Taxation

Taxes are paid on both earned income and capital income. Earned income and capital income are taxed differently. Capital income is the income that accrues from assets. Other income is earned income.

In addition to wage income, you must also pay taxes, for example, on the following income in Finland:

• payment for labour or service
• business income
• various social benefits, such as unemployment allowances, parental allowances and student financial aid
• pensions
• capital income, such as rental income or gains from the disposal of property.

With tax money, the state and municipalities pay for the following, for example:

• health care
• education
• early childhood education and care
• defence.

In Finland, taxation of earned income is progressive. This means that you pay a larger share of tax on a larger salary than on a smaller salary. The tax rate indicates how much tax you pay on your income. It is calculated separately for each person in Finland. Your spouse’s income does not affect your tax percentage. You can estimate your own tax percentage using the Tax Administration’s calculator.

If you receive a salary, the employer withholds the amount of tax directly from your salary and passes it on to the tax authorities. For that purpose, the employer must have your tax card. A tax card is a document that shows your tax rate. After each year, the Tax Administration calculates whether you have paid a sufficient amount of tax on your income. If you have paid too much tax, you will receive a tax refund. If you have paid too little tax, you will have to pay the missing amount in back taxes.

Read more on the page Tax return and tax decision.

Check your payslip and tax return to ensure that your employer has withheld tax from your salary and forwarded it to the tax authorities. Retain your payslips.

In addition to taxes, your employer will withhold obligatory insurance payments from your salary for unemployment and sickness, for example.

If you reside in Finland for more than six months, you must usually pay taxes on all your income in Finland. This also applies to the income you receive from abroad. Usually, you must also pay the obligatory insurance payments in Finland. If you have a Finnish employer, the tax rate of your salary is determined by the income for the whole year. The higher your wage income, the higher the tax rate. You need a Finnish personal identity code and a tax card.

If you reside in Finland for six months at the most and your employer is a foreign company, you do not usually need to pay taxes in Finland. However, if your employer is Finnish or your foreign employer has an office in Finland, you will pay taxes in Finland. You can apply for progressive taxation if you live in a country that belongs to the European Economic Area or a country with which Finland has a tax agreement. Otherwise, you will pay 35% tax at source on your salary and you must have a tax-at-source card.

If you are covered by health insurance in Finland, the Tax Administration will determine an employee’s health insurance contribution for you. However, you will not pay a health insurance contribution in Finland if you have an A1 certificate or equivalent to prove that you are insured in the country in which you live.

When you move away from Finland, you must submit a notification of change of address to the Digital and Population Data Services Agency within a week of the move. It is also advisable to notify the Tax Administration of the move separately.