Taxation in Finland is carried out by the State of Finland, mainly through Finnish Tax Administration, an agency of Ministry of Finance. Finnish Customs (Ministry of Finance), Finnish Transport Agency and Finnish Transport Safety Agency (Ministry of Transport and Communications) also collect taxes. All taxes are collected by the state agencies mentioned, who then distribute them to the local authorities, municipalities and the church parishes, and social security institution Kela.[1]
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Earned gross income is taxed by a progressive state tax (tax brackets 6.5% – 30%) and proportional communal taxes paid to municipalities (16.5% – 21.5%, average 19.17%) and parishes (1.00% – 2.00%, average 1.34%). The permanent residents of Finland have also to pay health insurance contributions, medical care fee (1.19 %) and daily allowance contribution (0.82 %). There is an earned income tax credit for local taxes, making them slightly progressive despite their fixed rate.
The tax-like mandatory insurance fees are withheld from the wages. They are fully credited from the income taxes. The employee's pension and unemployment insurance fees have rates varying according to the person's age but they are usually at 4.7 % and 0.6%, respectively.
Above rates are as of year 2011.[2][3]
The total income taxes including the mandatory insurance fees were 29.8 % for an average yearly income of 37,400 € in 2010.[4]
| Taxable earned income (euros) | Basic tax amount | Rate within brackets |
| 15,600–23,200 | 8 | 6,5% |
| 23,200–37,800 | 502 | 17,5% |
| 37,800–68,200 | 3,057 | 21,5% |
| 68,200– | 9,593 | 30,0% |
There are also indirect tax-like mandatory social security contributions and insurance fees paid by employer in addition to the gross income. The social security contribution is 2.12% of the gross income. The pension and unemployment insurance fees depend on the age of the employee and the size of the employer, they are usually 18.3% and 3.2% of gross income, respectively.
The income from dividends, rents, and capital gains are taxed with investment income tax. The investment income is taxed at fixed rate of 28%.
The effective dividend tax rate from publicly listed companies is 19.6% because of a tax credit of 30% for dividends from listed companies. The tax credit for dividends from non-listed companies vary depending on the corporate taxes paid by the companies themselves and equity in the company. Part of the dividends may be taxed as earned income in case the equity in a non-listed company is not sufficient.
The corporate income tax rate is 26%. The corporate tax was fully credited in dividend tax before 2004, but because the neutrality requirements by EU, the tax credits allowed for dividends are now more complex.
Municipal property taxes are low, since municipalities mostly meet their funding needs via direct income taxes and state subsidies. Tax rates are higher for leisure properties like summer cottages.
VAT is levied at a standard rate of 23% (July 2010), and two reduced rates of 13% on food and restaurants, and 9% on transport and accommodation.[5]
Excise taxes are in place for alcohol, tobacco, sweets, lotteries, insurances, pharmacies, transport fuels and automobiles (2011).
The mandatory pension fees are paid to directly to the pension insurance company selected by the employer or entrepreneur. The pension fees total 23% of the gross income (2011), usually 4.7% is deducted from gross income and the rest of the 23% is paid by the employer in addition to the gross income.
The voluntary pension insurance fees or transfers to a personal pension account are credited in earned income taxation up to 5000 € per year.
Taxes are collected by local church parishes belonging to the two official churches, Evangelical Lutheran Church of Finland and Finnish Orthodox Church, and two country-wide Lutheran parishes, the German parish in Finland and Olaus Petri parish for citizens of Sweden living in Finland. The tax rates vary from 1 to 2 % of earned income. A small percentage (2.55 % as of 2011[6]) of corporate taxes is distributed to parishes, too.
Colliander, Anders (April 2009). Taxation in Finland 2009. Ministry of Finance publications. 7/2009. Ministry of Finance. ISBN 978-951-804-932-9. http://www.vm.fi/vm/en/04_publications_and_documents/01_publications/075_taxation/20090504Taxati26547/taxation_2009_netti%2bkannet.pdf.
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