Happy New Year to all of you! In this blog post, we take a look at what changes in Finland in 2020.
The new year always brings legislative changes in Finland. These changes affect Finnish residents in a variety of ways. Here we’ll look at some that may affect you the most.
Income taxation changes in Finland in 2020
There won’t be any large-scale changes in income taxation in Finland this year, but those that do happen may alter your take-home pay.
Practically every year the government tweaks the different insurance payments employers and employees alike have to pay to the government. These are payments such as unemployment insurance, pension and sickness insurance payments. You yourself as an employee have to pay your share of these payments and your employer pays its share. These percentages change somewhat this year so that you’ll end up paying about 0,5 percentage points more this year than last year.
The taxation of the so-called “foreign key individuals” will go down this year. In 2019, individuals who qualified paid source tax at the 35-percent rate. In 2020, this source tax is lowered to 32 percent.
Changes in other taxes
In addition to small changes in income taxation, there are other taxation changes in Finland in 2020. These other types affect how much you’ll have to pay for different things this year.
Towards the end of the year, you’ll pay more to fill the tank of your car. The estimated effect of the tax increase will be about 6,3 cents for one liter of gas and 6,9 cents for a liter of diesel.
You’ll also pay more for sodas. The price of a 1,5-liter bottle of soda will go up about 0,09 € because of tax increases. You’ll also pay more for cigarettes this year because of tax increases.
Finnish employers have been allowed to pay for their employee’s moving expenses, but that benefit has been a taxable benefit. Starting from 2020, half of such moving benefits are tax-free provided that certain conditions apply. If you are moving to Finland from abroad for work and your employer pays for your move, half of that amount is tax-free from now on.
The Finnish government gives tax credits for household expenses if you have household work done in your home or holiday home. Such work includes cleaning, child care, decorating and renovations, and installation of IT equipment. In 2019, the maximum amount of tax credit per year was 2 400 €. In 2020, this drops down to 2 250 €. Your own personal liability portion is still 100 €.
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Changes in Kela benefits in 2020
In social benefits, there will be a number of changes in Finland in 2020. Here we’ll mention a few of them. You can read more about them here.
Quite often the basic day allowances of different benefits increase slightly at the start of the year. That is the case in 2020 as well. For example, the daily minimum parental allowance in 2020 is 28,95 €/day. In 2019 it was 27,86 €/day.
Families that have four or more children will see an increase of 10 €/month per child in their child benefit.
There will also be changes in how the level of one’s parental allowance is determined. Starting from 2020, parental allowance levels are based on income earned during the last 12 months prior to the calendar month that precedes the start of the entitlement to the allowance.
Study allowance will increase by 25 €/month.
The minimum daily unemployment benefit will increase slightly to 33,66 €/day.
Ordering stuff from outside Europe more expensive in 2020
About half of all online purchases Finns made from abroad came from China. This year this will be slightly more expensive since Finland is charging China more for handling these shipments.
Starting at the end of January this year, customs officials will also be charging a new handling fee of 2,90 euros for the packages that are subject to customs clearance. Packages that are valued above 22 euros are all subject to it. So, when you are ordering anything above that value from outside the EU remember to factor the handling fee into your calculations.
The year 2020 is also the last year when packages under 22 euros in value can be sent to Finland from outside EU VAT free. From 2021 onwards the normal 24 % VAT will be applied to these as well.
Permit required for real estate purchases for non-EU and non-EEA residents
Starting from 2020, non-EU and non-EEA residents wanting to purchase real estate in mainland Finland will need a permit to do so from the Finnish Defence Ministry. The purchaser should apply for the permit as soon as possible when preparing to purchase a certain real estate. Such a permit is not necessary when planning to buy shares in a limited liability housing company.
The permission is real estate specific. Hence if the target of your purchase changes, you need to apply for a new permit. Note that it can take up to 3 months for the officials to process your application. Applications can be submitted only in Finnish or Swedish. You can find the application here.
Changes in Finnish Immigration Service fees
The Finnish Immigration Service changes its processing fees in 2020. For example, an online application for a residence permit for an employed person now costs 490 euros. An online application for Finnish citizenship now costs 420 euros.
They will also start charging a fee of 50 € for unused appointments.
You can find their 2020 processing fees and payment instructions here.
The new Working Hours Act takes effect
The new Working Hours Act took effect yesterday. In October, we wrote a blog post about some of the changes that’ll occur with the new legislation. Read that blog to learn more. You can also take our online tutorial on Working in Finland. That’ll get you up to speed on the new Working Hours Act and on a lot more.
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