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Taxes in Finland

Employer Contributions in Finland

The employer is obliged to pay the following contributions in addition to the salaries: (1) pension insurance, (2) health insurance, (3) accident insurance, (4) unemployment insurance, and (5) group life insurance. These contributions are compulsory. In general, the contribution amount may be affected by the employee's age, the employment relationship’s duration, and the salary.

Health insurance

The employer’s health insurance contribution is paid to the Tax Administration and other self-assessed taxes.
 
The health insurance rate is laid down annually — e.g., the 2023 rate is 1.34% for employees between 16 and 67 years of age. The health insurance rate applies to the salaries to be paid in 2023.

Pension insurance

The employer must set up and pay pension provisions for its employees if they are between 17 and 67 years old and if their monthly earnings exceed the lower limit for compulsory insurance. In 2023, the earnings must be at least EUR 62.88 per month. In addition, employees are obligated to participate in their pension provision by paying the employee pension contribution.
 
As of 2024, the average pension contribution is 25.12%.
 
To manage the pension insurance, the employer must inform without delay one of the pension insurance companies — Elo, Ilmarinen, Varma, and Veritas — of the employee’s employment agreements that have begun and ended.
 
Pension insurance covers a pension in proportion to the earnings during the period of employment if the conditions for the pension are met. The pension is paid due to disability or old age.

Accident insurance

Employers must take accident insurance for their employees against accidents at work and occupational diseases. However, if the salary doesn’t exceed EUR 1,300 in a calendar year, the employer is exempt from the obligation to take accident insurance.
 
The obligation applies to all employees in an employment relationship regardless of their salary, age, or duration. Statutory accident insurance applies to remote work as well.
 
The amount of accident insurance varies in relation to how much danger the work and the sector in which it’s performed present, with the average contribution being 0.7% in 2023.
 
Statutory accident insurance covers accidents at work, and while travelling to and from work, certain injuries considered accidents at work and occupational diseases caused by work.
 
The employer can take accident insurance from any insurance company providing accident insurance.

Unemployment insurance

Both the employee and the employer have to pay unemployment insurance contributions. The employer is, however, responsible for paying the contributions.
 
The employee’s unemployment insurance contribution is calculated based on the salary amount paid by the employer. In 2023, the contribution is 0.5% if the salary is up to EUR 2,169 and 2.05% if the salary is above that amount.
 
The unemployment insurance contribution is levied on employees between 18 and 64.
 
Unemployment insurance contributions finance unemployment security, adult education, and pension benefits.

Group life insurance

Generally, applicable collective agreements may impose an obligation on employers to take group life insurance.
 
The group life insurance contribution varies among insurance companies and is charged together with the accident insurance contribution.
 
Group life insurance covers compensation paid to the employee’s heirs in the event of the employee’s death.
 

Employee Contributions in Finland

Tax residency

In general, residents of Finland are subject to tax on their worldwide income, whereas non-residents are subject to tax on the income generated only within the country. To be considered a resident, the person must (1) have their home, and main place of abode in Finland, (2) have their home and main place of adobe abroad but stay for more than six months in Finland, or (3) be a Finnish citizen who left Finland to live abroad less than three years ago (so-called three-year rule).

Income tax

Earned income is taxed at state, municipal, and church levels. Earned income includes salary, comparable income (such as fringe benefits, employee issues and options based on the employment relationship), and pension. Certain tax deductions can also be made from earned income — e.g., trade union dues and home-work-home trip expenses. Earned income is taxed according to a progressive scale at the state level. A separate regulation regarding state-level income taxation is enacted each autumn for the following year.

Income tax rates

Over Not over Tax on Column 1 Tax on Excess (%)
0 19900 0 12.64
19900 29700 2515 19
29700 49000 4377 30.25
49000 85000 10215 34
85800   22727 44
 
In addition, earned income is taxed at the municipal level (municipal tax) and at the church level (church tax). Municipal tax varies annually and among municipalities, and church tax must be paid if the person belongs to a church. Depending on the municipality, the rate varies between 4.36% and 10.86%. Church tax is payable by Evangelic Lutheran, Orthodox, and Finnish German church members in Finland at flat rates on the same taxable income used for municipal taxation. Rates vary between 1% and 2.10%, depending on the parish.
 

Pension insurance

Pension insurance is part of statutory social security. Pension insurance covers a pension in proportion to the earnings during the period of employment if the pension conditions are met. The pension is paid due to disability or old age.
 
The employer pays the full pension insurance contribution but withholds the employee’s contribution from the salary.
 
The employee’s contribution depends on the employee’s age as follows:
 
  • 7.15% (17–52 years old)
  • 8.65% (53–62 years old)
  • 7.15% (63–67 years old)

Unemployment insurance

Both the employee and the employer have to pay unemployment insurance contributions. The employer is, however, responsible for paying the contributions.
As of 2023, the employee’s unemployment contribution is 1.5% of the salary.
 
Unemployment insurance contributions finance unemployment security, adult education, and pension benefits.

Voluntary employee contributions

Trade union dues

An employee can belong to a trade union, and trade union dues are usually levied on the employee’s salary. The dues are also tax deductible.

Voluntary unemployment fund contributions

An employee can also belong to a voluntary unemployment fund, and the contribution is usually levied on the employee’s salary. The contribution is also tax deductible.
 
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