Tax residents in Finland: are liable to pay Finnish tax on their worldwide income,
Tax non-residents in Finland: are liable to pay tax on Finnish-source income in Finland.
Individuals will be regarded as tax residents:
A temporary absence up to two months does not break the period.
Finnish Nationals: are, in addition, subject to the 3-year rule. After a Finnish citizen’s residency has been established elsewhere, he or she is still considered to be resident in Finland until three years have passed from the end of the year when the individual left the country, unless the individual can establish that no essential connections with Finland have been maintained.
Spouses are taxed separately on their own income.
There is no positive definition of the term income although in principle this consists of all income received by the taxpayer in money or money's worth (such as salaries, wages, directors’ fees and benefits in kind).
Taxable income is divided into two categories: income from capital and earned income
Both categories are subject to national income tax. In the case of income from capital, it is levied at a flat rate; on earned income, it is imposed at progressive rates and also subject to municipal income and church tax, both imposed at proportional rates. Since the tax burden on earned income is remarkably heavier (aggregate marginal
rate of income taxes and social security contributions up to almost 60%, in Helsinki area approximately 56% to 57%) than on income from capital (flat rate of 28%), the distinction between the two types of income has become crucial; in borderline cases, the income is presumed earned income.
Certain deductions are permissible on earned income including:
Allowances for 2014:
Income tax rates for 2014:
Earned income is subject to national and municipal tax.
Municipal: varies depending on municipality between 16.25% and 22%.
Church: varies depending on municipality between 1% and 2%.
Expatriate: Under a special expatriate tax regime, qualifying expatriates may apply to be taxed on their salary income at a rate of 35%, instead of the normal income tax rates.
Generally in April or May of the following income tax year.