Taxation of International Pensions

As of 2006, the Finnish pensions of persons who are permanently resident abroad, i.e. persons with a limited tax-paying liability, are taxed in the same way as the pensions of persons who are resident in Finland. The tax rate, deductions and tax return procedure are the same as for persons who reside in Finland.

Previously, persons who resided abroad were liable to pay a tax at source of 35 per cent. All taxes of the foreign pension recipient, including the calculated municipal tax according to the average municipal tax rate, go to the State.

In some cases, based on a tax agreement between Finland and the person’s country of residence, the pension is not taxed at all in Finland but only in the country of residence.

The pension from abroad has often been taxed in the country from which it is paid. In that case, no income tax is deducted in Finland, but the pension increases the tax rate on income from Finland. Pensions from certain countries are not taxed in the country in question. In such cases, Finland taxes the pensions in the normal way.

The tax treatment of the pension from a specific country is determined by the taxation agreement between Finland and the country in question to prevent double taxation. Finland has concluded such agreements with more than 60 countries. Foreign pensions are often subject to the insured’s contribution for medical care insurance in Finland.

Valid taxation agreements are available at the website of the Finnish Tax Administration.

Further information