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Taxation of Economic Impact Payment received from the USA by Finnish tax residents

Date of issue
Record no.

The English translation below is unofficial. It has been made for the purpose of facilitating the understanding of the Finnish tax system and legislation. The original guidance text is released on our website in Finnish and Swedish, the official languages of Finland.


A US citizen residing permanently in Finland received an Economic Impact Payment from the USA in 2020. Economic Impact Payments are based on the Corona Aid, Relief and Economic Support Act (the CARES Act) of the United States.

The Economic Impact Payment support is deposited directly into the taxpayer’s account or paid by cheque. Technically, the payment is a ‘tax refund’ paid through the US tax system. However, you can receive the payment even if you do not have any income taxable in the US or even if you do not pay any taxes in the US.

Read more about the support on the website of the Internal Revenue Service at:


In Finland, ‘income’ under the act on income tax (Tuloverolaki 1535/1992) is understood in the broad sense. Under § 29 of the act, taxable income comprises income received by the taxpayer in cash or as a benefit of monetary value, with the exceptions specified in the act. Under § 61 of the act, all income that is not capital income is earned income.

§ 92 of the act prescribes on tax-exempt social benefits. The tax-exempt social benefits are chiefly benefits governed by specified Finnish legislation, so they do not cover benefits received from abroad. The Economic Impact Payment support is also not comparable to those benefits under the provision with regard to which there is no reference to a particular benefit under Finnish legislation.

According to Article 3 of the Tax Convention between Finland and the USA, if a term is not defined in the Tax Convention, it has the meaning which it has under the national tax laws of the Contracting State applying the Convention.

According to Article 18 of the Tax Convention, a payment based on the social security legislation of a Contracting State is taxable in the country making the payment.

According to Article 23, however, this income may be taken into account in the payment recipient’s country of residence as tax is imposed on their other income.


In the United States, Economic Impact Payment support is technically a refundable tax credit. From the point of view of Finnish taxation, however, the support is not a tax refund received from abroad, because the recipient is not required to have income taxable in the United States or to have paid tax to the United States.

The Economic Impact Payment support received from the US by a person residing in Finland is the person’s taxable income. It is regarded as income received in cash or as a benefit of monetary value under § 29 of the act on income tax. It is regarded as earned income under § 61 of the act on income tax.

The underlying objective of the Economic Impact Payment was to provide financial support for US citizens during the Covid-19 pandemic. The support amount varies based on income thresholds, so social grounds for the support exist. The support is therefore comparable to a payment according to social security legislation, and so Article 18 of the Tax Convention between Finland and the United States applies.

Under Articles 18 and 23 of the Tax Convention, the Finnish Tax Administration applies the exemption method to Economic Impact Payment support paid to a person residing in Finland. The income is therefore not taxable in Finland. However, the support raises the tax rate applied to the recipient’s other earned income, if any.


A US citizen residing in Finland received an Economic Impact Payment of $1,200 from the USA in 2020. The payment was sent as a cheque.  When the amount is converted into euros using the average exchange rate for 2020 (1.1422), the amount of income received is €1,050.60. The person’s other earned income taxable in Finland is €40,000.

On account of the provisions of the Tax Convention, the Economic Impact Payment is not taxable in Finland but it is taken into account in taxation through the application of the exemption method. This means that the payment affects the tax rate applicable to the person’s other earned income. Because of this, the person’s taxable income in Finland is €40,000 but the tax rate is calculated based on the combined income (€40,000 + €1,050.60). In 2020, the tax rate for €41,050.60 was about 18.3%*. The tax rate for €40,000 would have been 17.8%. The Economic Impact Payment thus slightly (0.5%) increased the amount of tax collected on €40,000.

* The tax rate has been calculated with the municipal tax rate of Helsinki, without the church tax. The tax rate is also affected, for example, by personal deductions claimed by the taxpayer.

Senior Tax Specialist Tero Määttä

Senior Adviser Iisa Väänänen

Page last updated 4/14/2021