Finland’s 2012 Social Security, Personal Income Tax Rates
Tax Rates/Brackets
The 2012 income tax rates and brackets have been accepted by the Parliament1. The 2012 tax scale is below.
| Taxable Income (€) | Tax at Lower Limit (€) | Tax for Amounts Exceeding Lower Limit (%) |
| 16,100 — 23,900 | 8 | 6.5 |
| 23,900 — 39,100 | 515 | 17.5 |
| 39,100 — 70,300 | 3,175 | 21.5 |
| Over 70,300 | 9,883 | 29.75 |
The 2012 municipal and church tax rates have also been published.2 The municipal rate varies depending on municipality, the highest rate in 2012 is 21.75 percent and the lowest is 16.25 percent. The church tax varies between 1 percent and 2 percent. Helsinki’s rates are as follows:
• municipal income tax rate is 18.5 percent;
• the Evangelical Lutheran Church income tax rate is 1 percent;
• the Orthodox Church income tax rate is 1.6 percent.
Amount of Work Income Deduction3
The amount of the (earned) work income deduction is 7.1 percent calculated on annual income exceeding €2,500. The maximum amount of the work income deduction is €945 annually. The amount of the work income deduction decreases to 6.0 percent on the amount of income exceeding €33,000. However, the work income deduction is not granted on annual income levels of €118,900 or more.
Amount of Basic Allowance for Municipal Taxation4
The amount of the basic allowance for municipal taxation is a maximum €2,850. In cases where the amount of income does not exceed €2,850, the amount of €2,850 is deducted from the income as basic allowance. In cases where the amount of income exceeds €2,850, the amount of the basic allowance is decreased by 20 percent of the income that exceeds €2,850. The basic allowance applies to yearly salaries not exceeding €17,100.
Social Security Rates for 2012
There have been minor changes to the compulsory social security rates. The confirmed rates are as follows:
Employer Contributions5:
• Employer’s social security contribution: 2.12 percent.
• Employer’s pension insurance contribution: 17.35 percent on average.
Employer’s Unemployment Insurance Contributions6:
• 0.80 percent if total salaries are at a maximum €1,936,500;
• 3.20 percent on salaries exceeding €1,936,500.
Accident Insurance and Group Life Insurance Contributions7:
• Accident insurance: 1 percent on average;
• Group life insurance: 0.07 percent on average.
Employee Contributions:
• Employee’s sickness insurance contributions* (divided in two different contributions, contributions are payable in connection with tax payments)8:
Medical treatment contribution: 1.22 %
Daily allowance contribution: 0.82 %
Total 2.04 %
• Pension insurance (deductible in income taxation)9:
Ø 5.15 percent if an employee is under 53 years old;
Ø 6.50 percent if an employee is 53 years old or older.
• Unemployment insurance 0.60 percent10 (deductible in income taxation).
* Payable in connection with tax payments
Footnotes:
1 The Act of Income Tax Scale (Vuoden 2012 tuloveroasteikkolaki 30.12.2011/1514).
2 List 803/31/2011 of municipal and church tax rates 2012 in the Statutes of Finland (Luettelo kuntien ja seurakuntien tuloveroprosenteista vuonna 2012).
3 The Act of the Changes to the Income Tax Act 1515/2011 in the Statutes of Finland (Laki tuloverolain muuttamisesta 30.12.2011).
4 The Act of the Changes to the Income Tax Act 1515/2011 in the Statutes of Finland (Laki tuloverolain muuttamisesta 30.12.2011).
5 Report from Confederation of Finnish Industries EK (Elinkeinoelämän keskusliitto työnantajan ja työntekijän sosiaaliturvamaksut 2012).
6 Report from Confederation of Finnish Industries EK (Elinkeinoelämän keskusliitto työnantajan ja työntekijän sosiaaliturvamaksut 2012).
7 Report from Confederation of Finnish Industries EK (Elinkeinoelämän keskusliitto työnantajan ja työntekijän sosiaaliturvamaksut 2012).
8 Report from Confederation of Finnish Industries EK (Elinkeinoelämän keskusliitto työnantajan ja työntekijän sosiaaliturvamaksut 2012).
9 Report from Confederation of Finnish Industries EK (Elinkeinoelämän keskusliitto työnantajan ja työntekijän sosiaaliturvamaksut 2012).
10 Report from Confederation of Finnish Industries EK (Elinkeinoelämän keskusliitto työnantajan ja työntekijän sosiaaliturvamaksut 2012).
Source: KPMG