Finland

Individual - Other taxes

Last reviewed - 29 December 2019

Social security contributions

The below-mentioned social security contribution rates are confirmed for 2020. The sickness insurance premium payable to the tax authorities is divided in two classes, a daily allowance premium of 1.18% and a medicare premium of 0.68% (1.86%). Only the daily allowance premium is deductible for individual taxation. The daily allowance premium is not collected if the total amount of salary is less than EUR 14,574.The medicare premium on pension income and social benefits is collected at a rate of 1.65%. The employer collects the aforementioned premiums from the employee’s salary and remits them together with income tax withholdings to the tax authorities. If the employee's salary is taxed under the foreign expert tax regime, the sickness insurance premium is included in the flat 32% tax rate. In addition, the employer shall withhold from the employee’s salary the employee pension insurance contribution (7.15% for employees of age 17 to 52 years or 63 to 67 years and 8.65% for employees of age 53 to 62 years) and unemployment insurance contribution (1.25% for employees of age 17 to 64 years). These contributions are remitted to the appropriate insurance companies together with employer social insurance contributions. However, if a certificate of coverage (A1, E101, or similar) is obtained for an assignee sent to Finland, basically no Finnish social security contributions are payable (depending on the applicable social security treaty, some contributions may still remain payable in Finland). For employees taxed under the foreign expert tax regime, the tax rate remains the same flat 32% regardless of the A1 or certificate of coverage even though the sickness insurance premium is embedded in the rate.

A foreign employer who sends an employee to work in Finland for a period of maximum two years may be automatically exempted from taking out Finnish pension insurance for the employee (other social insurances shall basically be taken out). If the employee stays in Finland over two years, the exemption shall be applied for (even if at first it is planned that the stay will exceed two years, the automatic exemption is not applicable at all). The aforementioned exemption rules apply to employers not residing in the European Union (EU)/EEA or in countries with which Finland has concluded a totalisation (social security) agreement (see the Foreign tax relief and tax treaties section).

Consumption taxes

Value-added tax (VAT)

The general VAT rate is 24%. A reduced rate of 14% is applied to food and animal feed. The reduced VAT rate of 14% also applies to restaurant and catering services. A reduced VAT rate of 10% is applied to certain goods and services (e.g. books, subscriptions of newspapers and magazines lasting one month or longer, accommodation, passenger transport).

A zero rate applies in certain instances (e.g. intra-Community supplies of goods and exports of goods). Additionally, certain services (e.g. financial services, insurance services, and certain educational services) are exempted from VAT.

Net wealth/worth taxes

There are no net wealth/worth taxes in Finland.

Inheritance, estate, and gift taxes

Taxes are imposed on property acquired by inheritance, will, or gift. Inheritance tax is levied to a person who receives immovable or movable property through inheritance or will if the deceased, the inheritor, or the beneficiary was resident in Finland at the time of death. Immovable property located in Finland and shares of a company, the assets of which consist mostly of immovable property, are always subject to inheritance taxation in Finland.

Gift tax is levied to a person who receives immovable or movable property as a donation if the donor or the beneficiary is resident in Finland at the time of donation. Immovable property situated in Finland and shares of a company, the assets of which consist mostly of immovable property, are always subject to gift taxation in Finland. The taxable amount of gifts is calculated cumulatively in three-year periods. This means that if gifts received from the same person are EUR 5,000 or more in three years, the donor will be liable to pay gift tax.

The tax is levied on both resident and non-resident beneficiaries. The taxable value of the inheritance, gift, or bequest is based on the fair market value of the property at the date of death/donation. The tax rate applicable to the inheritance or to the gift depends on the beneficiary's relationship to the deceased or donor. The tables below apply if the inheritor or donor is the spouse (including a cohabitating partner if the partners have a common child or if they have previously been married), father, mother of the deceased, or donor, and to any linear descendent of deceased/donor or spouse (including stepchild/adopted child).

Inheritance tax rates

Applicable to inheritance received on 1 January 2017 or later.

Value of taxable property (EUR) Tax on column 1 (EUR) Tax on excess (%)
Over Not Over
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 And above 149,700 19

Gift tax rates

Applicable to inheritance received on 1 January 2017 or later.

Value of taxable property (EUR) Tax on column 1 (EUR) Tax on excess (%)
Over Not Over
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 And above 142,100 17

Property taxes

The municipalities in Finland collect property tax from owners of real estates. Tax on real estate is payable on real estate situated in Finland. The most important exemptions from the tax liability are for forested and agricultural land. The real estate tax is payable by those who own the taxable property at the beginning of the calendar year. Tax is calculated on the taxable value of the real property. In general, the rate may vary between 0.41% and 2.0% of the taxable value. Municipalities will annually decide within allowed limits what percentage is applied in each municipality.

The municipality may impose a separate real estate tax on a vacant plot if the plot is situated in a town plan area and it is not in residential use or under construction. The tax rate on a vacant plot may vary between 2% and 6%.

Transfer tax

Transfer tax is imposed on transfers of real property located in Finland and Finnish securities. The tax is 4% on transfers of real property, 2% on transfers of shares in an entity of which the assets are mostly comprised of real property (directly or indirectly), and 1.6% on transfers of other securities. The tax is calculated on the transfer price. The transfer of listed company securities is, in most cases, tax exempt. In addition, no transfer tax is imposed if both the transferor and the transferee are non-residents (except the cases of transferring shares in Finnish real estate companies).

There is no liability to transfer tax if the transfer is due to an inheritance, donation, or a division of property subject to a matrimonial right. Also, no tax is imposed if a person between 18 and 39 years of age acquires the first owner-occupied permanent home.

Luxury and excise duties

Alcohol and alcoholic beverages, tobacco products, liquid fuels, electricity, natural gas, and coal are subject to EU harmonised excise duties. National excise duties are levied in Finland on waste delivered to landfill sites, lubricating oil, oil imported into or through Finland, soft drinks, beverage containers, and tall oil.