Finnish
Taxes
Orientation
for American Fulbrighters
the Fulbright
Center
31.1.2006
Carola
Bäckström
Helsinki
Area Tax Office
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Office
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Structure
Taxation of individuals
in Finland
Non-residents
Residents
Health insurance premium
Taxation of grants
Addresses and phone numbers
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1. Taxation of individuals
the taxable income of an
individual is divided in two types of income:
earned income and
investment income.
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Earned income
wages, salaries, directors’
bonuses, comissions, rental value of an employee’s free housing.
pensions, living and housing
allowances, car benefits.
unemployment benefits and
other social security benefits.
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Investment income
income accrued from capital.
dividends from listed companies,
rental income and capital gains.
taxed at a flat rate of
28 per cent in 2006 for both residents and non-residents.
tax agreement can reduce
the rate.
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Preassessment and final taxation
preassessment during the
current year 2006  withholding tax.
final taxation: tax return
in May 2007.
taxation of 2006 is final
by the end of October 2007.
if the withholding tax
is too small: pay more.
if too much: refund.
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Residents and non-residents
a person is non-resident
for tax purposes if he stays in Finland for less than 6 months.
a person is considered
resident in Finland if:
he has his permanent home
in Finland, or
he stays here continuously
for more than 6 months.
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2. Taxation of non-residents
only liable to tax for
income from a Finnish source.
tax rate of earned income
is 35 per cent of the gross income after
a deduction of 510
euros per month or
17 euros per day.
always apply for a tax
at source card.
tax rate of investment
income is 28 per cent of the gross income.
most non-residents do not
file a tax return.
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Tax at source card
if a non-resident receives
earned income from Finland.
a tax at source card is
always needed.
application form on the
internet www.vero.fi/english/forms and publications.
local tax office.
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3. Taxation of residents
on earned income residents
pay
state tax which is progressive
communal tax at a flat rate
church tax
if members of lutheran
or orthodox churches.
health insurance premium
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Rates of state income tax on earned
income 2006
9.0
14.0
19.5
25.0
32.5
8
440
860
3.356
9.706
12.200 – 17.000
17.000 – 20.000
20.000 – 32.800
32.800 – 58.200
58.200 –
Rate within brackets (%)
Basic tax amount (euros)
Taxable income
(euros)
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Communal tax and health insurance
premium 2006
the rate of the communal
tax (municipal income tax) in Helsinki is 17.50.
the rate of the church
tax in Helsinki is 1.
the health insurance premium
is 2.1% if you are covered by the Finnish social security (Kela).
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Deductions from earned income (both
state and communal taxation)
an individual taxpayer
is allowed to deduct the following expenses (inter alia):
membership fees to trade
unions or unemployment funds,
travelling expenses from the
place of residence to the place of employment which exeed 500 euros/year.
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Deductions continues
outlays on professional literature,
research equipment and scientific literature, and expenses incurred
in scientific or artistic work,
deductions in officio
620 euros for workrelated
expenses, if no demand for deduction of professional expenses.
employee’s obligatory pension
insurance contribution and the unimployment insurance contribution.
earned income allowance.
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Deductions in municipal income taxation
– ex officio
pension income allowance
disabled persons’s allowance
student grant allowance
a basic allowance for taxpayers
with a small income
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Tax card
first you shall get the
Finnish social security number from the Local Register Office (maistraatti).
you can also file an application
for Finnish social security number at the Local Tax Office.
passport
when you have your Finnish
Social Security number you can apply for a tax card at the Local Tax
Office.
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Tax card
application form on the
internet www.vero.fi/in english/forms and publications/application
for tax card.
a withholding percentage
is marked on the tax card.
without a tax card the
withholding rate is 60%.
if you have more than one
employer – apply for a second tax card.
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Tax return
a resident receives a prefilled
tax return for 2006 in april 2007.
important to inform the
correct address to the Local Register Office (Maistraatti) when you
move from Finland.
if the information on the
tax return is correct, you do not have to file it.
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Income from abroad - other than salary
or wages
if you stay for a short
period
it is not necessary to
report foreign-source income, for example investment income.
if you stay for a longer
period and
you do not have a permanent
home available in your home State or
your spouse and/or family
is with you in Finland
you should also report your
foreign-source income.
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Salary or wages from abroad
if you stay less than 6
months  salary from abroad is not taxed in Finland.
if you stay in Finland
for more than 6 months
your salary is taxed here
and should be reported here.
in this case please contact
the Local Tax Office.
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4. Health insurance premium
if you work less than 4
months ->
no health insurance premium.
if you work longer than
4 months ->
health insurance premium of
2.1%.
if you have a certificate
of posted employee or certificate from Kela

no health insurance premium.
salary not exceeding 930
€/month and weekly working hours max 18 ->
no health insurance premium.
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5. Taxation of grants
if you are non-resident
grants are not taxed in Finland.
if you stay for a short
period
it is not necessary to report
grants.
if you stay for a longer
period and
you do not have a permanent
home available in your home State or
your spouse and/or family
is with you in Finland
you should report your grants.
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Taxation of grants
grants are taxed at an
amount that exceeds 14.841.72 euros per year.
if you are considered as resident
in Finland within the meaning of the Finnish-US tax treaty.
if you are considered resident
in the US, only US can tax.
it is possible to deduct expenses,
for example travel expenses, expenses for lodging, expenses for research.
same procedure for both
residents and non-residents.
no preassessment/withholding
tax.
tax return for final taxation.
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Avoidance of double taxation
salary:
if Finland has the right
to tax your salary make sure you have a receipt of the salary and the
tax withheld.
enclose the receipt to your
US tax return and ask for credit for Finnish tax.
grant:
tax demand note or
ask for a certificate from
the Local Tax Office when the taxation is final.
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Example 1
student A from the US receives
a grant of 900 euros per month during 9 months.
the total amount is less
than 14.841.72 €.
A does not have to pay
tax in Finland on the grant.
it is not necessary to
look at the residence for the purpose of the Finnish – US tax treaty.
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Example 2
B receives a grant of 2.500
euros per month during 9 months from a Finnish source.
B receives rewards from
a Finnish University for giving lectures 2.000 euros.
B receives salary from
a US University 1.000 euros per month.
B has expenses of 3.000
euros in total.
B’s family lives in the
US.
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Example 2 continues
the salary from the US
University is not taxed in Finland.
provided that the US University
is a public institution.
the grant is not taxed
in Finland
because B is considered
resident of the US within the meaning of the Finnish – US tax treaty.
Finland taxes only the
income from the Finnish University, 2.000 euros.
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Example 3
same as in example 2 but
B’s family stays with
him in Finland.
B is considered resident
in Finland in accordance with the Finnish – US tax treaty.
the salary from the US
University is exempted from tax but raises the tax rate on the Finnish-source
income (exemption with progression).
provided that the US University
is a public institution
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Example 3 continues
grant 22.500 – expenses
3.000 = 19.500
19.500 – 14.841.72 =
4.658.28.
B’s taxable income is
2.000 + 4.658,28 = 6.658.28 euros.
B reports his total income
and all the deductions in his tax return.
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Example 4
D from the US receives
a grant of 2.000 euros per months during 5 months.
D is non-resident.
D receives rewards from
a Finnish University for giving a lectures.
the reward is 200 euros
per lecture.
the grant is not taxed
in Finland.
the reward from the lectures
is taxed at a rate of 35% after a deduction of 17 euros.
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7. Addresses and phonenumbers
Helsinki Tax
Office
Rajatorpantie 8 A, Vantaa (Myyrmäki)
Main Post Office
Itäkeskus
Pasila
Phone: 010 320 460
from abroad: + 358 10 320 460
Website: www.vero.fi/english
Publications nro 277e and 278e