Taxation

Just like the earnings-related pensions, the national pensions and guarantee pensions are taxable income.

You may be eligible for a pension income tax deduction, which provides tax relief for low-income pensioners. The deduction ensures that persons who only receive a national or guarantee pension get their pension tax-free. Applicable to local government and state taxes, the pension income tax deduction is made from the pension recipient's earnings net of deductible expenses. The latter includes both pension income and earned income minus work-related expenses. The amount of the pension income tax deduction decreases as the amount of pension income and other earned income increases.

TV license fees were replaced by a public broadcasting tax at the beginning of this year. The new tax is levied at a rate equivalent to 0.68 percent of the tax payer's annual income. For pensioners whose sole income consists of a national pension and a guarantee pension totalling €738, the amount of public broadcasting tax payable is about €60. The maximum amount payable per person is €140.
Kela does not collect public broadcasting tax from pensioners living in the Åland Islands or from persons who receive a full-rate national pension and remain under 18 years of age throughout the tax year.

The following payments by Kela are, however, free from tax: child increase, housing allowance for pensioners, care allowance for pensioners, front-veteran's supplement, additional front-veteran's supplement.

Once you are granted a pension, contact the Finnish Tax Administration and apply for a tax change for pension purposes. Present your pension decisions and state your other income and deductions.

The Tax Administration will notify both Kela and the organisations paying you an earnings-related pension of your new withholding rate. Kela is notified directly by the Tax Administration if you apply for a revised tax card in mid-year.

You will then not have to provide information about your pensions to the tax office unless you begin to receive a new pension from Finland or from abroad. Your pension providers will send you a statement showing the amounts of your pension payments and the amounts withheld from your pensions in the previous year.

If you live abroad and are paid Finnish national pension, your pension will be taxed largely in the same way as if you were living in Finland.

You can apply for tax change by visiting the website www.vero.fi/taxcard or by calling 020 697 000. The Tax Administration will send the revised tax information directly to Kela.

Updated 04/17/13

• Tweet
• Print