Tax Card explain

[GmoDelft]

What is the difference between this two and which one will be chosen by employer ?

[sotka_]

What is the difference between this two and which one will be chosen by employer ?

Matti and Samuli work for the same employer. Both have tax cards of the type that has a single income ceiling for the entire year. Both cards have 15% as the basic withholding rate and 33% as the additional rate. By November, both Matti and Samuli have been paid €23,000 in wage income. It is expected that both will still receive €3,000 before the year is over. When asking for their tax cards at the tax office and having their withholding calculations made, Matti and Samuli had given €24,000 as their estimated annual gross income. This means that they are about to go beyond their income ceilings by €2,000.

Matti does not react to this situation. As a result, his withholding for December is according to the instructions his employer sees printed on the card (33%, the additional rate, is applied on the €2,000). Matti's employer has withheld €4,260 in total (15% × €24,000 + 33% × €2,000). However, considering what Matti's true gross income would require, the need for withholding is €4,405: this means the €4,260 is not enough (although the €2,000 has the higher withholding rate), and Matti ends up paying back tax.

In January the following year, the basic withholding rate of 15% is again applied by Matti's employer.

[Honest]

2% is tax rate for the income which you have estimated and told the tax office for this year. Any income which goes above that limit will be taxed at 3%.

P.S: It doesn't mean that you can earn 30000 more and you will still be taxed at 3%. It's only if the increase is a fraction of your declared/estimated income.

[Rosamunda]

Hmmm.... If the OP wasn't bewildered already, then s/he certainly must be now

I am.


By the way, what happened to Samuli? Or did I miss something.

[sotka_]

Hmmm.... If the OP wasn't bewildered already, then s/he certainly must be now

I am.


By the way, what happened to Samuli? Or did I miss something.

https://www.vero.fi/en-US/Individuals/T ... ome(32332)

Basic rate is calculated based on your estimated income. Anything you earn up to that estimate is taxed using basic rate. Anything over that is taxed using additional rate.