Tax on property income in Finland
Taxation Researcher | January 12, 2023
Tax Rate on Rental Income
|Click here to see a worked example|
Nonresidents are taxed on their income from Finnish sources. Spouses are taxed separately.
Nonresidents are taxed on their Finnish-sourced income. Taxable income is divided into two categories: (1) income from capital and (2) earned income.
The two categories are taxed separately at different rates. Nonresident individuals earning income from capital is taxed at progressive rates, from 30% to 32%. Nonresidents earning earned income or employment income are taxed at a flat rate of 35%.
Income from Capital
Income from capital includes any yield from capital investment, dividends, interest, capital gains and rental income among others. Tax on capital income is levied at progressive rates.
INCOME TAX ON CAPITAL INCOME
|TAXABLE INCOME, €||TAX RATE|
|Up to €30,000||30%|
|Over €30,000||34% on band over €30,000|
|Source: Global Property Guide|
Rental income falls under income from capital and is taxed at progressive rates, from 30% to 34%. Income-generating expenses, such as maintenance, renovation and interest (provided it came from a loan used to acquire income) are deductible from rental income before the tax is imposed.
Gains from the sale of property are included in the income from capital category and taxed at progressive rates, from 30% to 34%. Gains that do not exceed €1,000 are exempt from capital gains tax.
Taxable capital gains are computed in two ways:
- Gross selling price less acquisition costs;
- Gross selling price less 20% in lieu of actual acquisition costs.
Real Property Tax (kiinteistövero; fastighetsskatt)
A real estate tax is levied on properties located in Finland. The actual rates are established by the municipalities, which are the recipients of the revenue from this tax.
The tax is imposed on the value of the property. Tax rates vary in different municipalities, ranging from 0.41% to 6%.
Corporate income and capital gains are taxed at a flat rate of 20%. Income-generating expenses and other business-related expenses are deductible from gross income.