In Finland, you pay income tax on your salary in advance. You must also pay taxes on other income, such as unemployment allowance, parental allowance, pensions, and study grant. All employees must have a tax card as the employer will deduct a % of your salary based on your tax rate on the card. In addition to taxes, the employer will also deduct a % for unemployment and medical insurance. In Finland, taxation is progressive. This means the more you earn, the more tax you pay and vice versa.
At the end of tax year, you will get a summary of taxed income from Vero and you can change and adjust if there are more or less income and benefits. Vero will then decide if you will have to pay more, or they will return overpaid tax to you, or no adjustments needed thereafter.
Most of you are probably wondering what does the state do with your taxed income. In summary, the state and municipalities use the tax money to pay for the public’s social benefits, for example, unemployment benefits, free/cheap health care, and free education. The tax money also pays for the country’s defense, maintenance of public roads and properties.
Find out more about taxation at the The Finnish Tax Administration (Vero.fi) or InfoFinland.fi