What Are the Different Tax Rates in Finland?
Navigate Finland's comprehensive tax landscape. Gain clarity on the various rates impacting your earnings, assets, and spending.
Finland’s tax system plays a central role in funding the country’s comprehensive social welfare model, which aims to provide universal services and reduce income inequality. This system supports public services such as healthcare, education, and social security for all residents. Finnish taxation is progressive, meaning higher incomes contribute a larger proportion. This reflects a societal consensus that taxes are a collective investment in national well-being. Tax revenues are distributed among the government, municipalities, and social security institutions.
Personal Income Taxation
Personal income tax in Finland includes state, municipal, church taxes, and social security contributions. State income tax is progressive, with rates increasing at higher income levels. For 2025, state income tax on earned income starts at 12.64% for income over €21,200, after a zero-tax bracket. Marginal rates reach 44.25% for income above €150,000.
Municipal income tax is a flat rate set by each municipality. For 2025, rates vary from 4.7% to 19.7%. Church tax, a flat rate on municipal taxable income, applies to members of the Evangelical Lutheran or Orthodox Church. In 2025, Evangelical Lutheran rates are 1.0% to 2.0%, and Orthodox rates are 1.75% to 2.25%.
Mandatory social security contributions are deducted from gross wages. The employee’s pension insurance contribution for 2025 is 7.15% for individuals aged 17-52 and 63-67, and 8.65% for those aged 53-62. These fund future retirement benefits.
Other social security contributions include health and unemployment insurance. For 2025, health insurance includes a 1.06% medical care contribution and a 0.84% daily allowance contribution, applied if annual income is €16,862 or more. The employee’s unemployment insurance contribution rate for 2025 is 0.59%. These finance healthcare and unemployment support.
Deductions can reduce taxable income. Common deductions include work-related expenses (e.g., tools, professional literature, travel over €750). Interest on primary residence loans is also deductible. Other deductions include charity donations, alimony, and home office expenses (up to €940). For 2025, a basic allowance up to €4,115 and an employment income credit up to €3,225 reduce taxable income and state income tax.
Consumption and Property Taxes
Finland levies consumption and property taxes on goods, services, and real estate. Value Added Tax (VAT) applies to most goods and services, with a standard rate of 24%. Reduced VAT rates apply to certain categories.
A 14% VAT rate applies to food, animal feed, and restaurant/catering services (excluding alcohol). A 10% VAT rate applies to books, newspapers, magazines, medicines, passenger transport, accommodation, and cultural/entertainment services. These rates ease consumer burden for necessities and cultural activities.
Property tax (real estate tax) is a municipal tax on assessed real estate value. The state sets limits, but municipalities determine the exact percentage. Rates for permanent residences range from 0.41% to 1.00% of assessed value. For other buildings and undeveloped land, rates vary from 0.90% to 6.00%, depending on municipal decisions and property type.
Excise duties are consumption taxes on goods like alcohol, tobacco, and fuels. They are added to the product price. While specific rates vary widely by product and are adjusted periodically, their purpose is to generate revenue and influence consumer behavior.
Business and Investment Income Taxation
Business and investment income have specific tax rates, differing from personal earned income. Corporate income tax applies to profits of limited companies (Osakeyhtiö, Oy) and other corporate entities. The corporate income tax rate is a flat 20%, applied uniformly to taxable profits regardless of size or earnings.
Capital gains from asset sales (e.g., shares, real estate) are taxed separately from earned income. They are subject to a progressive tax rate. Gains up to €30,000 are taxed at 30%. Gains exceeding €30,000 are taxed at 34%.
Dividend taxation varies for listed versus unlisted companies. For listed companies, a portion is taxable capital income, subject to 30% or 34% capital gains rates. For unlisted companies, tax treatment is more complex; a dividend portion may be capital income, another earned income, depending on net assets. The specific percentages are determined by tax regulations.
Inheritance and Gift Taxation
Inheritance and gifts are taxed in Finland, with the recipient paying the tax. Rates are progressive, depending on value and relationship. Recipients are categorized into two tax classes.
Tax Class I applies to close relatives: spouses, direct descendants, direct ascendants, and adopted children. For this class, tax-exempt amounts apply before tax is calculated; for inheritances, the exempt amount is €20,000, and for gifts, it is €5,000. Class I rates increase from 7% (€20,000-€40,000 inheritance, €5,000-€25,000 gifts) up to 19% for amounts over €200,000.
Tax Class II includes other relatives (e.g., siblings, non-relatives). Class II rates are higher than Class I, starting at 17% (€20,000-€40,000 inheritance, €5,000-€25,000 gifts) and rising to 33% for amounts over €200,000.