Tax at source (Lähdevero)

Detailed explanation

When you work in Finland as a non-resident, your employer withholds tax at source directly from your wages rather than using the progressive tax system that applies to residents. This flat-rate withholding simplifies taxation for temporary workers and ensures Finland collects tax on income earned within its borders. The tax at source is considered final in most cases, meaning you typically do not need to file a tax return in Finland.

Your tax residency status is determined by factors including the length of your stay, whether you have a permanent home in Finland, and the center of your vital interests (family, economic ties). If you stay in Finland for more than six consecutive months, you generally become a tax resident and switch to the normal progressive taxation system with a tax card instead.

Tax at source also applies to certain other income types regardless of residency, such as dividends paid to foreign shareholders, royalties, and some pension payments. The rates and rules vary depending on tax treaties between Finland and your home country.

Current rates

• •35%

• •Standard tax at source rate for wages (non-residents)

• •30%

• •Dividends to non-residents (may be reduced by tax treaty)

• •15-35%

• •Varies by income type and applicable tax treaty

How it affects expats

• •Short-term workers: If staying less than 6 months, you likely pay tax at source rather than regular income tax

• •Higher flat rate: The 35% rate may be higher or lower than progressive taxation depending on your income level

• •No tax return: Generally no Finnish tax return required, simplifying your obligations

• •Tax treaty benefits: Your home country's tax treaty with Finland may reduce the rate or provide credits

• •Transition to resident: If your stay extends beyond 6 months, contact the Tax Administration to switch to normal taxation

How to determine your tax status

• Assess your expected length of stay in Finland

• Consider where your permanent home and family are located

• Contact the Finnish Tax Administration if unsure

• Provide documentation of your situation to your employer

• Apply for a tax-at-source card if you are a confirmed non-resident

Related terms

• •Tax card (Verokortti) — Shows your withholding rate

• •OmaVero (MyTax) — The Finnish Tax Administration's online service for taxes, filings, and messages

• •DVV — The Digital and Population Data Services Agency