Payable taxes are either direct or indirect taxes, such as value-added tax and excise duty.
For indirect taxes, the taxpayer acts as the indirect tax collector and is accountable to the State, and the final burden is paid by the purchaser as part of the product price.
Value-added tax is a consumption tax that is paid when goods or services are bought. The entrepreneur reports value-added tax from his sales to the State every month. The general rate of value-added tax is 23%, but 13% for foods and fodder. Books, medicines, sports services, film showings, transport, accommodation services, culture and entertainment events and television licences contain value-added tax at 9%.
Information relating to VAT and employer contributions is provided once a month to the Tax Administration in a periodic declaration.
Direct taxes include income tax (for the state), local tax and church tax. Companies also pay church tax.
State tax is calculated two ways:
- progressive or
- proportional tax.
When applying the progressive income-tax scale, an increase in earnings causes a greater percentage increase in taxes. A person coming to Finland for more than six months is taxed in the same way as all other Finnish citizens residing in Finland. Except in certain cases, income in the form of money or benefits with monetary value is considered taxable income. Unless otherwise stated in legislation, all forms of income are taxable.
The taxpayer collects and passes on indirect taxes to the state. Value-added tax (VAT) is a tax on consumption and is paid when goods or services are provided. Businesses pay VAT to the state, with the rate generally being 23%.
In the Member States of the European Union, alcohol and alcoholic beverages, prepared tobacco, mineral oils (liquid fuels), electricity, natural gas and coal are subject to harmonised excise duty under the Directives.
In Finland, energy drinks, packaged drinks and pine oil are subject to national excise duty. Lubricating oil and lubricants are also subject to an excise-type oil waste charge and waste that is sent to landfill is subject to a waste tax. Oils are also subject to oil damage duty. The rules relating to each of the groups mentioned above have their own taxation laws. The taxation procedure for all types of tax is regulated by the Excise Duties Act.
Both products manufactured in Finland and those imported into Finland are subject to excise duty. In both cases, taxation is performed by the Customs service. Excise duties on products imported from outside the EU are usually paid during Customs formalities and in accordance with their rules of procedure.
The National Board of Customs is a tax, supervisory and service organisation that, in addition to the Tax Administration, collects the majority of taxes.
Finnish Customs is part of the European Union Customs system. Finnish Customs is a central agency, the performance of which is monitored by the Ministry of Finance. Finnish Customs work in collaboration with industry and with both Finnish and foreign officials.
The Tax Administration collects and refunds tax. The basic duty of the Tax Administration is to administer taxation and to account for taxes and tax-type charges so that taxpayers pay the proper amount of tax and incur the smallest possible costs and disadvantages, and that tax recipients receive the correct amount of tax revenue, at the correct time and in a cost-effective manner.
Submission of tax declarations
The Tax Administration website has links to the tax authorities' Internet service, both for private individuals and for businesses. Corrections to tax returns may also be made over the Internet. A new tax card, for example, for salaries, supplementary income, benefits or revenue from work at sea, may also be ordered through the site.
Finland uses a pre-completed tax return.
The Tax Administrationn website contains comprehensive information about the Finnish tax system.
The EnterpriseFinland website has extensive information about personal and corporate taxation.
Suomi.fi is an online public administration service containing useful information for people living in Finland.
Information on Finland is available in 15 languages on the website Infopankki.fi.
The Federation of Finnish Enterprises is the largest central organisation for industry, with 110 000 corporate members. They include companies from the retail, transport, services, manufacturing and contracting sectors. The membership structure corresponds to the Finnish business structure. Half the corporate members are sole traders, and half are employers.