Finland Structure and development of tax revenues Table FI.1: Tax Revenue (% of GDP) 00 003 004 005 006 007 008 009 010 011 01 013 Ranking Revenue (billion euros) A. Structure by type of tax Indirect taxes 13.3 13.7 13.3 13.4 13.3 1.8 1.5 13.0 13.0 13.9 14. 14.5 14.5 1 9.7 VAT 7.9 8. 8. 8.4 8.4 8. 8.1 8.4 8.3 8.8 9.0 9.3 9. 4 18.9 Taxes and duties on imports excluding VAT 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 8 0. Taxes on products, except VAT and import duties 5.1 5. 4.9 4.9 4.7 4.4 4. 4.4 4.5 4.9 5.0 4.9 4.9 8 10.1 Other taxes on production 0. 0. 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0. 0. 8 0.4 Direct taxes 18.5 17.3 17.3 17. 17.1 17.3 17.1 15.8 15.7 16.1 15.9 16.5 16.7 4 34.3 Personal income taxes 13.5 13.1 1.7 1.9 1.8 1.5 1.7 1.7 1.0 1.3 1.5 1.8 13.4 3 7.5 Corporate income taxes 4.0 3.3 3.4 3. 3.3 3.7 3.3 1.9.4.6.1.4 1.9 0 4.0 Other 1.0 0.9 1. 1.1 1.1 1.0 1.1 1.1 1. 1. 1. 1.4 1.4 7.8 Social contributions 11.5 11.3 11. 11.5 11.7 11.5 11.5 1. 1.1 1.1 1.6 1.6 1.7 11 6.0 Employers 8.6 8.5 8.5 8.6 8.6 8.4 8.6 9.0 8.6 8.6 8.8 8.8 8.7 6 17.9 Households.9.8.7.9 3. 3.0.9 3. 3.5 3.5 3.8 3.8 4.0 15 8.1 Less: capital transfers ( ) n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Total 43.3 4.4 41.8 4.1 4. 41.5 41. 40.9 40.8 4.0 4.7 43.6 43.8 4 90.0 Memo item: Total payable tax credits n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. B. Structure by level of government as % of total taxation Central government 51.9 5.1 5. 51.8 50.9 50.9 49.9 46.3 45.9 47.9 47.5 47.6 47.4 4 4.6 State government ( 1 ) n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Local government 1.4 1.1 0.8 0.7 1.0 1.3 1.9 3.7 4.3 3..7 3.4 3.5 3 1. Social security funds 6.5 6.7 6.8 7. 7.8 7.6 8.0 9.7 9.7 8.7 9.6 8.9 8.9 15 6.0 EU institutions 0. 0. 0. 0. 0. 0.3 0.3 0. 0. 0. 0. 0. 0. 7 0. C. Structure by economic function as % of GDP Consumption 13.0 13.4 13.3 13.3 13. 1.6 1.5 1.9 13.0 13.8 14.1 14.4 14.3 5 9.4 Labour.4 1.9 1.3 1.5 1.3 0.6 1.3. 1.3 1.5.4.4 3.0 6 47.1 of which on income from employment 0.0 19.6 19.0 19. 19.1 18.5 19. 19.9 18.9 19.1 19.8 19.7 0.0 5 41.1 Paid by employers 8.6 8.5 8.5 8.6 8.6 8.4 8.6 9.0 8.6 8.6 8.8 8.8 8.7 8 17.9 Paid by employees 11.4 11.1 10.5 10.6 10.5 10.0 10.6 10.9 10.4 10.5 11.0 11.0 11.3 6 3. Paid by non-employed.3.3.3.3..1.1.4.3.4.5.7.9 5 6.0 87
National tax systems: Structure and recent developments Table FI.1: Tax Revenue (continued) (% of GDP) 00 003 004 005 006 007 008 009 010 011 01 013 Ranking Revenue (billion euros) Capital 8.0 7.1 7.3 7.3 7.6 8.3 7.4 5.7 6.6 6.7 6. 6.8 6.6 15 13.5 Income of corporations 4.0 3.3 3.4 3. 3.3 3.7 3.3 1.9.4.6.1.4 1.9 0 4.0 Income of households 0.8 0.8 1.0 1. 1.4 1.6 1. 0.9 1.1 1.1 1.0 1.1 1.3 7.6 Income of self-employed 1.9 1.8 1.7 1.7 1.8 1.8 1.7 1.8 1.8 1.8 1.9 1.8 1.9 8 3.8 Stock of capital 1. 1. 1. 1. 1.1 1.1 1.1 1.1 1. 1. 1.3 1.4 1.5 16 3.0 D. Environmental taxes as % of GDP Environmental taxes 3.0 3.1 3.1 3.0.9.7.6.5.7 3.0 3.0.9.9 9 5.9 Energy 1.9 1.9 1.9 1.8 1.7 1.6 1.7 1.7 1.7.0.0.0 1.9 13 4.0 of which transport fuel taxes : : : 1.4 1.3 1.3 1.3 1.3 1.3 1. 1.3 1.3 1.3 19 Transport 1.0 1.1 1. 1.1 1.1 1.0 0.9 0.8 0.9 1.0 0.9 0.9 0.9 6 1.8 Pollution and resources 0.04 0.05 0.05 0.06 0.07 0.07 0.05 0.05 0.06 0.07 0.06 0.06 0.05 16 0.1 E. Property taxes as % of GDP Taxes on property 1.0 1.0 1.1 1. 1.1 1.1 1.1 1.1 1.1 1.1 1. 1.3 1.4 1.9 Recurrent taxes on immovable property 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.7 0.7 15 1.5 Other taxes on property 0.6 0.6 0.6 0.7 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.7 0.7 11 1.3 F. Implicit tax rates % Consumption 7.9 8.1 8.1 7.9 7.6 7.0 6.3 6.0 5.7 7.1 7.1 7.6 7. 4 Labour 4.9 41.8 40.7 40.6 40. 39.9 40.4 39.6 38.3 38.9 39.5 39.7 40.5 6 ( 1 ) This level refers to the Länder in Austria and Germany, the gewesten and gemeenschappen / régions et communautés in Belgium, and the comunidades autónomas in Spain. ( ) Representing taxes assessed but unlikely to be collected. Source: DG Taxation and Customs Union, based on Eurostat data. Figure FI.1: Tax revenues by main taxes, compared to EU-8, (in % of GDP) Consumption 15 Social contributions Indirect taxes 10 Capital 5 by employers 0 Direct taxes by non-employed by employees FI EU-8 Source: DG Taxation and Customs Union, based on Eurostat data. 88 Taxation trends in the European Union DG Taxation and Customs Union
Latest tax reforms Table FI.: Latest tax reforms Description of measure Change Date Personal income tax Amendment for non-residents taxed by assessment. Capital income up to EUR Both base and rate increase In force from: 01/01/016 30 000 (EUR 40 000 in ) is taxed at 30% and capital income over EUR 30 000 is taxed at 33% (3% before 015). Maximum amount of basic allowance for low-income earners for municipal tax Base decrease In force from: 01/01/016 purposes is increased to EUR 3 00 (currently EUR 970). The higher tax rate for capital income received by individuals is increased to 34% Rate increase In force from: 01/01/016 (currently 33%). Deductibility of mortgage interest is further limited. The percentage of interest Phase-out (increase) In force from: 01/01/016 (on loan for dwelling in which taxpayer or his family lives permanently) that is deductible is 55% in tax year 016, 45% in tax year 017, 35% in tax year 018, and 5% in tax year 019. Capital losses accrued from 1 January 016 may be deducted from other capital N/A In force from: 01/01/016 income (currently they may only be set off against capital gains). Temporary expatriate regime providing flat taxation of income received by qualified N/A In force from: 01/01/016 foreign specialists and executives is extended until 31 December 019 (currently applies to employment starting by 31 December 015). Increase of credit granted to low and medium-income earners. The maximum Both base and rate decrease In force from: 01/01/016 amount of earned income credit against national tax on earned income is increased to EUR 1 60 (currently EUR 1 05). Percentage used to calculate the credit is increased from 8.6% to 11.8%. Percentage to reduce the maximum credit is increased to 1.46% from 1.%. The highest tax bracket is adjusted temporarily so that the lower threshold for the Base increase In force from: 01/01/016 highest tax rate applies if taxable income is EUR 7 300 or over (currently EUR 90 000). Tax brackets for earned income are adjusted to correspond to increased level of Base neutral In force from: 01/01/016 income and to inflation, all thresholds raised with 1.%. Value-added tax Threshold for annual turnover for small businesses that are exempt from VAT Base decrease In force from: 01/01/016 is increased to EUR 10 000 (currently EUR 8 500). The threshold for tax relief is increased to EUR 30 000 (currently EUR 500). Tobacco excises Excise duties on tobacco and tobacco products are increased by approx 4%, in four Rate increase In force from: 01/01/016 phases within two years. Other, non-harmonised excises Abolition of excise duties on sweets and ice cream, scope of excise duty on soft drinks will be modified. Base decrease Announcement; in force from: 01/01/017 Property taxes Increase of certain real estate tax rates: 1) the rate for buildings used for residential Rate increase In force from: 01/01/016 purposes will range between 0.39% and 0.9% (currently between 0.37% and 0.8%), ) the rate for other kinds of immovable property will range between 0.86% and 1.8% (currently between 0.8% and 1.55%), and 3) the special rate for unbuilt immovable property will be capped at 4% (currently 3%) Other types of tax Tax amnesty for undeclared funds. The tax amnesty is available for individuals and Introduction (decrease) In force from: 01/01/016 estates of deceased persons, covers income taxed under the Income Tax Act and assets taxed under the Gift and Inheritance Tax Act. Car taxes to be reduced between 016 and 019.The reductions will be implemented Rate decrease In force from: 01/01/016 in four stages and will apply to vehicles whose emissions do not exceed 140g/km. Basic tax included in vehicle tax for vehicles used in Finland is increased by EUR 36.5 Rate increase In force from: 01/01/016 for personal vehicles and vans. Increase of waste tax Rate increase In force from: 01/01/016 Increase of tax levied on CO emissions of heating, power plants and work machinery. Rate increase In force from: 01/01/016 Deduction for donations (between EUR 850-500 000) made to universities by Introduction (decrease) In force from: 01/01/016 individuals or estates of deceased persons is introduced. Tax refunds for mining N/A Announcement; in force from: 01/01/017 Source: DG Taxation and Customs Union. 89
National tax systems: Structure and recent developments Main features of the tax system Table FI.3: Individual taxation (PIT) General Base and jurisdiction Taxation of couples and families Resident: worldwide income (subject to double-tax relief)) n-resident: domestic income Separate taxation System and Applicable rates Dual system: earned income and capital income taxed separately Global / Labour income scheme Basic allowance For national income tax, no tax on earned income below EUR 16 700 For municipal tax, earned income allowance maximum EUR 3 00 per year Rate schedule Progressive, 4 rates from 6.5% to 31.75% Top marginal rate: 31.75% (> EUR 7 300) ( 1 ) Surtaxes Municipal income tax varying between 16.5% and.5% (weighted Regional and local surcharges average 19.87%); Church tax of between 1 and % depending on the municipality (average 1.43%) Top statutory PIT rate (including surcharges) 51.6% ( ) Owner occupied dwelling t included Capital income 30% (up to EUR 30 000); 34% (over EUR 30 000) Income from renting movable property Income from renting immovable property Capital gains (immovable property) Capital gains (movable property) Dividends Creditable withholding tax: (non-listed companies) 7.5% and 8% (dividends exceeding EUR 150 000), (listed companies) 5.5% Interests on deposits and special savings accounts 30% (final withholding) Interests on corporate and government bonds 30% (final withholding) Other specific features and alternative regimes Partnerships Partnerships are not taxed separately; income is divided among the partners and taxed as personal income Other tax provisions Main tax credits & deductions Professional expenses Standard lump-sum deduction (EUR 60) OR based on real expenses Pension savings Mortgage 55% is deductable from capital income Others (not exhaustive) Travel expenses, alimony, donations (deductable from earned income); interest from loans (deductable from capital income) Treatment of losses (business/self-employed income) 10 year carry forward ( 1 ) The highest tax bracket is adjusted temporarily for 016-17. ( ) Including the average of municipal income taxes; church tax not included. In national accounting the church tax is recorded as a transfer to non-profit institutions. 90 Taxation trends in the European Union DG Taxation and Customs Union
Table FI.4: VAT Tax rates Standard 4% Reduced rate(s) 10% and 14% Table FI.5: Corporate Taxation (CIT) Tax rates minal corporate income tax rate 0% Central government surcharge Regional government surcharge Local government surcharge Top statutory CIT rate (including surcharges) 0% Special tax rate for SMEs (all-in rate) Tax base Worldwide income Anti-avoidance (deductibility of interest on intra-group loans restricted to 5 % Limits to interest deductions of earnings before interest, taxes, depreciation subject to certain safe harbours from onwards; no thin cap rules) Transfer pricing rules, arm s length principle Controlled foreign company (CFC) Controlled foreign company (CFC) for passive income only Allowance for Corporate Equity Table FI.6: Social contributions Employment income, income from business and self-employed activities, Base income from sports/entertainment, benefits in kind, income from occasional activities Employers contributions Total rate 1.% of which: Pensions 18%, Healthcare.1%, Unemployment 1% (3.9 above EUR 044 500), Accident insurance 0.1% (up to 7%) Capped contributions Employees contributions Total rate 8.97% of which: Pensions 5.7% (plus 1.5% for over 53), Healthcare.1%, Unemployment 1.15% Capped contributions Table FI.7: Wealth and transaction taxes Inheritance and gift tax Real estate taxation Recurrent real estate tax Regional differentiation Tax discount for primary dwelling Real estate transfer tax Net wealth tax Source: DG Taxation and Customs Union, on the basis of information provided by the national finance ministries. For more detail the TEDB database contains an extensive inventory of the main taxes in force in EU Member States. 91