Taxes and finances in Finland: Guide for expats | KOCH Moving Logistics Ltd.

Moving to Finland is an exciting adventure that offers many new opportunities and experiences. One essential aspect that emigrants must consider is taxes and finances in Finland. This article provides comprehensive information about the Finnish tax system, the best banks and tips for international money transfers for anyone wishing to emigrate to Finland. All comparisons refer exclusively to the situation in Germany.

The Finnish income tax system is – similar to the German one – progressive, but with a special feature: not only federal tax but also municipal tax and church tax (optional) are levied. Taxation distinguishes between earned income and investment income.

– State income tax (progressive): The national income tax is levied on taxable earned income.

– Municipal income tax (flat rate): In addition to state tax, every Finnish municipality levies a municipal income tax. The rate varies by municipality 4,70 % and 10,90 %; the average is about 7,50 %. By comparison, in Germany income tax is only levied by the federal government and the states; there is no independent municipal income tax.

– Church tax (optional): Members of the Evangelical Lutheran, Orthodox or German‑Finnish church in Finland pay a church tax of 1% to 2.25 % on taxable income.

– Public broadcasting tax: Another special feature is the Yle tax, which finances public broadcasting. It is 2,5 % of annual income above 15,150 euros, but a maximum of 160 €.

– Basic allowance and tax credits: The statutory basic allowance in 2026 is a maximum of 4.115 €. In addition, an Earned Income Tax Credit is granted. This is 18 percent of earned income, but a maximum of 3.225 €. By comparison, the German basic allowance in 2026 is about 11,784 euros. However, employee contributions in Finland are significantly lower than in Germany, because the Finnish social system is financed almost entirely through taxes.

– Capital income tax: Unlike in Germany, where capital income is taxed at a flat rate of 26.375 percent (including solidarity surcharge), capital income tax in Finland is 30 % 30 percent on annual capital income up to 30,000 euros. For income above this threshold, the rate rises to 34 %.

The overall burden for employees in Finland can quickly reach a marginal tax rate of over 50 percent (depending on municipality and additional levies). Nevertheless, the system is more transparent than in Germany: the total burden is made up of many small components, all of which are shown on the payslip.

One of the most attractive provisions of the Finnish tax system is the Foreign Expert Tax RegimeForeign Expert Tax Regime. Highly qualified foreign employees moving to Finland can benefit from flat‑rate taxation for a period of up to 84 months . The tax rate in 2026 is 25 % on Finnish employment income (instead of the progressive rates). Requirements for this regime:

– The gross monthly salary must be at least 5.800 € .

– You must not have been tax‑resident in Finland in the last five calendar years.

– The application must be submitted within 90 days of starting the activity.

Value added tax in Finland (Arvonlisävero – ALV) is one of the highest in the EU. The standard tax rate is 25,5 %. By comparison, the standard rate in Germany is 19 percent. Finland offers two reduced rates: 13,5 % 13.5 percent for food, restaurant services, medicines and cultural services (this rate was reduced from 14 percent to 13.5 percent on 1 January 2026) and 10 % for books and magazines.

The financing of the Finnish social security system (Kela) differs fundamentally from the German one. Employee contributions in Finland are very low compared to Germany. The employer in Finland pays a flat employer contribution (sosiaaliturvamaksu) of about 23‑26 percent of gross salary. The employee themselves (in the vast majority of cases) pays no monthly contributions for health, long‑term care and pension insurance. Instead, these benefits are financed from general tax revenues.

This is a major difference from Germany, where employees spend about 20 % of their gross salary on social security contributions. In Finland, employee contributions are minimal (only a small contribution of about 1,9 % for unemployment insurance becomes due above a certain income). Employer contributions in Finland, on the other hand, are higher to finance the system.

A double taxation agreement exists between Finland and Germany, updated in 2016, , which preventswhich prevents your income from being taxed in both countries. The most important provisions:

– Residence: The DTA defines where you are considered tax‑resident – generally where you have your habitual abode. If you are resident in both countries, the "centre of vital interests" decides, i.e., the country with which you have the closest personal and economic ties.

– Employment income: Income from dependent employment is generally taxed in the state of employment . So if you work in Finland, Finland taxes your employment income – even if you live in Germany.

– Exception ("183‑day rule"): If the work is not carried out in Finland for more than 183 days in the relevant calendar year, the employer is not resident in Finland and the remuneration is not borne by a Finnish permanent establishment, the right to tax remains with Germany.

– Tax exemption with progression proviso: Germany generally applies the exemption method : the employment income taxed in Finland remains tax‑free in Germany, but increases the tax rate for the income taxed in Germany (progression proviso).

– Pensions: Pensions from the statutory pension insurance (DRV) are generally taxed in the state of residence. Certain public service pensions may be regulated differently.

An important difference from Germany: Finland uses a credit method to avoid double taxation of income earned in Germany. The exact provisions are complex and should be discussed with a tax adviser on a case‑by‑case basis.

A Finnish bank account is essential for everyday life in Finland. It is needed for salary payments, rent payments and bills. In addition, you gain access to common digital identification services (e.g., pankkitunnukset, which are the Finnish equivalent of the German eID function, but much more widespread).

 

Unlike in Germany, it is generally not possible for foreigners to open an account without a Finnish identification number (henkilötunnus). The requirements of most banks:

– Personnummer (henkilötunnus) – required for a full account with online banking and bank card.

– Passport (the identity card is often not accepted) for identification.

– Employment contract or enrolment certificate as proof of purpose of stay.

– Proof of address in Finland (e.g., rental contract).

 

Major banks such as OP Financial Group, Nordea, Danske Bank or Aktia offer services for foreigners. For a full account opening, the Finnish identification number (henkilötunnus) is indispensable. When opening the account, you will be issued with the pankkitunnukset. Without these, the use of digital banking is not possible.

The Finnish tax system is progressive and, compared to Germany, similarly high, but offers more generous social benefits. For new arrivals, the 25 percent flat‑rate taxation for highly qualified skilled professionals is extremely attractive. Employee contributions to social security are low, while employer contributions are high. Expenditure on consumption (VAT 25.5 percent) is noticeably higher than in Germany. Access to bank accounts is tied to the Finnish henkilötunnus . The double taxation agreement with Germany prevents double taxation. KOCH Moving Logistics helps you prepare optimally for your move to Finland.