Tax Shock

[Burge.Derek]

Päivä all,

I am an American citizen, married to a Finnish woman, working online for a US based company. Got my 1 year residence permit with intentions of making it permanent and possibly going for citizenship, and recently went to register with the Hämeenlinna tax office... And my eyes just about fell out of my head when I was presented with slips to pay nearly 60% income tax per month on my $40k a year salary. Called the tax office line later and was given three different stories from three different officials regarding international tax structuring.

I understand that Finland reserves the right to tax my US based income, and Uncle Sam always gets his cut as long as I'm a citizen working for a US company, but 60% seems *absurd*. I've placed inquiries out to a few Finnish lawyers to see if any of them know some work arounds, but I was curious to see if anyone here has been in a similar situation. Anyone with some wisdom to share would be an immediate friend.

[TeppoKroatialainen]

didn't have similar experience, but in general welcome to europe high taxes and free university

[rinso]

60% is the default percentage if they cannot make a good estimate what to charge you.
You pay, next year you fill in the forms with the detailed info and at the end of that year you get something back.
I guess that on a 40 K salary you'll pay somewhere between 30 and 40%.
So it is worth to negotiate a more reasonable percentage with the fax office.

[Beep_Boop]

Okay, so what happened here.. you basically screwed up. Luckily, you're not gonna lose money over this screw up, but you'll lose time and it'll inconvenient. Consider it as a learning lesson. If you don't declare your income estimate for the coming year, then the tax authorities reserve the right to tax you at 60%. Whoever family you have in Finland should have told you this.

Now you basically do what risno said. You pay, and then can do an information correction in the forms you receive later by mail, and then they give you the difference between the 60% and your actual percentage for your salary which is closer to 26%. Also, get familiar with http://www.vero.fi/en-US , it's almost fully translated into English.

Disclaimer: I'm not a tax expert.

[betelgeuse]

Now you basically do what risno said. You pay, and then can do an information correction in the forms you receive later by mail, and then they give you the difference between the 60% and your actual percentage for your salary which is closer to 26%. Also, get familiar with http://www.vero.fi/en-US , it's almost fully translated into English.

In addition with the web services one can at any time request a change to the withholding percentage. Once Burge.Derek has online identification access, he should try to get the percentage down using the service.

There's also the option of incorporating and just invoicing the US company. The taxation is different so it's possible that the taxation levels would be different. I didn't do any calculations but it's sure that this way dealing with the withholding and social security payments would be simpler.

[raskarhu]

I think the OP has made some new friends ...