SOCIAL SECURITY AND TAXATION IN FINLAND

Transcription

1 SOCIAL SECURITY AND TAXATION IN FINLAND THE BASICS KIRSI KORHONEN, UNIVERSITY OF HELSINKI

2 SOCIAL SECURITY (I.E. KELA) Social security system in Finland covers several eventualities Family situations (parental leave etc.) Student benefits Sickness allowance Medicine and other cost reimbursement Housing allowance Unemployment benefit Disability benefits

3 PREREQUISITES FOR KELA COVERAGE Based on residence in Finland (i.e. temporary vs. permanent) EU nationals, employment over 4 months Full coverage and access to benefits Coverage in one EU country at a time Social security agreement countries, employees Depends on agreement Other nationalities Partial coverage from 4 month employment Access to public health care

4 SOCIAL SECURITY WHILE WORKINGABROAD Social security status depends on reason of staying abroad (work, telecommuting, studies, etc.) period of staying abroad ties to Finland while staying abroad status before leaving abroad country in question (EU/EEA, social security agreement, third country)

5 SOCIAL SECURITY WHILE WORKINGABROAD CONT D If a person is covered by Finnish social security before working abroad, they are usually covered for max. 2 year periods of working abroad In other cases they are usually covered by the other country s social security -> employer obligations and payments move to country in question -> time-consuming processes, require preparation and additional resources

6 MARIE S. CURIE ALLOWANCES All allowances taxed as salary Incl. obligatory payments Social security Pension Accident insurance Group life insurance Unemployment insurance Payments should be made in full and balanced at the end of project MSC researchers not subject to university salary system YPJ Holiday pay practices vary (UH pays annually)

7 TAXATION Income taxation: capital income is generated through the possession of wealth Earned income is all other income (salary, grant, etc.) 6 months or less -> tax at source 35%/progressive tax rate for income earned in Finland Over 6 months -> tax resident, progressive taxation for all global income Tax residents tax percentage calculated annually based on income and deductions estimations

8 TAXATION CONTINUED In addition, two flat rates of tax applicable to earned income, namely municipal tax (usually 18% to 19%) and church tax (1% to 2%). Grants and stipends for studies, scientific work or artistic activity tax free up to ,24 (2014) UH does not pay grants or stipends to its employees, all payments from employer considered salary (excl. training) Checked annually in the spring with tax declaration (veroilmoitus)

9 DEDUCTIONS EARNED INCOME General deductions (ex officio) deduction for study grants, the basic deduction in municipal taxation and the pension income deductions Cost of acquiring income Natural deductions, i.e. schematic deduction for acquiring income, deduction for commuting costs between home and work, deduction for paying trade union membership fees, membership fees of an unemployment fund, etc. (most on demand) Interests on loans (study loan, house loan etc.) Tax credit for domestic help (cleaning, renovations, care of children or elderly etc.) Costs deductible from grants vary

10 TAXATION WHEN WORKING ABROAD Tax-residents: If period of working abroad exceeds 183 days within tax year, taxation might move to another country If person is in Finland for more than 183 days within tax year, taxation stays in Finland If there is a tax treaty between Finland and the other country, taxation might stay in Finland If period of working abroad under 6 months, taxation stays in Finland

11 TAXATION WHEN WORKING ABROAD CONT D Non-tax-residents: Depends on situation. Usually not taxed in Finland. Double taxation usually avoided with tax treaties. If employer obligations related to taxation in host country, process might be time-consuming and could incur extra costs

12 FURTHER INFORMAITON Social security Kela Mela for grant recipients Taxation Vero Tax guide for individuals Tax calculator In To Finland service point

13 QUESTIONS? THANK YOU FOR YOUR ATTENTION! KIRSI KORHONEN INTERNATIONAL HR SPECIALIST UNIVERSITY OF HELSINKI KIRSI.KORHONEN (AT) HELSINKI.FI