Finland Clarifies 2015 Tax Rate Changes

The global solution for payroll professionals, combines custom research, strategic white papers, country primers, webinars, and the expert guidance you’ve come...

By Jared Mondschein

March 25 — Several changes to both income and social tax rates are in effect as of Jan. 1, 2015, according to a March 17 announcement by the Finland Ministry of Finance.

For income taxes, changes to the salary brackets are as follows:

• incomes greater than 16,500 euros ($18,102.15) and up to 24,700 euros ($ 27,098.37) now face a base tax of eight euros ($8.77) plus a 6.5 percent tax;

• incomes greater than 24,700 euros and up to 40,300 euros ($44,213.13) now face a base tax of 541 euros ($593.53) plus a 17.5 percent tax;

• incomes greater than 40,300 euros and up to 71,400 euros ($78,332.94) now face a base tax of 3,271 euros ($3,588.61) plus a 21.5 percent tax;

• incomes greater than 71,400 euros and up to 90,000 euros ($98,739) now face a base tax of 9,957.50 euros ($10,924.37) plus a 29.5 percent tax;

• incomes greater than 90,000 euros now face a base tax of 15,491 euros ($16,995.17) plus a 31.75 percent tax. 

Increases and Decreases in Social Taxes

Both employers and employees face a number of different social tax rates for 2015.

For employers:

• the health insurance contribution rate increased to 2.08 percent of employee salaries from 2.14 percent;

• the unemployment insurance contribution rate increased to 0.75 percent of employee salaries from 0.8 percent while the contributions for the amount in salary exceeding 2,025,000 euros ($2,204,820) increased to 3.15 percent from 2.95 percent;

• unemployment insurance contributions for any salary amount exceeding 2,025,000 euros increased to 0.8 percent from 0.75 percent.

For employees:

• the contribution rate for the daily allowance, or paid medical leave insurance, decreased to 0.78 percent of earned employee salary from 0.84 percent;

• the unemployment insurance contribution rate increased to 0.65 from 0.5 percent;

• the employee pension insurance rates increased for employees under 53 years old to 5.7 percent from 5.55 and for those over 53 to 7.2 percent from 7.05 percent;

• the employee pension insurance rates for entrepreneurs and agricultural entrepreneurs under 53 years old increased to 23.7 percent from 23.3 percent and for those over 53 to 25.2 percent from 24.8 percent.

Employer-subsidized travel expenses between home and the workplace is now tax free up for amounts up to 300 euros ($326.64) and between 750 euros ($816.60) and 3,400 euros ($3,701.92).

The basic deduction maximum for earned income in 2015 rose to 2,970 euros ($3,233.73) from 2,930 euros ($3,190.18). The maximum deduction from earned income rose to 1,025 euros ($1,116.02) from 1,010 euros ($1,099.68). The accrual rate of deduction also increased to 8.6 percent from 7.4 percent. A deduction is not granted for income exceeding 119,000 euros ($129,567.20), a decrease from 124,500 euros ($135,555.60).

To contact the reporter on this story: Jared Mondschein at jmondschein@bna.com

To contact the editor responsible for this story: Michael Baer at mbaer@bna.com

The Finnish Tax Administration's guide for 2015 is available in Finnish at http://www.vero.fi/fi-FI/Syventavat_veroohjeet/Ennakkoperinta/Henkiloverotuksen_lakimuutoksia_vuodelle(36120).

More information on payroll issues in Finland can be found in the Finland country primer.