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Finland - Other taxes and levies

Finland - Other taxes and levies

Taxation of international executives

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All additional tax information is summarized by KPMG Oy Ab, the Finnish member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on Finish tax legislation in force in March 2013.

Social security tax

Are there social security/social insurance taxes in Finland? If so, what are the rates for employers and employees?

Employer and employee

Type of insurance

Paid by employer

Paid by employee

Total

Statutory pension insurance premium (on average)

16,95

7,15/8,56

24,1/25,51

Unemployment insurance premium (on average)

0,45/1,70

1,25

1,7/2,95

Accident insurance premium (on average)

0,70

N/A

0,70

Group life insurance premium (on average)

0,07

N/A

0,07

Employer's social security premium

1,34

N/A

1,34

Daily allowance premium

N/A

1,18

1,18

Medical treatment premium

N/A

0,68/1,86

0,68/1,86

Total (on average)

20,32

10,56

31,69


Medical treatment premium is 0,68 percent if the incomes of individual are under EUR14,574 annually and 1,86 percent if the income is more than this.

Daily allowance premium is 0,00 percent if the income of individual is under EUR14,547 annually.

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Finland?

Inheritance and gift tax is imposed on property acquired by inheritance, bequest, or gift. Inheritance tax is levied on the individual share of each beneficiary, not on the estate of the deceased as a whole. Taxable property includes real estate, shares, and movable property, wherever situated, if the deceased or heir or beneficiary lived in Finland at the time of death.

Beneficiaries are divided into two classes.

  • Class I - Spouses, children, spouse’s children, adopted children, parents, adoptive parents, and direct heirs of children or adopted children, betrothed in certain circumstances, and common-law spouses if the couple has been married before or if they have had a child.
  • Class II - Other relatives and strangers.

Inheritance tax rates in Class I are as follows:

Value of taxation property (EUR)

Basic tax amount

Plus percent on the

excess

20,000 - 40,000

100

7

40,000 - 60,000

1,500

10

60,000 - 200,000

3,500

13

200,000 – 1,000,000

21,700

16

1,000,000 – over

149,700

19


Inheritance tax rates in Class II are as follows:

Value of taxation property (EUR)

Basic tax amount

Plus percent on the

excess

20,000 - 40,000

100

19

40,000 - 60,000

3,900

25

60,000 – 2,00,000

8,900

29

2,00,000 – 1,000,000

49,500

31

1,000,000 - over

297,500

33


Gift tax rates in Class I are as follows:

Value of taxation property (EUR)

Basic tax amount

Plus percent on the

excess

5,000 - 25,000

100

8

25,000 - 55,000

1,700

10

55,000 - 200,000

4,700

12

200,000 – 1,000,000

22,100

15

1,000,000 – over

142,100

17


Gift tax rates in Class II are as follows:

Value of taxation property (EUR)

Basic tax amount

Plus percent on the

excess

5,000 - 25,000

100

19

25,000 - 55,000

3,900

25

55,000 – 2,00,000

11,470

29

200,000 – 1,000,000

53,450

31

1,000,000 – over

301,450

33

Real estate tax

Are there real estate taxes in Finland?

Real estate property situated in Finland is subject to real estate tax. The revenue goes to the local municipality. Land used in forestry or agriculture are exempted.

Real estate tax is payable by those who own taxable property at the beginning of the calendar year.

The amount of real estate tax is based on the tax value of the real property. Tax rates vary in different municipalities between 0.41 percent and 6,00 percent of tax value. The rate for houses used for living is between 0.41 percent and 1.00 percent of the tax value.

Sales/VAT tax

Are there sales and/or value-added taxes in Finland?

The standard rate of VAT is 24 percent. In addition, two reduced rates are in use: 14 percent, which is applied on food and animal feed, and 10 percent, which is applied for example to passenger transportation services. Tax is computed on the total charge for goods or services, excluding the amount of tax.

Unemployment tax

Are there unemployment taxes in Finland?

The employer pays one part and the employee pays the other part of the unemployment insurance contribution. The unemployment insurance contribution is collected by the accident insurance company together with the statutory accident insurance contribution. In 2019, the unemployment insurance contribution paid by the employer is 0,45 percent on the total amount of gross salaries up to the amount of EUR2,125,500 and 1,70 percent on the exceeding amount. Correspondingly, the unemployment insurance contribution paid by the employee is 0,45 percent of gross salary.

Other taxes

Are there additional taxes in Finland that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Municipal tax

Municipal tax is levied at flat rates. The tax varies between 16.5 percent and 23.5 percent in 2020 depending upon the municipality.

In municipal taxation, if an individual’s taxable earned income is between EUR2,500 and EUR7,230, a deduction is made of 51 percent of the portion of income, which exceeds EUR2,500. For the part of the income that exceeds EUR7,230, the deduction is 28 percent. The maximum deduction is EUR3,570. The allowable deduction is gradually phased out for taxpayers with income higher than EUR14,000.

If taxable income after certain deductions is not more than EUR3,305 (2020), a deduction equal to the amount of taxable income is available. The deduction is reduced by 18 percent of the portion of income which exceeds EUR3,305. For salary income exceeding approximately EUR21,666, no deduction is allowed.

Net wealth taxes

As of January 2006, the net wealth tax has been abolished.

Church tax

The local communities of the Evangelical-Lutheran and Orthodox churches levy church tax. Church tax is imposed at flat rates between 1 percent and 2.20 percent (2020) that are set annually for the following year by each community ecclesiastical council. Church tax is levied on the same taxable income as determined for municipal tax purposes.

Transfer tax

Alienation of real estate and securities are subject to transfer tax. The tax rate is 4 percent of purchase price or other remuneration for real estate and 1.6 percent for securities other than shares in housing companies. For shares in housing companies the tax rate is 2 percent as of 1 March 2013. Alienation of shares of listed companies via the stock exchange is exempt. There are certain other exemptions of the rule (for example, concerning purchase of the taxpayer’s first own dwelling).

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?
 

Yes. According to Assessment Procedure Act, a taxpayer has a duty to file a report to the Finnish Tax Administration considering their taxable income, deductions, wealth, debts and other information relevant to the taxation.

As to what is considered taxable income, a person with unlimited tax liability is obligated to pay tax on income or wealth received from Finland and elsewhere. A person with limited tax liability pays tax only on income received from Finland or on wealth in Finland.

Disclaimer

All income contained in this publication is summarized by KPMG Oy Ab, the Finnish member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Finnish Income Tax Act 1535/1992 and subsequent amendments, the Finnish Tax Administration’s web site, Kansainvälisen Verotuksen käsikrirja 2015 (Publication 284.15 of the Finnish Tax Administration), the Finnish Act on Inheritance and Gift Tax (378/1940) and subsequent amendments, the Value Added Tax Act (1501/1993) and subsequent Amendments, the Real Estate Tax Act (654/1992) and subsequent Amendments, the Health Insurance Act (911/2011) and subsequent amendments, the Prepayment Act (1118/1996) and subsequent amendments, Act on the Taxation of Business Profits and Income from Professional Activity (EVL, 360/1968) and subsequent amendments, the Convention implementing the Schengen Agreement on the gradual abolition of controls at common borders (Treaties of Finland 23/2001), the Aliens Act 301/2004 and subsequent amendments and the Finnish Immigration Service’s web site.

All income tax information is summarized by KPMG Oy Ab, the Finnish member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

© 2021 KPMG Oy Ab, a Finnish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.


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