Taxpayers = persons/entities liable to tax

• private individuals
• companies
• corporate bodies

Taxable income

• earned income: wages, salaries, pensions, benefits...
• capital income: rental incomes, dividends, intrests...
• business profits

Some significant questions in income taxation

• Income taxation for earned income is progressive: tax rate is higher for higher income.
• Different deductions decrease the amount of tax.
• Taxation is carried out year by year. A tax year is equal to a calendar year.
• Failing to take care of your tax returns or tax payments can lead to tax assesment by estimation and punitive tax increase.

Phases of income taxation

Income taxation is carried out in two phases.

1) during the tax year

Advance tax payments are based on estimation. Prepayments are collected in two ways:

• Withholding tax on wages and salaries is carried out according to the tax card (verokortti) by the employer.
• Enterprises and self-employed persons should register for prepayments. Prepayments are paid according to the prepayment calculation (ennakkoverolippu).

2) after the tax year

During the spring of the next year the tax administration sends tax return forms to all.

Persons getting only wages/salaries get one form: tax return of private persons. Self-employed persons and entrepreneurs get two different forms: one for business and one for private person.

Tax return forms must be checked, filled in and returned to the tax administration.

During autumn the tax adminstration sends final assessment decision (verotuspäätös). There you can see all the data that has been used for assessing your taxes.

If your prepayments were too high you are entitled to refund (veronpalautus).

If your prepayments do not cover your taxes you have to pay outstanding tax (jäännösvero).

Income taxes in practice

Income taxation is partially different for earned income (wages/salaries) and for business profits.

Wages are declared with tax return form for private persons. Business profits are declrared with the tax return form for enterpises.

See instructions:

• Are you an employee or an entrepreneur?
• Income tax on wages/salaries of private persons
  • Employee resident in Finland
  • Employee non-resident in Finland
• Income tax on business profits
  • Very minor single-person business when start-up notification has not been filed
  • Private entrepreneur, private trader, self-employed person, "toiminimi"
  • Limited liability company (Ltd)
• Employers' (wage payers') responsibilities