I live in the UK. Keen on moving to Finland so I've spent the past week studying the tax system because I've heard how high the taxes are.
First of all, holy crap what a complicated tax and state insurance system there is in Finland! It is entirely possible there are errors in this post, if so, please feel free to correct me and I will adjust this post accordingly.
Secondly, income and insurance tax is not actually that much different between the two countries. The main difference appears to be that employers have a slightly higher tax rate in Finland, and in the UK there is a very tax efficient private pension scheme. UK also has a very tax efficient savings scheme, but that's out of scope for this comparison.
This is a highly simplified comparison using the same salary number for both jobs/currencies.
Finnish taxes are calculated using the Tax Percentage Calculator on vero.fi.
UK taxes are calculated using the UK Salary Calculator.
Robert
- Lives in London
- Gross salary: £100,000
- Not a member of church
- Private pension contribution via salary sacrifice (minimum mandatory): 5%
- National insurance (health insurance and state pension): 3.91%
- Effective income tax rate: 25.43%
- Total deductions from gross: 34.34%
- Net monthly take home: £5,471
Pekka
- Lives in Helsinki
- Gross salary: €100,000
- Not a member of church
- State pension contribution: 7.15%
- Unemployment insurance: 0.79%
- State + municipal tax rate: 30%
- Total deductions from gross: 37.94%
- Net monthly take home: €5,171
I have limited knowledge in UK employers tax, but it seems to sum up to a minimum of 16.8% depending how much the employer pays towards their employees private pension scheme (anything over the minimum 3% is a benefit). 16.8% does not include private health care premiums.
In Finland, that number appears to be 20.4% excluding private health care premiums.
So as you can see, if Robert moved to Finland and received the same salary number in euro, he would only be a few hundred pounds worse off. If he has an international employer, then they would have to take on an extra 3.6% in taxes. But the employer would save thousands in overall salary. If Robert was paid €110,000, his employer would still be better off.
Now, even more interestingly: If Robert stayed in London on his £100K salary and wanted to buy an apartment outside the city centre, it will cost him a staggering £8100/sqm. That same apartment outside Helsinki city centre is "only" €4500/sqm.
Before you scream at me and say 100K salaries are rare in Helsinki, I'd like you to know they aren't a normality in London either.
Some unconfirmed stats I found online:
Average salary London: £44K/pa
Average salary Helsinki: €50K/pa (in GBP £43K)
Edits:
Robert and Pekka do not belong to any churches.
Added info and links to the tax calculators
by 2rowlover
7 comments
I assume that Finnish tax rate includes chirch tax also. But even then it seems a bit high; my salary is around 120k€ but tax rate is 27,5% – as a heathen I don’t pay church tax but that’s only around 1.2%.
Not entirely tax related, but note that in UK you can have personal pension fund. In Finland the pension scheme is a) unsustainable so you may never get any reasonable returns on insurance payments, b) if you die early your children gets nothing and c) you can’t opt out of it.
If you only look at net salary, it is quite similar, but pension system is magnitudes worse than in the UK.
“Before you scream at me and say 100K salaries are rare in Helsinki, I’d like you to know they aren’t a normality in London either. ”
Lol, dude knows his audience 😀 I was about to comment this exact thing.
Touche.
Few things I’d like to note on the expense side of Finland. We have here few things that are taxed to “death” here.
– VAT hiking to 25.5% in September (+1.5%)
– food is a lot more expensive than in most of the EU, about [+10%](https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Comparative_price_levels_for_food,_beverages_and_tobacco), even more so for eating outside
– car tax is high on anything else than EV, moderate on plugin hybrids
– tobacco and alcohol are expensive
– health care not free like NHS
Basically these combined mean that 100k is not enough to eat outside several times a week, or buy a premium car etc, esp. if you have more mouths to feed.
Pekka’s net seems a bit high. I would expect around 4k5
Did you use the online vero calculator?
Agreed. I moved from UK to Finland two years ago.
My salary is about the same here and I actually think I pay slightly less income tax.
In terms of taxes council/property tax is maybe 75% less than UK but I do have to pay towards healthcare and pay for my rubbish collection.
Car road tax however is maybe 3-4 times more here.
But all taxes to me are irrelevant when you consider my house cost €425,000 less than it would in the UK!!
The taxation works somewhat differently in UK. At least in London one has to pay a council tax separately, while in Finland kuntavero is taken directly from one’s salary and it’s harder to notice in a way. So even if one’s net income seems higher in UK, the council tax still has to be paid from that.