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Tax revenue

The City of Helsinki’s tax revenue consists of municipal income tax, corporate income tax and real estate tax (the latter also referred to as ‘immovable property tax’). In 2019, the City’s total tax revenue amounted to €3494 million, in other words approximately €3.5 billion. Tax revenue makes up two-thirds of the City’s total income.

Municipal income tax rate 18.00%

Residents in Helsinki (as indeed residents in any Finnish municipality) pay municipal income tax on their earned income (wages, salaries, pensions). The municipal income tax rate is the same for every resident in the municipality. In Helsinki, it was 18.00 per cent in 2021.

However, taxpayers have the right to municipal income tax deductions of many kinds (for travel expenses and domestic help expenses, e.g.). Thus while in principle, 18 per cent is at present the highest possible municipal income tax rate in Helsinki, the final rate is not, in practice, the same for all residents.

The annual aggregate municipal tax paid in Helsinki makes up roughly half of the City’s annual income. Thus, it is a very important source of income for the City.

Helsinki has one of the lowest municipal income tax rates in Finland. The rate is lower only in the city of Kauniainen and in municipalities in the Åland Islands.

A low rate in Helsinki is enabled by a good employment rate and higher personal incomes than the national average, as well as by efficient municipal public services.

Real estate tax

Real estate taxes generate roughly 5 per cent of the City of Helsinki’s total income.

Municipalities are entitled to determine their own real estate tax rate, within a certain range. For the general real estate tax rate, the range is 0.93-2.00 per cent, and for a permanent residential building 0.41-0.90 per cent.

In Helsinki, the general real estate tax rate is 0.93 per cent, and for a permanent dwelling, the rate is 0.41 per cent.

Real estate tax is paid on buildings and plots/sites. Although real estate tax rates in Helsinki are at the lower extreme of the legally permitted range, the fact that property prices (and their taxable value) are higher in Helsinki and its surroundings translates in higher aggregate real estate tax revenue.

Efforts to correct clearly inaccurate building and property data used as background information for property taxation will begin in 2021. The information exchange between the City and state registers will be brought up to date to ensure that taxation is as balanced and fair as possible for property owners. The work will cover all the buildings in Helsinki and all plots in the detailed local plan areas. The work will take several years. More information about the project (in Finnish)

Corporate income tax 20% everywhere in Finland

In Helsinki, corporate tax generates roughly 10 per cent of the City’s total income.

The corporate income tax rate is the same for all companies or similar organisations in Finland, 20 per cent. Of the total corporate income tax revenue, roughly one-third goes to municipalities, and the rest to the State. Corporate income tax is paid on the profit made by companies or similar organisations, and if they make no profit, they pay no corporate income tax either.

If the company or similar operates in several municipalities, the corporate income tax that it generates is given to these municipalities in proportion with how many of the company’s employees work in the municipality.

In January 2014, the corporate income tax rate in Finland was reduced, by 4.5 percentage points down to 20 per cent. By doing so, the Finnish legislators wanted to boost Finland’s appeal for international business investment. In Finland’s neighbour Estonia, too, the corporate income tax rate is 20 per cent.

18.02.2021 13:52