Prepayments of tax for 2016: Individual taxpayers – physical persons
- Date of issue
- In force until further notice
Taxpayers must make prepayments on any receipts of income that are not subject to withholding.
Your prepayments are related to both earned income and capital income. The Tax Administration database on assessment of all taxpayers’ taxes for the 2014 taxable year serves as the base for the official decisions that define the total prepayment for the 2016 taxable year. Nevertheless, the following exceptions have been made in the official calculations:
- Projected income from agricultural sources has been lowered by 20.0%.
- Projected income from business sources has been increased by 5.0%
- Projected rental income has been increased by 3.0%
- Projected wage income, including tip income within certain service professions, has been increased by 2.0%, and if income figures for 2015 have been available it has been increased by 1.0%.
The calculations include no further upward adjustments in addition to the above.
If any changes to your prepayments were made during 2015, the income figures for 2015 have thus been available to us and we have made use of them. Similarly, you may have submitted an estimate of your 2016 income, and in that case, we have made use of it as well.
Similarly, for calculations on capital income and earned income, derived from business and farming, the Tax Administration database on assessment for 2014 serves as the base, and alternatively, if changes in prepayment were carried out in 2015, the income figures for 2015 have therefore been available and calculations are based on them.
No income estimates for interest on cooperative capital and dividends are included in the calculation of the prepayments if such estimates relate to the taxpayer's latest final tax assessment. The only cases when this type of income is included are firstly, if on the taxpayer's request, changes to prepayments were made in 2015, and secondly, if the taxpayer submitted an estimate for 2016 that included dividends from domestic payers, dividends from stock-exchange-listed foreign payers or profit-surplus income from cooperative societies
Payers must withhold 25.5% on the dividends if they are distributed by a stock-exchange-listed corporation. Regarding the payers of other dividends, the rate of withholding is 7.5% except for any amounts going over the threshold of €150,000 on which payers must withhold 28% on the excess. It should be noted that when payers withhold tax, the percentage rate applies to the entire amount, not just to the taxable portion of the dividends. If you expect to receive dividends distributed by other than stock-exchange listed corporations, we recommend that you ask for a revised tax card to ensure that your withholding is correct. When you ask for the card you should let us know the gross amount of your dividends, divided into two parts; one of which is taxable as earned income, the other — as capital income. Report the part representing 8% of the mathematical value of the shares you hold as the capital-income part. The dividends in excess of 8% of the mathematical value will be taxed as earned income.
Further information on the taxation of dividend income (in Finnish or in Swedish) - Osinkotulojen verotus.
Payers must withhold 25.5% on the profit surplus distributed by a stock-exchange-listed cooperative society. For other cooperative societies, the rate of withholding is 7.5% on the condition that the annual total profit surplus is max. €5,000 distributed by the same cooperative. If the annual total exceeds this threshold, the rate of withholding is 25.5% on the excess. It is the obligation of the cooperative society to monitor whether its distributions to a single beneficiary go over the threshold. If you expect to receive profit surplus distributed by other than stock-exchange listed cooperatives, we recommend that you ask for a revised tax card to ensure that your withholding is correct.
(in Finnish or in Swedish)
Healthcare contributions of self-employed individuals
Healthcare contributions are the two following payments: healthcare payment (Finnish: sairaanhoitomaksu) and the earned-income contribution payment (Finnish: päivärahamaksu). The rate of the healthcare payment is 1.30% of the annual earnings amount reported to the insurance company, because in the case of self-employed business, the payment cannot be based on wages. If the individual concerned is additionally employed by another employer, and has receipts of wage income, all incomes are taken into account in the official decisions that define the total prepayment for 2016. If there are tax deductions, they are included in the calculation as based on the total income, and the result is the net taxable income. Recipients of academic grants, insured as prescribed by MYEL laws, have the receipt of grant included in their income base for healthcare contribution.
For wage earners – individuals who are not self-employed or MYEL insurance carriers – the base for healthcare contribution amounts is the same as the base for municipal income tax. Some taxpayers are recipients of pension, social benefit or other income, which is exempted from the earned-income contribution, but includible in the healthcare payment base. For this reason, the rate of the healthcare payment is raised by 0.17% for these taxpayers.
The earned-income contribution rate equals 0.82%, and if the taxpayer is not a wage earner, the annual earnings amount reported to the insurance company is used as the base. In the case of self-employed business insured under the YEL laws, the applicable rate of the earned-income contribution payment is increased by 0.13%.
Applicable prepayment rates
- State income tax schedule, 2016
- Income tax rates valid in various municipalities and church parishes, 2016
- Nonresidents’ municipal income tax rate 19.75%
- Healthcare payment 1.30% + 0.17%
- Healthcare charge called earned-income contribution 0.82% + 0.13%
- Income tax rate for capital income (investment income) 30%. For amounts of taxable capital income in excess of €30,000, the capital-income tax rate is 34%.
Acceptance of prepayments as payments of future tax; consequences of delayed payment
The tax authority will accept all paid-in prepayments to 100% as payments of taxpayer’s upcoming or future taxes to be assessed for the tax year.
If you fail to make a required prepayment, penalty interest will accrue. The tax office calculates it in connection with the final assessment of your taxes for the relevant tax year, if not at an earlier stage. You may have to pay the late-payment penalty in the form of back taxes (jäännösvero; restskatt). The rate of penalty interest is 7.5% per annum in 2016. If you do not make a required prepayment during the tax year, the Tax Administration may contact the local Enforcement Unit (ulosotto; utsökning) to collect the unpaid balance.
The smallest amount to be prepaid is €170. An Official Decision of the Tax Administration determines the sizes of the installments that must be paid during the year as follows:
Quantity of installments
Due dates fall in…
€170.00 to €500.00
March and September
Over €500.00 up to €1,700.00
February, July and November
Over 1,700.00 up to €10,000.00
February, April, June, August, October, December
Further information on the Official Decision on due dates and sizes of income-tax prepayments is available in Finnish and Swedish: Verohallituksen päätös ennakon alarajasta ja kantoeristä 1.12.2006/1113.
Asking for the prepayments to be changed or waived
Complete and file the application form for lowering or raising your prepayments during the tax year rather than after it is over, by mid-November at the latest. If it seems that you are paying too much during the tax year, you can still ask total prepayment to be lowered when the year is not over, but afterwards it is too late. A good reason for reducing your prepayments could be, for example, that you have shown evidence that you are getting a significantly lower income from your business (compared to what had been projected for the entire year).
If the entire prepayment of income tax turns out to be unmotivated, it can be waived, and the last date to do so is August during the year that follows the calendar year when the income is received. To ask for changes or for a waiver, log in to Tax Card Online, call the Telephone Service at the number printed on your prepayment invoices, or complete the paper application form and deliver it to any tax office.
Forms are available for downloading at Tax.fi (this site) or as paper copies at tax offices. Don't enclose your bank slips with the application, because they remain valid up to the date when the Tax Administration has given you a new calculation of prepayments — and new bank slips.
If you work as self-employed, i.e. as an independent contractor, and your clients pay you nonwage compensation (= trade income), they must withhold tax on all payments to you if you are not entered in the Prepayment Register.
The above requirement on withholding only concerns payments to independent contractors, not payments of wages to employees, which are always subject to withholding. Even though the clients must withhold tax on any payments to the independent contractor (who is not registered), there may simultaneously be a decision of the tax authority in force that the independent contractor should make regular prepayments of tax.
However, the Tax Administration may waive the prepayment decision on request, if you can prove that the amount is too large or financially unjustified.