Taxation and Social Insurance Contributions
The final income level of a pension recipient is the income in hand after taxation and the deduction of social security contributions.
The earnings-related, national and guarantee pensions are taxable earnings. In general, in the taxation of earned income, the taxation of statutory pensions is more lenient that the taxation of wages of the same amount. This is due to the special tax deductions of pension income.
Collective supplementary pension provision arranged by the employer and lump-sum pensions are also taxed as earned income. They are treated as statutory pension income in the taxation of the pension recipient.
Pension based on voluntary individual pension insurance is taxable capital income, as are the withdrawals of long-term savings. Contributions made to insurance policies and long-term savings accounts are deductible in income taxation.
Tax agreements regulate the taxation of pensions paid abroad from Finland and from abroad to Finland.