Taxation in Finland
Taxation in Finland is mainly carried out through the Finnish Tax Administration, an agency of the Ministry of Finance. Finnish Customs, the Finnish Transport and Communications Agency Traficom, and pension funds also collect taxes. Taxes collected are distributed to the Government, municipalities, church, and the Social Insurance Institution.
The taxes can be broadly divided into four types:
- progressive state income tax
- other flat-rate income taxes
- flat-rate property tax
- flat-rate consumption and property transfer taxes
Taxes on income
Income is categorized in Finnish tax law as either earned income or capital income, essentially by stating that earned income is any salary paid in compensation for employment and "any income other than capital income". In general, as a tax is any compulsory financial charge levied on a taxpayer by a governmental organisation, all the payments listed here are taken into account as taxes.Taxes on earned income
Income taxation takes place in a series of phases where the proportional taxes are deducted from the gross income before the net income subject to the state income tax is determined. An employee's gross earned income is subject to the three following, proportional social security contributions:- employee's pension insurance fee, paid to a pension insurance company
- employee's unemployment insurance fee, paid to the state
- health insurance daily allowance contribution, paid to the state
- income tax which is divided into
- * a tax, progressively paid to the state
- * a tax, proportionally paid to the municipality
- * a church tax, proportionally paid to the parish if the person is a member thereof
- proportional health insurance medical expenses contribution, paid to the state
- proportional Yle tax, paid to the state and collected to fund the public broadcasting company
Pension insurance fees
Every person that is 17–68 years of ageand gets a salary as an employee pays a certain amount of pension insurance fee on their gross income. The exact percentage is set annually by a decree of the Ministry of Social Affairs and Health.
- The employee's fee is 7.15% in 2025.
- The employer's average is 17.38% on the average in 2025.
Unemployment insurance fees
Every person 18–65 years of age working as an employee in Finland is required to pay unemployment insurance fee on their gross work income. The employee's fee is levied on their gross work income. The employer's fee is proportionate to what they pay to all their employees and it is not withheld from the employees' gross salaries – in effect, it is paid out of the employer's assets. The exact percentages of the fees are set by law to a level that secures the Employment Fund's ability to pay out unemployment benefits, and in 2025 the fees are as follows:- The employee's fee is 0.59%.
- The employer's fee is 0.20% for salaries up to €2,455,500 and 0.80% above that.
Health insurance daily allowance contribution
Every person who is 16–68 years of age and works as an employee in Finland is required to pay the health insurance daily allowance contribution on their gross earned income. The rate of the fee is annually set by a law, and it is set to a level that secures funding for healthcare costs.In 2025, the rate is 0.84% and it is levied on the entire gross earned income if equals to or exceeds €16,862.
State income tax
The following contributions are deducted from the gross income before determining the net income subject to the state income tax:- natural deductions:
- * automatic income-production deduction ; €750 in 2025
- * trade union membership fees
- * expenses for the production of income ; all costs above the automatic income-production deduction
- other deductions:
- * employee's pension insurance fee
- * employee's unemployment insurance fee
- * health insurance daily allowance contribution
- * automatic basic deduction ; maximum of €4,115
| Net Income Over | Tax Rate |
| €0 | 12.64% |
| €21,200 | 19% |
| €31,500 | 30.25% |
| €52,100 | 34% |
| €88,200 | 41.75% |
| €150,000 | 44.25% |
The gross state income tax is subject to following credits:
- several credits, e.g. household expenses credit ; all costs above €150 in 2025
- automatic earned income tax credit; maximum of €3,225 in 2025
Municipal tax
The following contributions are deducted from the gross income before determining the net income subject to the municipal tax:- natural deductions:
- * automatic income-production deduction; €750 in 2025
- * trade union membership fees
- * expenses for the production of income; all costs above the automatic income-production deduction
- other deductions:
- * employee's pension insurance fee
- * employee's unemployment insurance fee
- * health insurance daily allowance contribution
- * automatic basic deduction; maximum of €4,115
Health insurance medical expenses contribution
The following contributions are deducted from the gross income before determining the net income subject to the medical expenses contribution:- natural deductions:
- * automatic income-production deduction; €750 in 2025
- * trade union membership fees
- * expenses for the production of income; all costs above the automatic income-production deduction
- other deductions:
- * employee's pension insurance fee
- * employee's unemployment insurance fee
- * health insurance daily allowance contribution
- * automatic basic deduction; maximum of €4,115
Church tax
If the individual is a member of the Evangelical Lutheran or the Orthodox Church, or any of the country-wide Lutheran parishes, their net earned income is subject to the church tax. The following contributions are deducted from the gross income before determining the net income subject to the church tax:- natural deductions:
- * automatic income-production deduction; €750 in 2025
- * trade union membership fees
- * expenses for the production of income; all costs above the automatic income-production deduction
- other deductions:
- * employee's pension insurance fee
- * employee's unemployment insurance fee
- * health insurance daily allowance contribution
- * automatic basic deduction; maximum of €4,115
Yle tax
The following deductions are made on the gross income before determining the net income subject to the Yle tax:- automatic income-production deduction; €750 in 2025
- trade union membership fees
- expenses for the production of income; all costs above the automatic income-production deduction
Collection of taxes on earned income
The employer withholds the employee's pension insurance and unemployment insurance fees from each gross paycheck. The employer is responsible for choosing the pension insurance institution and pays the fee to the institution in conjunction with paying the salary to their employee. The pension insurance fees withheld by public-sector employers are paid to the dedicated agency Keva.The employer withholds another portion of each paycheck and pays that to the Finnish Tax Administration. That portion is officially termed as a withholding tax and it adds up to the total of the following liabilities:
- health insurance daily allowance contribution
- state income tax
- municipal tax
- health insurance medical expenses contribution
- church tax
- Yle tax
Taxation of non-residents
Anyone who has arrived in Finland and stayed longer than 6 months will become, from Tax Administrator's view, a resident. The residents' worldwide income is subject to Finnish tax, so that no distinction exists between the source country. Non-residents are subjected only to taxation of Finnish-sourced income.ID number and tax number
Persons working in Finland for a short period can get their Finnish personal ID at the tax office. The Finnish Tax Administration is entitled to enter information into the Population Register System and distribute identity codes jointly with Local Register Offices if the matter concerns foreigners who arrive for temporary periods, i.e. less than one year to work in Finland. ID requires following information entered to the system: Full name, Date of birth, Sex, Place of birth, Address, Citizenship, Native language and Occupation.In association of measures against grey economy in the construction industry, a new act governing the mandatory tax numbers and the public register of tax numbers was adopted in 2012. At the moment mandatory Tax Numbers are issued for construction-industry workers only. The Individual Tax Number does not reveal the individual's age, sex or date of birth. The number doesn't change when a worker moves on to work for another employer or to work at another construction site.
European Union officials
Salaries or grants paid by the European Union bodies, such as European Chemicals Agency in Helsinki, are tax-free in Finland and do not need to be reported to the Finnish Tax Administration or Finnish social security, regardless of residency. Instead, the EU officials pay an EU-wide European tax on their salary. Employees of European Union bodies may bring a car to Finland without paying the Finnish car tax.Taxes on capital income
Dividends, rents, and other kinds of capital gains are considered capital income. Net capital income is taxed at a fixed rate of 30% for net income up to €30,000 and 34% for net income above that. However, different types of capital income are treated with different deduction schemes that may render the effective rates much lower. Only natural persons pay capital income tax.Dividends from listed companies
The proportion of dividends from a listed (publicly traded) company subject to capital income tax depends on whether the share is owned via a book-entry account or an equity savings account. Via an equity savings account, one can own only shares of listed companies and the owner can be only a natural person.Shares owned via a book-entry account
15% of dividends from listed companies to a private person are tax-exempt if the shares are owned via a book-entry account and the rest is subject to the capital income tax.Shares owned via an equity savings account
The entire dividend from a listed company to a private person is subject to the capital income tax if the share is owned via an equity savings account.The value of the account is considered to be the sum of liquid money on the account and market price of the shares that have been bought with the money deposited on the account. The dividends are deposited to the account and the owner can buy and sell shares with the assets of the account. If the owner withdraws money from the account at a moment when the account has surplus value, the profit withdrawn is proportionate to the withdrawal's proportion of the entire value of the account. The profit withdrawn is entirely subject to the capital income tax. There are no expenses deductible from capital income when the account is active—the losses are deductible only when the account is closed with losses and the money is withdrawn.
Dividends from unlisted companies
If the dividend from an unlisted company paid to a natural person adds up to 8% or less of the mathematical value of the company, 75% of the dividend is tax-exempt and the rest is subject to the capital income tax, rendering effectively a 7.5% capital income tax rate at minimum. If the dividend to that person adds up to more than 8% of the net assets of the company:- 75% of the dividend up to the 8% threshold is tax-exempt and the rest of the dividend up to the threshold is subject to the capital income tax ; and
- 25% of the dividend above the 8% threshold is tax-exempt and the rest of the dividend above the threshold is considered earned income and therefore added to the net earned income from any other sources and the sum is subject to the progressive state income tax rate
Taxes on corporate income
The corporate income tax rate is 20%. Corporate tax was lowered from 24.5% to 20.0% in January 2014.Until 2016, a small percentage of corporate taxes was also distributed to parishes, regardless of the corporations' religious affiliations. From 2016 onwards, the direct tax distribution was abolished and it was replaced by a fixed annual state subsidy that is €105-million in 2025 follows the Finnish Consumer Price Index.
Debate on the total tax burden on labour
The "gross salary" as reported to the employee conventionally does not include any of the taxes paid by the employer, which is a substantial portion of all taxes collected by the state, municipalities and pension insurance companies. Therefore, there are two viewpoints on what is the effective tax rate:- One viewpoint where one takes into account only what is withheld from income – pension insurance fees and unemployment insurance fees, health insurance daily allowance contributions, state income taxes, municipal taxes, church taxes, Yle taxes, and health insurance medical expenses contributions.
- One viewpoint where one takes into account both what is withheld from income and what is withheld from the one who pays that income – employer's pension and unemployment insurance fees, accident insurance fees etc.
Other kinds of taxes
Property tax
Municipalities collect property tax on properties located in their territory. The tax is levied separately on the soil and on the buildings located on it. The tax on the soil is paid by the owner of the property and the tax on the buildings is paid by the owner of the building. The tax on soil is generally 1.30–2.00%, but the municipality can set it at 2.00–6.00%, if the property is undeveloped and certain legal requirements are met. Additionally, if the property is located in Espoo, Helsinki, Hyvinkää, Järvenpää, Kauniainen, Kerava, Kirkkonummi, Mäntsälä, Nurmijärvi, Pornainen, Sipoo, Tuusula, Vantaa, or Vihti, the Property Tax Act requires that the soil tax for undeveloped property is 3.00 p.p. higher than for developed property, but 6.00% at maximum. The tax on buildings is 0.41–1.00% for permanently residential buildings and 0.93–2.00% for buildings with at least 50% of the space reserved for non-permanent residence. Property taxes are levied annually on present market value.Property transfer tax
There is a 3% property transfer tax for property, and 1.5% for stock and housing cooperative shares. First-time home buyers were exempt from transfer tax until 31 December 2023, but no longer enjoy exemption.Consumption taxes
Value-added tax is levied at a standard rate of 25.5%, and at two reduced rates of 14% on food, restaurant services, catering services and animal feed, and 10% on books, pharmaceutical products, services creating opportunities for physical exercise, passenger transportation and accommodation.Excise taxes are in place for alcohol, tobacco, sweets, lotteries, insurances, transport fuels and automobiles. The motor vehicle tax is substantial. As a rule, permanent residents cannot drive foreign-registered cars in Finland. Persons with permanent residence outside Finland may drive foreign-registered car in Finland for six months, or up to 18 months if residence abroad is separately proven to Customs. As an exception, European Civil Service employees working for the European Union are exempt from the car tax for their personal vehicle.
Pharmacies pay only the excise tax from their yearly income. There is a tax credit for pharmacies that keep subsidiary pharmacies. The aim of this policy is to support keeping pharmacies in sparsely populated regions.