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Finland  Income Taxes and Tax Laws













Last partial update, February 2014

Finland Income Tax Rates 2014

In Finland Taxation of an individual's income is progressive.
In other words, the higher the income, the higher the rate of tax payable.
In 2014 the income tax rate (national tax) for an individual is between 6.5%-31.75%.
In addition to direct taxation there is also municipal tax in Finland.
This tax is payable by an individual on his or her income and it fluctuates between 16.25% - 22% depending on the municipal authority.
Church tax of 1%- 2% is also payable.

Foreign residents generally pay 35% on salary income and 30% on dividend, interest and royalties income. Reduced rates of tax or exemption are available for certain income earners.
The standard rate of Finland corporate tax in 2014 is 20%.
In general private companies in Finland are characterized by the suffix OY after their names.
Public companies have the suffix OYJ.
For additional info,please see Finland Tax Office www.vero.fi


Finland Income Tax for an Individual

An individual is liable for tax on his income as an employee and on income as a self-employed person.
Tax will be payable on income earned in Finland and overseas by an individual who meets the test of a "permanent resident" of Finland.
A Finnish resident who receives a salary overseas and lives overseas continuously for at least 6 months, is exempt from tax on certain conditions.
A foreign resident who is employed in Finland pays tax only on income earned in Finland.
To be considered a Finnish resident, the taxpayer must be able to show that his or her life is centered in Finland and / or that they have lived in Finland continuously for 6 months.
It is important to point that that in regard to taxable income from outside Finland, a "tax credit" is allowed for tax deducted outside Finland.
In regard to income from a salary, an employer is obligated to deduct the amount of tax demanded each month.
A self-employed person is obliged to make advance payments of income tax that will be offset on submitting an annual return.
The advance payments are determined according to the return for the previous year. In the event of a new business, the advances will be calculated according to the estimate of the owner of the business.
Certain payments are deductible from taxable income as detailed below.
Finland Individual income tax rates (national tax) 2014:


Tax (%) Tax Base (EUR)
0 1-16,100
6.5% 16,101-23,900
17.5% 23,901-39,100
21.5% 39,101-70,300
29.75% 70,301 100,00
31.75% over 100,000



Finland Capital Gains


  • In 2014 the rate of tax payable on capital gains is 24.5% for companies and 30% for individuals, 32% for income exceeding EUR 50,000.
  • Under certain terms there is participation exemption for sale of shares .
  • The sale of an apartment / house that has been used as a main residence for at least two years, is exempt from capital gains tax.
  • A capital loss may be offset against a capital gain in the current year, or against capital gains in the following years for a maximum of up to three years.
  • Income of individuals from an investment, in respect of a rental or interest, is taxable at the rate of 30% for income under EUR 50,000 and 32% for income exceeding this amount.




  • Finland Reporting Dates and Payment


    The tax year in Finland ends on December 31st.
    Advance payments of tax are made on the following basis.
    • An individual whose only income is from a salary is not obligated to file an annual tax return.
          The employer deducts tax from the employee and transfers the payment immediately to the tax authorities on a monthly basis.
          A self-employed individual is obligated to make 12 monthly advance payments of tax.
          A self-employed individual is obligated to file a return before the end of March.

    • A limited company is obligated to submit financial reports before April 30 after the end of the tax year.
          During the year, the company is obligated to make 12 monthly advance payments of tax.
          Within 10 months of the end of the tax year, that is before October 30, the amount of tax payable / the tax refund is final.
          After receipt of the assessment, it is possible to appeal to an "Assessment Adjustment Committee" if need be.
          This body has regional divisions in a number of geographical areas.
          A further appeal may be made against a decision of this body to the "Administrative Court" within 5 years of the year in respect of which the assessment was made.
          An appeal may be made to the Supreme Court against a decision of this Court.


    Finland Deduction of Tax at Source


    Finland Taxation of Employees
    As regards employed persons, the employer is obligated to deduct tax at source from an employee and to make additional contributions to social security.
    Social Security
  • An employed person - The employer's average contribution is 17.35% of the salary for pension, and 2.04% for social security.
    The employee's contribution is usually 2.04% for sickness insurance and 5.75%-7.1% for pension and unemployment insurance.


  • Finland Other deductions

    Deductions must be made from the following payments to non-residents according to this table:

      %
    Dividend 24.5
    Royalties 24.5
    Interest 0
    Technical Fees 0


    Comments:
    Deduction at source paid to a foreign resident is subject to the relevant EU directive and Double Taxation Prevention Treaty.







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