specific tax question

Jokis · Post by **Jokis** » Tue Jul 30, 2013 7:44 am

I'm new here at this forum. I'm Belgian, living and running a business at the moment in Estonia and I decided to moove north. I'm doing some research still to where exactly I gonna go, Sweden or Finland. I find out that Sweden and finland have a quit different way of taxing the income. I spit the Finnish tax boards out but I still have questions. For the earned income tax one pays state taxes and one pays communal taxes. The state tax is a system where higher incomes pay higher % of taxes. But what about communal taxes? The % depends on the municipality one lives and is between 16 and 21 %. But is that % calculated on the total earned income or is there a tax free amount? So if I take an example that my year income is 100.000 euro and the municipality counts 20 % tax do I pay than 20% x 100000= 20000 euro? or?

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Pursuivant · Post by **Pursuivant** » Tue Jul 30, 2013 9:42 am

Its not so simple, as the government and municipal also have some slight differences in what is taxed and deductions. The easiest way to see how it goes is to use the tax calculator at www.vero.fi.

As far as the business goes, if you are now in Estonia, you better keep the company in Estonia as otherwise you get taxed for the income of the company - you can not hide the money away as capital like in Estonia.

Rip · Post by **Rip** » Tue Jul 30, 2013 10:38 am

Jokis wrote:So if I take an example that my year income is 100.000 euro and the municipality counts 20 % tax do I pay than 20% x 100000= 20000 euro? or?

With that high income, close to so. There are deductions made from the municipal tax, but they have largest effect in incomes below the median.
The graph in the picture (two years old, might have changed a bit on details) shows the effective municipal tax rate vs. annual income if the nominal municipal tax rate 19.17% (national average at the time)
http://suomenkuvalehti.fi/jutut/kotimaa ... tasaverona

The tax office calculator is good for giving the over all effect of all taxes and fees

Jokis · Post by **Jokis** » Tue Jul 30, 2013 11:06 am

indeed it is quit a difficult system in Finland. I actually used the tax calculater from the finnish taxboard. But If I put an yearly earned income of 20000 euro for example for a self employed person he calculates 500 euro tax to pay. I guess this is state tax and municipal tax together? If that is true, finland would be a tax paradise

In estonia from this 20.000 euro income you get finnaly 9500 in your hands. There has to be some information what I miss. I read also somewhere about pension insurence. Is it correct that this is an obligated insurence for self employment individuals? And this is 22 % of the yearly income starting from the first euro you earn? I would really like to know if I have 20.000 euro yearly earned income for example how much I get finnaly in my hands after paying taxes, health and pension insurence, etc.

Jokis · Post by **Jokis** » Tue Jul 30, 2013 11:12 am

Rip wrote:
Jokis wrote:So if I take an example that my year income is 100.000 euro and the municipality counts 20 % tax do I pay than 20% x 100000= 20000 euro? or?
With that high income, close to so. There are deductions made from the municipal tax, but they have largest effect in incomes below the median.
The graph in the picture (two years old, might have changed a bit on details) shows the effective municipal tax rate vs. annual income if the nominal municipal tax rate 19.17% (national average at the time)
http://suomenkuvalehti.fi/jutut/kotimaa ... tasaverona

The tax office calculator is good for giving the over all effect of all taxes and fees

ok, that is interesting, how higher the income how higher the % of municipal tax you pay. thanks for the link.

Pursuivant · Post by **Pursuivant** » Tue Jul 30, 2013 11:18 am

Theres the pension insurance thats mandatory, yes. And a few other things. This is the fees if you pay someone a salary what the employer has to pay...
http://www.yrittajat.fi/palkkalaskuri
Theres stuff there for self-employeds as well (that you don't have an OÜ)

Adrian42 · Post by **Adrian42** » Tue Jul 30, 2013 11:32 am

Jokis wrote:indeed it is quit a difficult system in Finland. I actually used the tax calculater from the finnish taxboard. But If I put an yearly earned income of 20000 euro for example for a self employed person he calculates 500 euro tax to pay. I guess this is state tax and municipal tax together?

No, that is the employer's share of the health insurance contribution.

You also have to enter the 20000 at the top as "Wages and in-kind benefits, main occupation"

Jokis wrote:I read also somewhere about pension insurence. Is it correct that this is an obligated insurence for self employment individuals?

Yes.

Jokis wrote:I would really like to know if I have 20.000 euro yearly earned income for example how much I get finnaly in my hands after paying taxes, health and pension insurence, etc.

My math is that you get 11500, but I might be wrong on that.

You've already read http://www.uusyrityskeskus.fi/sites/uus ... 13_web.pdf ?
It also contains some contact points for your questions.

Adrian42 · Post by **Adrian42** » Tue Jul 30, 2013 11:36 am

Jokis wrote:
Rip wrote:
Jokis wrote:So if I take an example that my year income is 100.000 euro and the municipality counts 20 % tax do I pay than 20% x 100000= 20000 euro? or?
With that high income, close to so. There are deductions made from the municipal tax, but they have largest effect in incomes below the median.
The graph in the picture (two years old, might have changed a bit on details) shows the effective municipal tax rate vs. annual income if the nominal municipal tax rate 19.17% (national average at the time)
http://suomenkuvalehti.fi/jutut/kotimaa ... tasaverona

The tax office calculator is good for giving the over all effect of all taxes and fees
ok, that is interesting, how higher the income how higher the % of municipal tax you pay.

Note that this is true for any tax with a fixed tax rate and a fixed amount deduction - you don't pay the tax on the deduction, so you are always below the actual tax rate (but the higher your income, the lower that effect is in relation to what you actually have to pay).

Jokis · Post by **Jokis** » Tue Jul 30, 2013 12:03 pm

Adrian42 wrote:
Jokis wrote:indeed it is quit a difficult system in Finland. I actually used the tax calculater from the finnish taxboard. But If I put an yearly earned income of 20000 euro for example for a self employed person he calculates 500 euro tax to pay. I guess this is state tax and municipal tax together?
No, that is the employer's share of the health insurance contribution.

You also have to enter the 20000 at the top as "Wages and in-kind benefits, main occupation"

Jokis wrote:I read also somewhere about pension insurence. Is it correct that this is an obligated insurence for self employment individuals?
Yes.

Jokis wrote:I would really like to know if I have 20.000 euro yearly earned income for example how much I get finnaly in my hands after paying taxes, health and pension insurence, etc.
My math is that you get 11500, but I might be wrong on that.

You've already read http://www.uusyrityskeskus.fi/sites/uus ... 13_web.pdf ?
It also contains some contact points for your questions.

yes I red this link already, interesting all. Yes now i put the 20,000 euro on top by salaris and then I get a tax of 2780 euro about, if I count also 22% of pension insurence than I come to 12800 euros about that i get, that start to look more realistc. And still better than in Estonia.

Jokis · Post by **Jokis** » Tue Jul 30, 2013 12:07 pm

Pursuivant wrote:Theres the pension insurance thats mandatory, yes. And a few other things. This is the fees if you pay someone a salary what the employer has to pay...
http://www.yrittajat.fi/palkkalaskuri
Theres stuff there for self-employeds as well (that you don't have an OÜ)

No, no OÜ , I have FIE. Now I can simply stop my business in estonia and start over in Finland.
even after 8 years Estonia I don't manage to understand Finnish

, I tryed the english version but can't find the table you send me of the finnish version.

Jokis · Post by **Jokis** » Tue Jul 30, 2013 12:11 pm

Adrian42 wrote:
Note that this is true for any tax with a fixed tax rate and a fixed amount deduction - you don't pay the tax on the deduction, so you are always below the actual tax rate (but the higher your income, the lower that effect is in relation to what you actually have to pay).

Ok, i got that, Is that also the case for the 22% pension insurence?

Adrian42 · Post by **Adrian42** » Tue Jul 30, 2013 12:22 pm

Jokis wrote:
Adrian42 wrote:
Note that this is true for any tax with a fixed tax rate and a fixed amount deduction - you don't pay the tax on the deduction, so you are always below the actual tax rate (but the higher your income, the lower that effect is in relation to what you actually have to pay).
Ok, i got that, Is that also the case for the 22% pension insurence?

I am not aware of any deductions for pension payments - and they would anyway also reduce the pension you get paid out.

Jokis · Post by **Jokis** » Tue Jul 30, 2013 1:16 pm

ok, that came more clear now. thanks people for your reactions.

Rosamunda · Post by **Rosamunda** » Tue Jul 30, 2013 11:28 pm

Try reading this (in whichever language you prefer):

http://www.masuuni.info/articles/521/

It might not be 100% up to date with the latest percentages but it gives a good overview on how the system works.

Adrian42 · Post by **Adrian42** » Tue Jul 30, 2013 11:43 pm

Rosamunda wrote:Try reading this (in whichever language you prefer):

http://www.masuuni.info/articles/521/

It might not be 100% up to date with the latest percentages but it gives a good overview on how the system works.

The link I already gave in this thread is for the latest version of this document.

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