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Wages and taxation

Although there is no universal statutory minimum wage in Finland, most employees are covered by collective agreements specifying minimum pay rates for various sectors. These legally binding minimum pay rates must be applied equally to Finnish and foreign workers.

Everyone who works in Finland pays taxes to the State and to the local authority where they live. While municipal tax is a fixed percentage of income that varies from one municipality to the next, the amount of State tax payable depends on the size of individual income. Employees also pay employment pension and unemployment insurance contributions. Employers withhold these taxes and contributions from wages automatically.

These taxes and contributions account for about 33.5 per cent of the average wage in Finland (EUR 2,600 per month). About half of this goes to local authorities and half goes to the State to various social security funds (e.g. for pension, sickness and unemployment benefits). Employers also pay social security contributions. Local authorities in Finland are responsible for organising a wide range of public functions, including education, day care and health services (e.g. through comprehensive, upper secondary and nursery schools, maternity and child welfare clinics, hospitals and health centres).

Finland has made bilateral taxation agreements with several countries. These agreements generally allow taxes paid abroad to be deducted from taxation in Finland. It is worth checking these matters with your local tax office.