Employment Basics: Taxes, Pay, and Pensions Explained

Understanding how taxes work in Finland is important when starting your new job. Here’s what you need to know:

Who Pays Taxes in Finland?

You are considered a tax resident in Finland if you have a home in the country and you stay for more than six months. If your stay is shorter than six months, you are classified as a non-resident taxpayer and are only taxed on income earned in Finland.

Short-Term Work (Less Than 6 Months)

If you work in Finland for less than six months, you typically pay a 35% tax at source on your salary. Your employer may also deduct social security contributions unless you have an A1 certificate from your home country confirming coverage under your home country’s social security system. This tax is considered final, so you usually do not need to file a tax return in Finland.

Long-Term Work (More Than 6 Months)

In Finland, income is taxed progressively, meaning the higher your earnings, the higher your tax rate. The taxes you pay include state and municipal tax, as well as health insurance contributions. If you do not have an A1 certificate from your home country, pension and unemployment insurance contributions - approximately 7% - are also deducted from your salary. You are required to obtain a tax card from the Finnish Tax Administration. It is important to note that without a valid tax card, your employer may withhold 60% of your salary in taxes.

Pre-Completed Tax Return

If you live in Finland for more than six months, you will receive a pre-filled tax return from the Tax Administration in March or April. You should carefully check the details, including your income and any deductions. If any information is incorrect or missing, you must make the necessary corrections and return the form. If everything is accurate, no action is required. You may also be entitled to deductions for certain expenses, such as work-related costs, housing, or domestic help. For more information, visit the Tax Administration’s page on tax returns.

Contact the tax office

The local tax office in Vaasa is located at Poikkikuja 7. It is open from Monday to Friday, between 9:00 and 12:00. To book an appointment, you can call the national switchboard at +358 29 512 000.

If you need assistance, you can contact the Finnish Tax Administration by phone:

• For matters related to international taxation—such as working in Finland as a foreign employee, income from abroad, or moving to or from Finland - call +358 29 497 024.
• For domestic tax matters, including tax cards, tax returns, housing, property, and appeals, call +358 29 497 050.
• More contact information is available on the Tax Administration website www.vero.fi/en/About-us/contact-us/call-us/

The University of Vaasa follows the University Salary System (USS), which determines salary based on two key factors:

1. The demands of the position, and
2. The employee’s personal performance.

This salary system is applied to employment contracts that exceed six months in duration.

All employment matters at the University are governed by the Collective Agreement for Universities, which outlines the terms and conditions of employment, including working hours, leave entitlements, and salary structures.

Salaries at the University of Vaasa are paid on a regular monthly schedule. Permanent staff receive their salary on the 15th of each month, while employees with a fixed-term contract are paid on the last banking day of the month. All salary payments are transferred to the bank account provided by the employee during the onboarding process.

In Finland, your earnings-related pension is based on your income from employment and self-employment throughout your working life. The amount of your pension depends on your total earnings and an age-related accrual rate, which determines how much pension you earn each year.

Earnings-related pensions are funded through mandatory pension contributions, which are deducted directly from your salary. These contributions are shared between the employee and the employer.

In 2025, the total pension contribution under the Employees Pensions Act (TyEL) is 24.85% of gross wages. Of this, the employee’s share is:

• 7.15% if you are under 53 or over 63 years old
• 8.65% if you are between 53 and 62 years old

The employer pays the remaining portion of the contribution. These contributions are used to finance current pensions and to build up pension reserves for the future.

You can find general information about the Finnish earnings-related pension system at www.tyoelake.fi. For more detailed data, research, and updates on pension policy and statistics, visit the Finnish Centre for Pensions.

In accordance with Finnish law, all employees have the right to join a trade union. Trade unions represent employees in negotiations with employer organizations, advocating for fair wages, working conditions, and employee rights. Most employees in Finland are members of a trade union or an unemployment fund, which also provides income security in case of job loss.

For more information about trade unions and unemployment funds in Finland, visit InfoFinland – Trade Unions.

A grant is financial support awarded by a public or private organization to fund academic, artistic, or scientific work. Grants are not considered payment for services and do not create an employment relationship between the recipient and the awarding body.

Employment Status and Benefits

Working solely on a grant does not establish an employment relationship. This means that:

• Employment-based benefits (e.g. paid leave, occupational health services) do not apply.
• Grant recipients are not insured by the university.

If the grant recipient also holds a part-time employment contract with the university, they may be entitled to employment-based benefits in accordance with the terms of that employment.

Researchers using university facilities must sign an Agreement on Conducting Research at the University of Vaasa, which outlines the terms of access and responsibilities.

Insurance for Grant Recipients

Grant recipients are responsible for arranging their own insurance, including travel insurance.

Pension and accident insurance for grant recipients is managed by the Farmers’ Social Insurance Institution (Mela). If you receive a working grant from a Finnish source, you must apply for Mela insurance within three months of starting your grant-funded work.

Mela insurance includes:

• Earnings-related pension coverage
• Occupational accident and disease insurance

Learn more about Mela insurance for grant recipients: Grant and scholarship recipients | Maatalousyrittäjien eläkelaitos Mela

Taxation of Grants

Grants awarded for scientific research, artistic work, or studies may be tax-free, depending on the total amount received within a calendar year. The maximum tax-exempt amount for grants from both public and private sources is reviewed and adjusted annually.

For the most current information on tax-free grant limits and related guidelines, please visit the Finnish Tax Administration’s website – Grants. Any amount exceeding this limit is considered taxable income.

Also, grants awarded for any other purpose—such as business activities or general support—are fully taxable, regardless of the awarding institution.

It’s important to note that each grant-awarding body may have its own rules and conditions. Always read the grant decision carefully to understand the specific terms, reporting requirements, and tax implications that apply to your grant.