Finland Taxation for Expatriates: Income Tax and Property Tax Explained

Published on January 28, 2026 and written by Cyril Jarnias

Moving to Finland is attracting an increasing number of managers, researchers, and mobile workers. But behind the image of a stable and highly digitalized country lies a dense, highly structured tax system that can surprise expatriates. Understanding who is considered a tax resident, how salaries, capital income, and real estate property are taxed is essential to avoid unpleasant surprises… and to optimize what can be optimized within a perfectly legal framework.

Tax Residence: The Cornerstone of Finnish Taxation

Before discussing tax rates, it is necessary to understand how Finland decides that a person is a resident or non-resident for tax purposes. Everything else follows from this: taxable base, type of tax, eligibility for foreign tax credits, treatment of real estate income, etc.

Under Finnish law, two main statuses exist for individuals: resident taxpayer (unlimited tax liability) and non-resident taxpayer (limited tax liability).

An individual is generally considered a tax resident in Finland if they have their “domicile and permanent home” in the country, or if they stay there continuously for more than six months. The six-month criterion should not be understood strictly day by day: temporary absences, for example vacations of a few weeks outside Finland, do not break the continuity of the stay. In practice, the administration considers that an absence of two months or more may break this continuity, but each situation is analyzed on a case-by-case basis.

Conversely, a non-resident is a person living abroad or staying in Finland for less than six months, without establishing a center of life there. In this case, only the portion of income considered of Finnish source is taxable in Finland.

Special Case of Finnish Citizens and the “Three-Year Rule”

For Finnish citizens, the law goes further. When a Finnish citizen leaves the country, they generally remain a tax resident for the year of departure and the following three full calendar years. To terminate this “three-year rule”, they must prove they no longer have substantial ties to Finland: no permanent home available, family moved abroad, limited economic activities, Finnish social security coverage terminated, etc.

Tax Residence and International Treaties

It is possible for an expatriate to be simultaneously resident under Finnish law and resident under the law of another country. In this case, the tax treaties concluded by Finland with more than 70 states play an arbitrating role. They provide “tie-breaker rules”: place of permanent home, center of vital interests (family, economic interests), habitual abode, nationality, etc.

If, according to the treaty, the expatriate is ultimately deemed a resident of the other state, Finland’s taxing rights are limited to Finnish-source income, within the limits provided by the treaty. In practice, this can, for example, restrict the taxation of investment income or certain capital gains.

Resident Income Tax: A Progressive, Multi-Tier System

Once tax residence is established, the expatriate becomes taxable on their worldwide income. Finland has a so-called “schedular” system: earned income and capital income are taxed separately, with distinct scales.

General Structure: State, Municipality, Church, Yle

For a resident, earned income bears several levels of taxation:

– a progressive state tax,

– a municipal tax at a fixed rate (different per municipality),

– possibly a church tax (for members of recognized churches),

– the public broadcasting fee (Yle),

– health insurance contributions and, in practice, social security contributions (pension, unemployment, etc.), which add to the overall burden.

In parallel, capital income is taxed according to a state scale at fixed rates (30% then 34%).

State Income Tax Scale for Earned Income

For 2025, the state income tax brackets for earned income are, in a simplified manner, as follows: state income tax brackets for earned income.

These percentages apply to the earned income base after deductions, and are then added to the municipal tax and possibly other levies.

Municipal Tax: A Rate That Varies by Municipality

Each municipality sets its own municipal tax rate on earned income. In 2025, rates range between 4.70% and 10.90%, with an average of about 9.3%. In the major cities where many expatriates settle, rates remain rather at the lower end of the range: Helsinki, Espoo, and other attractive municipalities apply 5.30%.

To illustrate the scale of the differences, a single employee with the median salary (around €3,300 gross per month) can pay over €2,000 more per year in tax depending on whether they live in the lowest or highest taxed municipality.

Church Tax and Yle Fee

Members of the Evangelical Lutheran Church, the Orthodox Church, or the German Parish of Finland pay a church tax at a fixed rate, typically between 1% and 2.25% of taxable income.

Health and Social Security Contributions

In addition to income tax proper, there are health contributions:

– a contribution for health insurance (approximately 1.06% of earned income),

– a contribution for daily allowances (0.84% in recent figures),

– and, from an overall perspective, the pension and unemployment insurance contributions paid by the employee.

These levies are deducted via the paycheck and add to the overall burden on salary, even though they are partly deductible in calculating the taxable base.

Capital Income: 30% then 34%

Capital income – interest, dividends (under specific rules), rental income, capital gains – is taxed at the state level, separately from earned income. The scale is simple:

This applies both to a resident and, in many cases, to a non-resident receiving Finnish-source income (subject to tax treaties).

Deductions: Room to Maneuver to Reduce the Bill

Despite high taxation, Finland grants a fairly wide range of deductions and tax credits, especially for residents subject to progressive taxation:

For an expatriate who becomes a resident, optimization often involves good anticipation of these deductions from the application for a tax card (verokortti) and when checking the annual pre-completed tax return.

Non-Resident Income Tax: A Withholding System, Simple but Potentially Heavy

Expatriates on short stays, or those who keep their main tax residence in another country, are generally treated as non-residents. Their status is based on the length of stay (less than six months) and the absence of a permanent home in Finland.

Principle: Taxable Only on Finnish Income

A non-resident is taxable in Finland only on their Finnish-source income: salaries for work physically performed in Finland, director’s fees from a Finnish company, rental income from property located in Finland, capital gains on certain Finnish real estate assets, etc.

The sourcing rules are precise. For example, a salary paid by a Finnish company is considered Finnish income if the activity is performed mainly (more than half the time) in Finland during the relevant period. For directors of Finnish companies, attendance fees are always considered Finnish-source, regardless of where they perform their duties.

35% Flat Rate on Salaries

The standard regime for non-residents regarding earned income is based on a final withholding at source of 35%. Before applying this rate, the administration allows a standard deduction of €510 per month or €17 per day, provided it is indicated on the tax-at-source card.

If no tax-at-source card is presented to the employer, the latter is obliged to withhold 60%, leaving it to the taxpayer to later request a refund or adjustment.

Option to Choose Progressive Taxation

The 35% withholding can be penalizing for modest incomes. That is why non-residents can, under certain conditions, request to be taxed according to the progressive scale for residents. In this case:

– they must provide the Finnish administration with information on all their worldwide income,

– Finland calculates the Finnish tax according to the same rules as for a resident, while taking into account, where applicable, tax treaties and double taxation credits.

This option is often interesting for non-residents with limited income, or for those who already bear high taxation in their country of residence.

“Key Employees” Regime (Foreign Experts)

Finland has established an attractive tax regime aimed at attracting highly qualified profiles: the “foreign experts” or key employees regime. It involves a flat rate on the Finnish-source salary, in exchange for a simplified framework without the right to deductions.

The main criteria are as follows:

– become a tax resident in Finland at the start of employment,

– receive a monthly cash salary of at least €5,800 (excluding benefits in kind),

– perform a job requiring special expertise,

– not be a Finnish citizen,

– not have been a Finnish tax resident during the five calendar years preceding arrival,

– be remunerated by a Finnish entity.

The rate of this regime was 32%, and the authorities have decided to lower it to 25%. The maximum duration is now 84 months (7 years) for foreign nationals, compared to 48 months previously. The application must be submitted within 90 days of starting work.

This regime offers a clear framework: no progressive scale, no deductions, but a fixed rate including the health insurance contribution. For highly paid expatriates, it can be significantly more favorable than ordinary taxation.

Real Estate Income, Capital Gains, and Rents: The “Capital” Dimension for Expatriates

Many expatriates remain tenants, but many end up buying a home, either to live in or as an investment. Finland has two main types of levies in this area: income tax (capital gains, rents) and property tax (annual real estate tax), not forgetting the transfer tax (stamp duty) upon acquisition.

Taxation of Rents: Capital Income

For a Finnish resident, rents received on property located in Finland or abroad are treated as capital income. The taxable base is the net rent: gross rent minus expenses actually incurred to generate this income (maintenance, repairs, loan interest related to the acquisition, management fees, etc.). Taxation is then at the rate of 30% or 34% depending on the €30,000 threshold.

For a non-resident, rents from property located in Finland are considered Finnish-source income and subject to the same capital income logic, with application of the 30%/34% scale. The withholding at source may not be final: a non-resident landlord must in principle file a Finnish tax return for this rental income.

Real Estate Capital Gains: Sale of Primary Residence and Investment Properties

Capital gains from the sale of real estate in Finland fall into the category of capital income. For residents and non-residents alike, the key distinction concerns the use of the property.

For an investment property (rental apartment, vacation home, etc.), the capital gain is taxable as capital income. The taxable base is calculated, at the taxpayer’s choice, using one of two methods:

– sales price – (acquisition price + acquisition and renovation expenses),

– or sales price – a standard deduction of 20% (or 40% if the property has been owned for at least 10 years), when this is more favorable than the actual cost method.

Losses on sale can be offset primarily against other capital gains, then against other capital income, with a possible carry-forward for five years.

Tax treaties can, however, limit or specify this taxing right. In many treaties, gains on real estate remain taxable in the country where the property is located, while gains on movable property generally go to the state of residence.

Real Estate Tax (Property Tax): An Annual Municipal Tax on Ownership

In addition to taxes on income and capital gains, Finland levies an annual real estate tax (kiinteistövero) on real estate ownership. It is a local tax, collected by the municipality where the property is located, and applies equally to residents and non-residents.

The base of the real estate tax is a tax value of the property, distinct from the market value. This value is calculated from official schedules that take into account the type of building, its area, year of construction, and land category.

The rates are set by each municipality, within ranges defined by law. For expatriate owners, three main categories are decisive:

In the Helsinki metropolitan region (Helsinki, Espoo, Vantaa, and a few others), the legislator additionally requires that the rate on unbuilt building land be at least three points higher than the general land tax rate, up to a limit of 6%. The goal: to encourage construction rather than holding empty plots.

For an expatriate investor renting out their property, the real estate tax paid is deductible from the rental income when calculating the tax on capital income. This point is important: the property tax thus reduces the taxable base for rents.

Examples of Property Tax Burden for an Expatriate

Imagine an expatriate who buys an apartment in Helsinki as a primary residence, with a tax value of €200,000. If the municipality sets a rate of 0.50% for permanent residences, the annual real estate tax will be:

200,000 × 0.5% = €1,000 per year

If they acquire a vacation cottage in a rural municipality, with a tax value of €100,000 and a rate of 1.5% for secondary residences, the real estate tax on this property will be:

100,000 × 1.5% = €1,500 per year

These amounts are in addition to taxation on rents or capital gains, as applicable.

Transfer Tax: The Entry Cost to the Real Estate Market

Finland does not have notary transfer duties as high as some continental European countries, but a transfer tax applies to almost all real estate acquisitions and shares in real estate companies.

The principle is simple: for each transaction, the buyer pays a percentage of the sales price, depending on the nature of what is being purchased:

This tax is, in principle, payable by the buyer within two months of the transaction. Until the end of 2023, first-time buyers could benefit from an exemption under certain conditions, but this regime has ended. Today, whether resident or non-resident, the transfer tax generally applies identically, except for exceptions provided by law or treaties.

To these tax costs are added legal fees, notary fees, and agency fees. Combining:

– transfer tax,

– notary fees (0.05% to 0.10%),

– attorney fees (approximately 1%),

– real estate agent commission (3% to 5% to the seller),

one obtains a “roundtrip” cost (purchase + resale) that can range from 5.5% to over 9% of the price, a figure to factor into any investment strategy for an expatriate.

International Double Taxation: How Finland Coordinates with the Country of Origin

Finland is well integrated into the international network of tax treaties, generally aligned with the OECD Model. These bilateral or multilateral agreements (notably the Nordic convention covering Scandinavian countries) pursue two objectives: avoiding double taxation and combating tax evasion.

Methods for Eliminating Double Taxation

For an expatriate who becomes a Finnish resident but continues to receive income in their country of origin, the central question is: who taxes what, and how to avoid a double charge. Two main methods exist:

The choice of method depends on the applicable treaty and, failing that, on Finnish law on the elimination of double taxation.

183 Days and Cross-Border Work

Many treaties signed by Finland include the famous “183-day rule” for employees. It essentially provides that:

– if an employee from country A works in country B for less than 183 days within a given period,

– they are remunerated by an employer who is not a resident of B,

– and the cost of this salary is not borne by a permanent establishment of the employer in B,

then the work country (B) cannot tax this salary. The country of residence (A) retains the taxing right.

The nuance is that the 183-day period is not always a “calendar” period: some treaties define it over any rolling 12-month period, others over the local fiscal year. Finland has, for example, different rules with Belgium, France, or Italy (calendar period) and with Australia, Canada, or the United States (12-month period).

In the Nordic region, the multilateral treaty also provides specific rules for cross-border commuters living and working on either side of the Finland–Sweden or Finland–Norway borders, to avoid absurd situations of double taxation or non-taxation.

Practical Steps for Expatriates: Tax Card, Tax Return, MyTax

Beyond the theoretical rules, the success of settling in Finland depends heavily on administrative management. The Finnish Tax Administration is renowned for its advanced digitalization, but it assumes that the expatriate follows a few key steps.

Obtaining a Finnish Identification Number and a Tax Card

To work legally and be taxed correctly, one must first have a Finnish personal identification number. It can be issued by:

– the national registration service (Digital and Population Data Services Agency),

– the tax administration (in some cases, notably in Helsinki),

– or the immigration administration when issuing a residence permit.

Once this number is obtained, the expatriate must apply for a tax card (verokortti) from Vero. There are different types of cards:

The application can be made via the MyTax portal, by paper form, or by visiting a Vero office. It is essential to provide a realistic estimate of annual income (salaries, bonuses, benefits) and, ideally, to anticipate the main possible deductions.

Pre-completed Tax Return and Adjustments

For residents, the administration sends a pre-completed tax return each spring, often already very complete thanks to data collected from employers, banks, insurance companies, etc. The expatriate must:

– either confirm it as is if they have no changes,

– or correct it (addition of foreign income, deductions, property information, etc.) via MyTax or on a paper form.

The final taxation occurs in the autumn (generally until the end of October). If the advance payments and withholdings exceed the tax due, the taxpayer receives a refund, otherwise they must pay a balance plus interest.

Using MyTax in Practice

The MyTax portal allows you to:

– view and modify your tax card during the year (in case of salary change, rental income, etc.),

– track the progress of your case,

– declare capital income, real estate capital gains, rents,

– enter information necessary for the application of tax treaties (foreign income, tax credits),

– pay your taxes online.

For an expatriate, one critical point is to correctly report foreign income, especially at the beginning and end of stay, to avoid being taxed twice on the same period.

Basic Strategies for Expatriates: Some Avenues within the Finnish Framework

Finland is not a tax haven. But the system, although heavy, also offers relatively clear rules, few “exotic” surprises, and a rather accessible administration. Some good practices emerge for expatriates:

Conclusion

Finnish taxation, viewed from abroad, can seem intimidating: progressive scales, overlap of national and local taxes, separate treatment of earned and capital income, not to mention an annual property tax and a transfer tax on real estate purchases. For an expatriate, the challenge is not only to know the rates, but to understand how their status as resident or non-resident, their real estate plans, their ties with their country of origin, and the applicable tax treaties interact in this landscape.

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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