treaty provides otherwise. In most cases, interest paid to nonresidents is tax exempt.
Taxation of employer-provided stock options. Stock options provided by an employer are not taxed at the time of grant. At the date of exercise, the difference between the fair market value of the underlying stock and the exercise price of the option is treated as taxable employment income. Employee social security contributions are generally not payable on the benefits except for the Medicare contribution of 1.48% (in 2024). Similarly, stock options are not usually subject to employer’s social security contributions. The base for the employee contribution is generally the taxable amount.
Any gain derived from the subsequent sale of the stock is taxed as a capital gain under the rules described in Capital gains and losses
Capital gains and losses. Capital gains on property are taxed as capital income at a rate of 30%. If the capital income received during a calendar year exceeds EUR30,000, the excess income is taxed at a rate of 34%. A taxable capital gain is computed by deducting from the disposal proceeds the greater of the acquisition cost plus the sales cost, or 20% of the proceeds (40% for property owned for at least 10 years before disposal). The acquisition cost used for property received by gift or inheritance is generally the value used for purposes of the gift and inheritance tax (see Other taxes). However, certain exceptions may apply.
A capital gain resulting from the sale of an apartment or house that the seller used as a primary residence for at least two years on a continuous basis during the time of ownership is exempt from tax.
Also, capital gains may be exempt from tax if the total sales price of all assets sold during the tax year (excluding, for example, the sales price of one’s primary residence) does not exceed EUR1,000.
Capital losses are deductible from all capital income in the year of the loss or in the five following years. However, capital losses are not deductible if the acquisition costs of all assets sold during the tax year do not exceed EUR1,000.
Deductions
Deductible expenses. In general, a taxpayer may deduct all expenses directly incurred in generating or maintaining taxable income. However, separate deductions apply for earned income and capital income. See Investment income for deductions applicable to capital income.
The following are the primary deductions applicable to earned income:
• Travel expenses that exceed EUR900 incurred between home and workplace, up to a maximum of EUR7,000
• Payments to labor unions
• Standard deduction from salary income, up to a maximum of EUR750
• Expenses incurred in connection with earning income, to the extent they exceed EUR750
• Employee contributions for health insurance per diem, unemployment insurance and pension insurance
Contributions paid by individuals to voluntary pension insurance are generally deductible for tax purposes up to certain maximum limits from capital income.
Business deductions. Expenses incurred to create or maintain business income are generally deductible. Exceptions apply, for example, to salaries paid to entrepreneurs, their spouses and their children under 14 years of age who work for their business.
Interest expenses relating to business or farming activities are generally deductible for business or farming income purposes in determining taxable income from these activities.
Rates. Income tax consists of national tax, municipal tax, church tax (payable if the individual is a member of certain Finnish congregations) and YLE tax.
National income tax. For 2024, national income tax is imposed on individual residents at the following progressive rates.
Municipal tax. For 2024, municipal tax is levied at a flat rate that ranges from 4.4% to 10.8% of taxable income, depending on the municipality.
Church tax. For 2024, church tax is payable by members of certain Finnish congregations at rates ranging from 1% to 2.25%.
YLE tax. For 2024, YLE tax of 2.5% is levied on annual income exceeding EUR14,000. YLE tax is capped at a maximum of EUR163 per year.
Nonresidents. Nonresidents’ Finnish-source pension income is taxed in a similar manner to pension income received by residents; that is, they are subject to tax at the progressive rates.
Salaries, including directors’ fees received by nonresidents, are subject to final withholding tax at a rate of 35%, unless a tax treaty provides otherwise. Nonresidents may deduct EUR510 per month (or EUR17 per day) from salary. This standard deduction may be claimed only if a Finnish tax at source card has been applied. The deduction does not apply to the directors’ fees. Nonresidents from tax treaty countries can alternatively apply for progressive taxation in which case their Finnish-source salaries are taxed broadly similarly to the salaries received by residents.
Remuneration paid to a nonresident artist or athlete for a personal performance is subject to withholding tax at a rate of 15%, unless a tax treaty provides otherwise. If artists and athletes are subject to the 15% tax, they may not claim the standard deduction of EUR510. However, nonresident artists and athletes from other
1.16% for employer’s sickness insurance contributions, 0.06% for group life insurance premiums, pension premiums that average 17.34%, 0.57% for average accident insurance premiums and 0.27% for unemployment insurance premiums (1.09% for salaries exceeding EUR2,337,000).
For self-employed individuals insured under the Entrepreneur Pension Act, in 2024, social security contributions consist of a Medicare contribution and a per diem contribution as with employees. However, compared to employees, the per diem contribution is 1.23% of the annual pensionable amount agreed to between the entrepreneur and his or her pension insurance institution. In addition, entrepreneur pension insurance contributions are due on the annual pensionable salary at a rate of 24.1% (25.6% for individuals who are more than 52 years but less than 63 years old; the corresponding rates for starting entrepreneurs are 18.8% and 19.97%, respectively). Self-employed individuals insured under the Entrepreneur Pension Act do not have to obtain compulsory unemployment, accident or group life insurance coverage.
The EU social security regulations apply to cross-border situations with other EU countries, with EEA countries (Iceland, Lichtenstein and Norway) and with Switzerland.
Finland has also entered into bilateral totalization agreements with Australia, Canada, Chile, China Mainland, India, Israel, Japan, Korea (South), Quebec and the United States. The material scope of the bilateral totalization agreements varies.
For assignments to Finland from a country other than an EU/EEA country, Switzerland or a totalization agreement country, employees working in Finland for foreign employers are generally exempt from the pension insurance contributions for the initial two years of an assignment. Employees can apply for a prolonged exemption.
D. Tax filing and payment procedures
The tax year in Finland is the calendar year. Married persons are taxed separately on all types of income. Pre-filled tax returns are sent to all individuals in the spring of the year following the tax year. The individuals must review the prefilled tax return and submit any corrections to the tax authorities within the specified time limit.
The final tax is assessed individually for each taxpayer, depending, for example, on whether there have been changes in the individual’s prefilled tax return and possibly on whether the individual’s spouse has made changes to his or her prefilled tax return. The final tax should be assessed at the latest by the end of October. To reduce or eliminate the amount of the residual tax and interest, the taxpayer can apply for additional prepayments. Residual tax due dates are individual for every taxpayer. The due dates are between August of the year following the tax year and February of the following year. Refunds of overpayments are made between August and December of the year following the tax year.
An employer must withhold tax from an employee’s salary for national, municipal and church tax purposes. In addition, an employer must withhold social security contributions (see Section C). Self-employed individuals must make monthly advance tax payments, which are calculated and levied separately by the tax authorities.
Self-employed individuals receive their prefilled tax returns in March of the year following the tax year, and they must submit their corrections to the tax authorities within the specified time limit. The tax authorities assess final tax individually for each taxpayer, at the latest by the end of October of the year following the tax year.
Nonresidents who are subject only to final withholding taxes do not need to file tax returns. However, if the nonresidents want to apply for progressive taxation, they must file a tax return (see Section A). Nonresidents must generally declare all of their income from immovable property located in Finland (including shares in Finnish residential housing companies and real estate companies).
E. Double tax relief and tax treaties
Most of Finland’s treaties are based on the Organisation for Economic Co-operation and Development (OECD) model. Most tax treaties eliminate double taxation using the credit method, but some use the exemption method. If no treaty is in force, Finnish law provides, under certain conditions, relief for foreign taxes paid, but only for purposes of national income taxes.
Finland has entered into double tax treaties with the following jurisdictions.
Albania Guernsey (a)
Pakistan
Argentina Hong Kong Panama (a)
Armenia Hungary Philippines
Aruba (a)
Iceland Poland
Australia India Romania
Austria Indonesia Russian
Azerbaijan Ireland Federation
Barbados
Isle of Man (a) Singapore
Belarus Israel Slovak Republic
Belgium
Italy
Bermuda (a) Jamaica (a)
Slovenia
South Africa
Botswana (a) Japan Spain
Brazil
Jersey (a)
Sri Lanka
British Virgin Kazakhstan Sweden
Islands (a)
Korea (South) Switzerland
Brunei Kyrgyzstan Tajikistan
Darussalam (a) Latvia Tanzania
Bulgaria Lithuania Thailand
Canada
Luxembourg Türkiye
Cayman Islands (a) Malaysia
China Mainland
Costa Rica (a)
Cyprus
Turkmenistan
Malta Ukraine
Mexico
Moldova
Czech Republic Morocco
United Arab
Emirates
United Kingdom
Denmark Netherlands United States
qualifications. An EU Blue Card can be granted for a maximum of two years. If the work lasts for less than two years, the EU Blue Card will be valid for the duration of the employment relationship and for three additional months thereafter. An EU Blue Card issued by Finland gives the right to work only in Finland. However, the individual can move to a second EU Member State. If this second Member State does not grant an EU Blue Card, the individual can return to Finland and stay in Finland for three months even if the Finnish EU Blue Card has expired.
Entrepreneurs. Private entrepreneurs who are non-EU/non-EEA/ non-Swiss nationals and who wish to come to Finland as entrepreneurs must apply for an entrepreneur’s residence permit. Before a permit can be issued, entrepreneurs usually need to enter their business in the Trade Register maintained by the Finnish Patent and Registration Office. An individual cannot get an entrepreneur’s residence permit only because he or she owns a company; he or she must also work for the company in Finland. The application is processed in two stages. First, the Centre for Economic Development, Transport and the Environment (ELY Centre) assesses whether the individual meets the requirements in terms of profitability and whether his or her means of support is secured. After this stage, the Finnish Immigration Service processes the application.
If an individual intends to come to Finland to become an entrepreneur, he or she may apply for a startup entrepreneur residence permit. He or she must first obtain a positive Eligibility Statement from Business Finland before he or she can apply for this permit. A startup entrepreneur cannot get a residence permit without a positive statement from Business Finland.
Students. Students who are non-EU/non-EEA/non-Swiss nationals may study in Finland for a maximum of 90 days without obtaining a residence permit. Even if a residence permit is not required, the individual may still need a visa. If the studies in Finland take longer than 90 days, a residence permit for studies is required.
If the individual has been granted a residence permit for studies by another EU Member State other than Finland and if the individual is covered by a program or an agreement specified in the Finnish act on residence permits for students, he or she can come to Finland to carry out part of his or her studies for a period up to 360 days. In this case, a mobility notification must be submitted to the Finnish Immigration Service. If the individual is coming to Finland for postgraduate studies, he or she needs to apply for a residence permit for scientific research.
Accepted educational institutions include institutions that provide education after basic education, such as universities, universities of applied sciences and vocational education institutions. The individual must have sufficient funds to pay for the tuition fees as well as sufficient means for living in Finland during the entire period of validity of the residence permit.
The individual must also take out private insurance that will cover his or her medical and pharmaceutical expenses while in Finland.
When granted a residence permit for studies, the individual is allowed to work in paid employment in any field for an average of 30 hours per week. The number of working hours can be exceeded in some weeks, as long as the average working hours are no more than 30 hours per week at the end of the year. If the degree requires completing internships or a diploma work, the working-time restrictions do not apply to them, provided that an agreement to earn credits has been made prior to starting the internship or diploma work.
H. Family and personal considerations
Family members. Family members of a residence permit holder, including a spouse or a registered partner, a cohabiting partner, a guardian of a child under 18 years of age and children under 18 years of age, may apply for residence permits on the basis of family ties. A requirement for getting a residence permit on the basis of family ties is that the individual must lead a family life with the sponsor living in Finland. Also, in most cases the individual must have sufficient financial funds to live in Finland. If an individual has been granted a residence permit on the basis of family ties, his or her right to work and study in Finland is not limited in any way.
Driver’s licenses. All driver’s licenses issued in states recognized by Finland are valid for driving in mainland Finland. However, the foreign driver’s license is not valid for driving in Finland if the holder was permanently living in Finland when the license was issued.
A driver’s license issued in an EU or EEA Member State is valid in Finland for driving all categories marked on the license within the period of its validity regardless of whether the holder is visiting Finland as a tourist or living in Finland permanently. A temporary driver’s license issued in the Nordic countries is also valid in Finland. If the holder is permanently living in Finland or has studied in Finland for at least six months, the holder may exchange or renew a driver’s license issued in an EU or EEA Member State for a Finnish license or apply for a Finnish license in place of a lost, stolen or destroyed driver’s license issued in an EU or EEA Member State. If the EU or EEA license has expired, the holder must enclose a medical certificate with the application. The holder will not need to pass a driving examination if the driver’s license is still valid or less than two years have passed since the expiration of a Group 1 license, or under a year has passed since the expiration of a Group 2 license.
A driver’s license issued in Hong Kong, Macau, Taiwan or a jurisdiction that has ratified the Geneva or Vienna Road Traffic Convention (hereinafter, Contracting States) is valid in Finland when visiting as a tourist until the license expires. It is also valid for two years after its holder moves permanently to Finland. The information in the Contracting State’s driver’s license must be written in a Latin alphabet or accompanied by a translation into Finnish or, Swedish or English, by a reliable source, or an international driving license. If the holder has a permanent address in Finland and has a valid driver’s license issued by a Contracting State, the holder can exchange the license for an A1, A2, A or B Class driving license without passing the driving examination.