Finland’s Expatriate Tax Regime

The special expatriate tax regime is designed to attract highly qualified professionals to Finland. Under the regime, employment income earned in Finland is subject to a flat 25% tax rate instead of progressive taxation.

To qualify the following requirements must be met:

• The employee becomes a tax resident in Finland at the commencement of employment.
• The employee’s cash salary is at least EUR 5,800 per month. Fringe benefits are not included in the cash salary. If the employee comes to Finland to teach or conduct research at an institution of higher education, there is no minimum cash salary requirement.
• The employee’s work in Finland requires special expertise.
• The employee has not been a tax resident in Finland during five calendar years preceding commencement of employment. 

The expatriate tax regime is applicable for a maximum period of 84 months from the commencement of employment in Finland, except in the case of Finnish citizens, for whom the applicable period is 60 months. Finnish citizen may qualify for the foreign expatriate tax regime provided that they have been non-resident of Finland for at least the five calendar years preceding the commencement of their employment.

Under the expatriate tax regime, the salary must constitute Finnish-source income in accordance with the Income Tax Act. This applies when the work is performed exclusively or primarily for a Finnish employer, when the employee works at a permanent establishment of a foreign employer in Finland, or when the place of effective management of a foreign entity is located in Finland. The regime also applies where the employer is foreign but the salary is paid by a Finnish party, such as a bookkeeping firm, at the request of the foreign employer.

An employee must apply for the special tax regime within 90 days from the commencement of the employment. Where the conditions for the expatriate tax regime are met, the Tax Administration shall enter its decision on the employee’s tax card. The tax card, issued by the Tax Administration, is required where a person receives salary income from Finland. The employee shall submit the tax card to the employer to enable the employer to withhold the correct amount of tax from the salary.