wages by the employer and paid to the relevant authorities. Self-employed individuals are responsible for calculating and paying their contributions.

Online tax calculator for taxes in Finland

First, you need to understand your total gross income, which includes wages, salaries, bonuses, rental income, and any other taxable earnings. You can calculate your net income here.

Finland also provides a calculator for residents to understand the percentage of taxes they need to pay.

Annual tax returns in Finland

The tax year in Finland is the calendar year (January 1 to December 31), and tax returns must be filed by the end of April of the year following the tax year.

The Finnish Tax Administration (Verohallinto) pre-fills tax returns based on information received from employers, banks, and other sources. This includes data on income, withholding taxes, and other relevant financial information. If there are discrepancies or if you have additional deductions or income not included in the pre-filled return, you need to amend the return. This can be done online through the MyTax service or by submitting a paper form.

Include any eligible deductions that were not automatically accounted for. Common deductions include work-related expenses, interest on loans, and certain personal allowances.

After processing your return, the Tax Administration will send a tax assessment notice, usually in late summer. This notice outlines your final tax liability or refund based on the information provided.

How to pay less taxes

In Finland, there are various deductions and allowances available to help reduce taxable income. The maximum deduction you can claim is €3,570.

Work-related expenses

You can deduct expenses that are directly related to earning your income. This includes costs for work tools, professional literature, and work-related travel expenses.

There are specific rules on what qualifies as deductible. For example, commuting expenses are deductible only if they exceed €750.

Interest on loans

Interest paid on loans for purchasing or improving a primary residence can be deducted. Interest on student loans can also be deducted.

Donations

Donations to registered charities and non-profit organisations can be deducted. Ensure the charity is recognised by the tax authorities.

Alimony payments

Alimony payments made to a former spouse can be deducted from your taxable income.

Home office

If you work from home, you may be able to deduct up to €940 of costs such as rent or utility costs, based on the proportion of time you work from home.

Talk to a tax advisor

For those with more complex tax situations, especially expats with international income, it may be beneficial to consult a tax advisor or accountant. These services ensure you pay correctly and can help collect benefits, allowances, and deductions. For expats, services like these can be even more beneficial, as they help foreigners overcome language barriers and the complicated tax regulations of a new country.

Other Finnish taxes

In addition to income tax, individuals in Finland are subject to several other taxes, which contribute to the country’s welfare system and public services.

Value added tax (VAT)

VAT is a consumption tax applied to most goods and services. The standard rate is 24%, and there are reduced rates of 14% and 10% for certain goods and services (food, books, and pharmaceutical products, to name a few).

Municipal tax

All residents who earn income pay municipal tax based on a flat rate set by their municipality. This rate generally ranges from 17% to 23%.

This tax funds local services such as education, public transportation, and social services.

Church tax

Members of the Evangelical Lutheran Church of Finland or the Finnish Orthodox Church pay church tax, which varies by municipality and typically ranges from 1% to 2%.

Capital gains tax

Capital gains are taxed separately from regular income, and the rates are 30% on gains up to €30,000 and 34% on gains exceeding €30,000.

This tax applies to profits from the sale of assets such as stocks, real estate, and other investments.

Property tax

Property owners pay an annual property tax based on the assessed value of their property. The rates are set by municipalities and vary depending on the property type. Generally, property tax rates range from 0.41% to 6%, with residential properties generally taxed between 0.41% and 1%.

Vehicle tax

Vehicle owners are required to pay an annual tax based on the type and emissions of their vehicle. This tax, which typically ranges from €50 to over €700 per year, helps cover road maintenance and environmental impacts.

Inheritance and gift tax

Inheritance and gift tax is levied on the value of inherited or gifted assets. The rates are progressive and vary depending on the relationship between the donor and recipient and the value of the assets.

Tax treaties with Finland

Finland has entered into numerous tax treaties to facilitate international trade and investment and avoid double taxation. You can find more information about these treaties here.