Taxation in Finland
Taxation in Finland9.4.20151Society needs taxesFor financing public servicese.g. health services, schools, daycare, road infrastructure
For changing people's behaviourtaxation can be a tool of economic policye.g. differential taxes on products that are more friendly for the environment, tax relief given in order to support business in a less favoured geographical region
For reducing the inequality of incomee.g. progression, childcare allowance, pensions9.4.20152Tax rules are part of the lawLaws are prepared by the Ministry of Finance and adopted by the Parliament
Some tax rules are agreed on the European level so that they concern Finlandas a member country of the EU
Local districts and local parishes of churches decide on their tax percentage rates themselves
9.4.20153The State and local districts receive the money9.4.20154
Taxpayers:Private individuals and corporations (businesses etc)Main collector of taxes is the Tax AdministrationOthers are Customs Finland and TrafiWe pay the money forward to recipients: The State Local districtsKelaChurches Forestry associations
9.4.20154Direct and indirect taxesIt is the taxpayer's obligation to pay the first type, Direct taxes:Example: Everyone pays income tax on his wages
But someone else may be the actual payer of the second type, Indirect taxes:Example: Value-Added Tax or VAT is added to the price of a product by the seller. However, the final result is that the consumer not the seller is the actual payer of VAT9.4.201559.4.20156Tax rates can be proportional,or they can be progressive
Taxes are proportional (flat), if the % rateis exactly the same for all taxpayersExamples: Capital Tax, Municipal Tax
Taxes are progressive, if the % raterises when the taxpayer's income rises Example: Tax on Earned Income
Income is subject to taxIndividuals must pay tax on their incomeYour tax on earned income (wages, salaries) goes to:To the State of FinlandTo the district where you liveTo the parish of your Church if you pay Church Tax To Kela as a healthcare contributionCapital income (example: dividends you receive)The taxes on capital income go to the StateNot only individuals but also businessesmust pay income tax.To the State, local districts, churches
9.4.20157Income taxation9.4.20158
Income taxation 1/3Tax assessment is not complete untilthe tax year is overHowever, you pay money in advance during the year. This reflects your future tax liabilityThis is the process of collecting tax in advanceIn this way, each time you get paid you pay us some money in advance (as tax withheld). Your withholding % is printed on the card that you give to your employerWe send you this document called the tax card -verokortti. Your previous income history is included in the calculation. You have the right to make changesBusinesses must also pay tax in advance9.4.20159Income taxation 2/3After the year is over we will knowhow much income you hadWe send Pre-Completed Tax Return forms to everyone. They show our database informationon the income that has been earned and paidYou have the right to send us correctionsYou have the right to demand tax deductions Some deductions are automatic, others you must ask forExamples of costs that can give you deductions: home-loan interest, major home repair costs
9.4.201510Income taxation 3/3Autumn is the time when tax assessment is finished Then we will know if the right amount was paidIf too much was withheld by your payors,we will pay the difference back to you.But if your payors withheld too little, you end up paying back tax. This is called jnnsveroWe send you the assessment decision by postIf you do not agree with your assessment decision,you have the right to appeal against it9.4.201511Taxes on consumptionAlmost all sellers of goods and services pay VAT This tax is included in the price of consumer goods As a result, it is the consumers who pay it Excise taxes are added to the production costsof alcohol and tobacco and some other goodsThis tax is also included in the price of the goods.
9.4.201512Other taxesInheritance taxDepends on the donor's family relation and the value of EstateGift taxDepends on the donor's family relation and the value of the giftReal estate taxDepends on the value of the building and the land where it is located. Is paid to the district where locatedTransfer taxMust be paid by buyers of real estate (or shares)Tax at SourceMust be paid on deposits in banksPublic Broadcasting TaxIs used for the financing of YLE. Must be paid by all grownup citizens and all corporate taxpayers9.4.201513
