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Taxation in Finland
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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 (Kela).
The taxes can be broadly divided into four types:
Income (tulo) is categorized in Finnish tax law as either earned income (ansiotulo) or capital income (pääomatulo), 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.
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:
The net earned income (gross earned income minus deductions) is subject to:
There is an automatic earned income tax credit (työtulovähennys) for some taxes and fees, making them slightly progressive despite their fixed rate.
Every person that is 17–68 years of age and 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 voluntary pension insurance fees or transfers to a personal pension account are credited in earned income taxation up to €5,000 per year.[citation needed] The Finnish system does not provide for voluntary contributions or employer matching.
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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 (Kela).
The taxes can be broadly divided into four types:
Income (tulo) is categorized in Finnish tax law as either earned income (ansiotulo) or capital income (pääomatulo), 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.
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:
The net earned income (gross earned income minus deductions) is subject to:
There is an automatic earned income tax credit (työtulovähennys) for some taxes and fees, making them slightly progressive despite their fixed rate.
Every person that is 17–68 years of age and 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 voluntary pension insurance fees or transfers to a personal pension account are credited in earned income taxation up to €5,000 per year.[citation needed] The Finnish system does not provide for voluntary contributions or employer matching.