Late fee and tax increase in the income taxation of individuals

A late fee or tax increase may be imposed on you if

  • you fail to report your income on time
  • you fail to file your tax return on time
  • you do not file your tax return
  • you do not correct the errors in your tax return
  • you do not report taxable income
  • you claim a non-deductible expense as a deductible expense.

Please note that the online tax return or paper tax return form must arrive at the Tax Administration no later than on the deadline date for filing the tax return!

Late fee

If the deadline for filing the tax return has passed but your tax assessment is not finished yet, a late fee will be imposed on you in the following situations:

  • you report income for the individual's pre-completed tax return voluntarily but not on time
  • you fail to file the income tax return for business, farming or forestry on time
  • you report more details or make corrections to your previously filed tax return for business, farming or forestry voluntarily by not on time, and the change increases the amount of taxable income.

Every individual and partnership has their own end date for the tax assessment process. The end date is shown on your tax decision.

Shareholders in a partnership

A late fee may also be imposed on you if you are a shareholder in a partnership and

  • the partnership has failed to file its tax return on time
  • the partnership is late in submitting more details or making corrections to its previously filed return. Although the details and corrections were reported at the partnership's initiative and they affect tax assessment to the detriment of the partnership, the late fee is imposed for not submitting them on time.

The late fee imposed on the partnership is split

  • between the shareholders in the partnership (taxpayer) in proportion to the share they hold in the partnership
  • between the partners in a general partnership and the general partners in a limited partnership in proportion to their share of the partnership's net income.

In general, the Tax Administration only imposes a late fee if the changes increase the amount of the taxpayer’s taxable income.
Only one late fee will be payable on omissions connected to the income taxation of a single tax year. However, if you are a shareholder in a partnership, you may have to pay your portion of the late fee imposed on the partnership.

Tax increase

A tax increase will be imposed on you if

  • your tax return or other required information is incomplete or has errors and you have not voluntarily corrected them before the end of your tax assessment
  • you have not filed a tax return for business, farming or forestry before the end of your tax assessment
  • after the tax assessment has finished, the Tax Administration makes a tax adjustment to your detriment due to your failure to comply with the obligation to file a tax return.

Every individual and partnership has their own end date for the tax assessment process. The end date is shown on your tax decision.

The amount of tax increase

For individual taxpayers, the minimum amount of tax increase is always €75, even if the percentage-based increase is lower. There is no maximum limit for the percentage-based tax increase.

The increase is calculated based on a schematic formula: it is 0.5–10% of the increase in taxable income, i.e. the amount not taxed due to the omission. An increase in taxable income may be due to, for example, your failure to report the income or you having claimed deductions for non-deductible expenses in your return. If no tax increase can be imposed based on the increase in taxable income, the tax increase shall be imposed based on the increase in the amount of taxes. In such a case, the tax increase is 2–50% of the increase in the amount of taxes.

The amount of tax increase is affected by

  • the size of the errors or omissions in the tax return, i.e. the euro amount of the increase in income or increase in taxes
  • whether or not the omission is recurring.

Example 1: Jaana has earned rental income in 2018 that is not shown in the pre-completed tax return. Jaana's deadline for filing the tax return is 14 May 2019 and the end date for her tax assessment is 30 June 2019. Jaana does not remember to report the rental income in MyTax until after the deadline for filing the pre-completed tax return has passed.

If Jaana reports the rental income late voluntarily before her tax assessment is finished, in other words, before 30 June 2019, a late fee will be imposed on her. If Jaana does not report the rental income until the Tax Administration sends her a reminder, a tax increase will be imposed on her.

Example 2. Mikko is one of three partners in a general partnership. The partnership does not file its business tax return (Form 6A) on time. Mikko reports his income after the deadline for his pre-completed tax return and also fails to file his income tax return for farming on time. Only a single late fee of €50 is imposed on Mikko for failing to file the income tax return for farming and failing to report the income for the pre-completed tax return on time. In addition, he will have to pay €33.33 due to the partnership's failure to file its business tax return on time because the late fee of €100 is split between the three partners.

Example 3. Antti has driven his own car for the commute between his home and place of work. When completing his tax return, Antti enters a total of €6,500 of commuting expenses by car. In the tax return, Antti gives the ability to spend less time commuting as the rationale for driving his car.

However, Antti's working hours would have allowed him to ride the bus. With a season ticket for the bus, Antti's travel expenses for the year would have been €1,600. Commuting expenses are deductible for tax purposes on the basis of the expenses arising from the use of the least expensive mode of transport. The amount of deductible travel expenses subtracted from Antti's earned income is €850, which is the amount that exceeds the taxpayer’s own liability threshold of €750.

A tax increase of €4,900 is imposed on Antti for claiming unjust deductions. The tax increase is 2% of the increase in income, calculated as follows: 2% x 4,900 = €98.

When are late fees and tax increases not imposed?

In most cases, you do not have to pay the late fee or tax increase if the deductions or other important information you file late decrease the amount of your taxes or taxable income.

However, the Tax Administration may impose a late fee or tax increase if you repeatedly fail to report a deduction or other details (to your gain) or act in apparent disregard of your tax obligations.

The Tax Administration will not impose a late fee or tax increase, for example, when there is a valid reason for the omission or if the omission only has a minor effect on the tax assessment.

Read more about late fees and tax increases in the instructions Penalty payments in income taxation (available in Finnish and English).

The late fee is shown on the tax decision. In most cases, the Tax Administration will not contact you upon making a decision to impose a late fee on you. However, you will be contacted by the Tax Administration before it imposes a tax increase on you.