Expatriate tax ebook - Finland

What taxes?

Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes
Social security taxes
Stock options
Wealth taxes
Other specific taxes

Capital gains tax
Capital gains are deemed taxable capital income and they are assessed at the flat rate of 28%. Dividends, interest income, income from the sale of forest, rent income, etc. are considered to be capital income. Dividends received from a listed publicly traded company are 70% taxable and 30% tax exempt. Dividends received from a non-listed company are tax free up until the amount of nine percent of the net assets of the company. Amounts exceeding nine percent of the net assets are 70% taxable and assessed according to the progressive tax rate and 30% are tax exempt. Capital gains received by a person with a limited tax liability in Finland are generally tax exempt in Finland and are taxed in the country of permanent residence.

Inheritance, estate & gift taxes
Inheritance tax is paid to the State on any inheritance of 3,400 euros or more. Inheritance tax is determined by the value of the inheritance and the nature of the relationship with the inheritor. Gift tax is paid to the State on any gift of 3,400 euros or more, or on advance inheritance. This applies to permanent residents only.

Investment income
See "Capital gains tax"

Local taxes
Municipal tax
Municipal tax is collected at flat-rates on earned income. The tax rates vary depending on the municipality, generally between 15% and 20%. Besides tax, the employer will withhold social security payments from the pay unless the person is a posted employee.

Real estate tax
The real estate tax is paid to annually to the municipality where the real-estate is located, according to the value of the real-estate. The real estate tax percentage is determined by the municipal council.
Property taxes are collected on assets having a taxation value of 185,000 euros or more and these taxes are paid to the State.
Transfer tax is paid to the State on handing over real-estate or securities.

Social security taxes
The Finnish employer must collect an employment pension premium and an occupational injury insurance premium from the pay. The employer pays these contributions to insurance companies. The employee must usually pay a health insurance premium, which is collected at source. However, if the employee stays in Finland for less than four months or has a certificate of a posted employee, this premium is usually not collected from the employee.

Stock options
An individual employee’s stock option is taxed as earned income and is imposed at progressive rates. The time of taxation is the time when an option is exercised or disposed of.

Wealth tax
Wealth tax does not apply in Finland.

Other specific taxes
Church tax is collected from the income of Evangelic Lutheran and Orthodox Church members. The Tax Administration transfers church payments to the parishes. Depending on the parish, the tax rate is between one and two percent.

Information about Finland:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities