Taxation, Social Security and Insurance Payments
Taxation in brief
As a rule, all employees in Finland must pay income tax. Therefore, you must obtain a tax card (verokortti) from the Tax Office (verotoimisto) for tax withholding. If you work without a tax card, you will be taxed 60% of your salary. The most important factor affecting your taxation is the duration of your stay in Finland, namely whether will you stay here for longer than six months. If you are uncertain whether you will exceed the six-month limit, you will be taxed at source during the first months. A tax card will be issued when it has been confirmed that the six month limit will be exceeded.
Tax treaties can affect your income tax
Taxation also depends on the tax treaties ratified between Finland and the country where you come from (tax.fi). Finland has a tax treaty with more than 70 countries. If there is a tax treaty between Finland and the country where you come from, your income from Finland may be exempted from Finnish income tax. Researchers and teachers coming from Egypt, UK, Japan, Marocco and France are advised to check the tax treaties. Tax treaties can be found from the link above. Please note that the introductory part of the treaty is usually in Finnish but the actual agreement is English.
If you live in a foreign country, arrive in Finland for less than six months, and continue to keep your permanent home in the country where you come from you will be considered as a tax non-resident whose liability to pay tax in Finland is limited.
Besides taxes, employers must additionally withhold mandatory pension insurance and unemployment insurance contributions from your salary. If the duration of your work in Finland is four months or more, you must also make a health insurance contribution (consisting of two parts: a healthcare payment + an earned-income contribution payment). However, if you have a valid A1 Certificate from your country, showing that you covered under its social insurance regime, you will not be withheld pension and social security contributions in Finland.
If you are a resident of a country within the European Economic Area or of a country that has a bilateral tax treaty with Finland, you can request to be taxed under the progressive scale instead of the 35% flat tax at source. When your income is taxed progressively, your tax rate is adjusted to the size of your income. Finland only taxes your income from Finnish sources, but your taxable income from your country of tax residence has an increasing effect on your taxation in Finland
Please note that if you choose progressive taxation, you are required to file a tax return for your salary.
Further information and application forms:
Tax at source (flat rate)
If you have a tax-at-source tax card, the amount of your salary does not affect your tax rate. You will pay 35% tax at source (lähdevero) on your salary to the Finnish tax authority. Before withholding the tax, the employer may exempt the amount of 510 euros per month or 17 euros per day. This deduction must be recorded on the tax-at-source card issued by the Tax Office The tax is deducted by the employer before the payment of your salary.
Tax at source is a final tax, and there is no need to submit an income-tax return in Finland for the salary. The application for a tax-at-source card can be found here (tax.fi).
If you are working in Finland for over six months, you are considered a resident and have full tax liability. Your tax rate is determined by your income. The tax rate increases progressively: the more you earn, the higher the tax rate will be. You can calculate your estimated tax rate by using the tax calculator. The application for a tax on income tax card can be found here (Application for a tax card / prepayment calculation – Current or previous foreign residents, arriving to Finland for longer than 6 months (5042e)
Key employees´ taxation
If you work as a researcher or in a teaching position and your tasks and responsibilities at the UEF require special expertise you may be taxed at the 35-per-cent flat rate instead of the usual Finnish tax based on the progressive scale, even if you stay longer than 6 months. Precondition is that you do not have Finnish citizenship and you have not been a tax resident in Finland at any time during the five years preceding the year when you accept employment in Finland. The maximum duration for the tax relief to be effective is 48 months.
Please note that none of the usual tax deductions are available to the key employee.
To qualify for the benefit you must request for the tax card at the local tax office within 90 days of starting work as a key employee. Please make clear when filling in the form that you are applying for key employee tax relief.
Tax card request form and further information: http://www.vero.fi/en-US/Individuals/Arriving_in_Finland/Work_in_Finland/Key_employees_from_other_countries%2817267%29
- Tax Office's bulletin for foreign employees
- Tax treaties between Finland and other countries (tax.fi)
- Tax percentage calculator
- Which option do I choose? - Tax card withholding rate alternatives (tax.fi)
- Taxation of workers moving to Finland (infopankki.fi)
- Taxation in Finland (Expat Finland)
A scholarship/grant can be tax free if the scholarship has been awarded on the basis of an open, public call for applications, and the scholarship cannot be regarded as salary from work or duty. A scholarship/grant is tax free if it is given for studies or scientific research by the public sector (Ministry of education, CIMO etc.) or the Nordic Council. Please consult the Tax Office for further information. Scholarships from other sources are tax free if they do not exceed the amount of the annual grant of Arts Council of Finland, i.e. € 20 309,40 per year (2017).
- Mela insurance for scholarship or grant recipients (pdf, mela.fi)
Apart from the tax, the employer is also required to deduct an employment pension premium and an occupational injury premium from your salary. Your employer pays these contributions to the insurance companies. In addition, you must pay a health insurance premium in connection to your taxation unless you have an E101 certificate or A1 card providing proof that you are covered by insurance in a country other than Finland.
If you have received a grant or scholarship from Finland for longer than four months, the Farmers' Social Insurance Institution (Mela) is responsible for your statutory pension insurance (MYEL), occupational accident insurance (MATA) and group life insurance. Mela's insurance coverage for work on a grant or scholarship is mandatory also for foreign recipients if they are covered by Finnish social security during the work.
If you are staying in Finland for less than one year, you can get the Finnish personal identity code for tax-related purpose from the local Tax Office. If you are working in Finland for one year or longer, you must obtain the Finnish personal identity code from the Local Register Office (Maistraatti). Please note that if you are a citizen of an EU/EEA country (excluding the Nordic countries), and you are staying for longer than three months, you will also need to present a registration of a right to reside in Finland (see Registration of EU/EEA citizens). Citizens of the Nordic countries do not need to register at the local police station. Under Nordic conventions, Nordic citizens can apply for the Finnish personal identity code directly at the Local Register office (maistraatti).
At the Tax Office you should give an estimate your annual income in Finland, so that your tax rate can be calculated. Please take your work contract indicating your salary with you to the Tax Office.
Applying for a tax card in brief:
For persons staying in Finland for less then one year:
- Visit the Tax Office
- You can apply for Finnish personal identity number at the Tax Office
- If you stay for less than six months - apply for "tax-at- source" (flat rate 35%) tax card with deductions
- If you stay for longer than six months - apply for "tax on earned income" (progressive taxation) tax card
- Documents to bring along: :
- Valid passport
- If you are a citizen of an EU/EEA member country and have already been residing in Finland for three months or over, you will need a certificate of your right to reside in Finland issued by the Finnish Migration Service
- Valid residence permit (non-EU citizens)
- Employment contract /written explanation of the main terms and conditions of your employment
- Tax office's forms
For persons staying in Finland for one year or longer:
1.If you are a citizen from the EU/EEA countries or Switzerland (excluding the Nordic countries), you obtain a Certificate of your right to reside in Finland from the local police
2. Register at the Local Registry Office (maistraatti)
- Fill in and submit the Notification of Move (permanent move) form
- After registration you will get the Finnish personal identity code
2. Visit the Tax Office (verotoimisto)
- A apply for "tax on earned income" (progressive taxation) tax card
- Documents to bring along: :
Tax Offices (verotoimisto)
Local Tax Offices:
Opening hours: Mon-Fri 9.00-16.15 (1 June – 31 August: 9.00-15.00)
- Joensuu - Yliopistokatu 6B, 2nd, Metla building
- Kuopio -Tulliportinkatu 35
Tax service by phone: +358 (0)20 612 000(switchboard)
International tax situations:+358 (0)20 697 024
In To Finland - A shared service point of The Social Insurance Institution of Finland (Kela) and the Tax Administration, email: email@example.com (response within three working days)