19 December 2023
Finland | Tax | Changes to Finnish taxation in 2024
This year draws to a close and it’s time to review what the upcoming changes to Finnish taxation brings us in 2024.
The legislative tax changes increase incentives for wage earners across income levels and include positive news, especially for individuals taxed under the tax regime for foreign employees. The changes are, amongst other things, aiming to enhance Finland’s competitiveness globally and elevate its attractiveness amongst international experts. Meanwhile, buyers of a first home are impacted negatively, as the cost will rise.
The main changes for 2024 include:
Foreign expert status made available for up to 84 months
The maximum duration for the 32% flat rate tax for foreign key employees is extended from 48 months to 84 months. At the same time, a new 30-day deadline is introduced for extension applications.
Slightly reduced taxation of earned income under progressive tax rates
The taxation of earned income taxed under progressive tax rates is overall reduced, primarily driven by a decrease in social security contributions. Among the tax-like payments, unemployment insurance contributions are reduced, alongside lower health insurance contributions. Additionally, the earned income deduction is increased, and the lower limit for solidarity tax is raised. Depending on income levels, the effective tax rates for wage earners will decrease by 0.5-1.2 percentage points from 2023.
Extension of the temporary increase in household deductions
The temporary increase in household deductions for household, care, and nursing work is extended into 2024, now encompassing physiotherapy and occupational therapy services provided at home.
Maximum deduction for commuting costs reduced
The maximum deduction for commuting expenses between home and place of work drops from 8,400 euros to 7,000 euros while the non-deductible self contribution portion rises from 750 euros to 900 euros. This could be interpreted as tightening the taxation for employees, who travel extensively due to the location of their home or workplace.
Transfer tax rates reduced but first-time homebuyer exemption removed
Transfer tax for real estate is reduced from 4% to 3%. For apartments, the tax rate decreases from 2% to 1.5%, and for non-listed securities, from 1.6% to 1.5%. At the same time, the transfer tax exemption for first-time homebuyers is removed from the beginning of 2024. These changes take effect at the turn of the year in 2024, but the tax rates apply retrospectively from the date of the government’s proposal on October 12, 2023, and for subsequent transfers.
Inheritance tax payment period extended
The inheritance tax payment period is extended to 10 years (interest implications to be taken into account)
Maximum tax free allowances related to business travels confirmed
The tax-free domestic daily allowance in 2024 stands at 51 euros (compared to 48 euros in 2023), with a part-day allowance of 24 euros (22 euros in 2023). The tax-free reimbursement rate for kilometers driven is 57 cents per kilometer in 2024 (53 cents per kilometer in 2023).
Changes to equity savings account
The maximum deposit amount for an equity savings account increases from 50,000 euros to 100,000 euros. This enhancement in the equity savings account encourages long-term investing more effectively, enabling private investors to maximize the benefits of compound interest.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Risto Löf
Partner
risto.lof@vialto.com
Lena Nymark-Akerele
Senior Manager
lena.nymark-akerele@vialto.com