Tax on insurance premiums
The tax on insurance premiums rises from 24% to 25.5% starting 1 September 2024. The Parliament adopted the bill and the tax rate change, but the amended legal act is currently awaiting confirmation. The new 25.5-percent rate will apply to premiums of an insurance contract or policy with a term that begins 1 September 2024 or later.
Companies and natural persons that are liable to pay the tax on insurance premiums must submit an application for registration. After registration, they are required to submit tax returns in order to declare the tax and make the payments. Tax on insurance premiums is imposed on the basis of valid insurance contracts and on the basis of related income, received in the form of insurance premiums.
Who are the parties liable to pay tax on insurance premiums?
Insurers, which typically are Finnish insurance companies and other comparable institutions that conduct insurance business in Finland, have the liability to pay the tax. Foreign insurance companies based in the countries of the European Economic Area (EEA) are also liable to tax if they exercise their freedom to provide services in the insurance sector in Finland. Insurers based in the EEA must submit a notification to the Financial Supervision Authority when they start conducting insurance business in Finland based on the freedom to provide services. An official list based on received notifications is maintained by the Financial Supervision Authority (finanssivalvonta.fi).
In certain situations, the policyholder – a private individual or a company – may be liable to pay the tax. Such policyholders must first submit an application for registration as a party liable to pay tax on insurance premiums, and then submit tax returns to declare the tax and pay it.
The policyholder becomes liable when the insurance premium on which the tax is levied is paid to an insurer that does not conduct insurance business in Finland. Typically, these insurance companies are from countries outside the EEA.
What are the insurance contracts subject to tax?
The tax on insurance premiums must be paid in Finland for several different kinds of insurance contracts including property insurance, business interruption and liability insurance.
What are the insurance contracts exempt from the tax? For more information, see the instructions “Taxation of insurance premiums — Vakuutusmaksuverotus Suomessa” (in Finnish and Swedish) (refer to chapter 3).
Percentage rate of the tax and the tax base
Up to 31 August 2024, the rate of the tax on insurance premiums is 24% and starting 1 September 2024, it will be 25.5%.
Tax base is the accumulated or the paid-in insurance premiums (in accordance with § 4 of the act on the tax on insurance premiums (Vakuutusmaksuverolaki 664/1966)). The base also includes the additional charges called “fire safety fee” (palosuojelumaksu) and “motor traffic safety fee” (liikenneturvallisuusmaksu), and others.
The insurance term determines the percentage rate of the tax. The new 25.5-percent rate will apply to premiums for an insurance contract/policy with a term that begins 1 September 2024 or later.
Example: A customer bought an insurance policy for a term that starts 1 August 2024 and ends on 31 July 2025. This policy’s premiums are paid in 4 instalments starting in August 2024. The fourth and final instalment will fall due in May 2025.
Because the term’s start date is before 1 September 2024, the insurance-premium tax rate on the policy is 24%. The tax to be paid will be 24% on the policy’s entire premium.
Example: Another customer bought an insurance policy for a term that begins on 1 September 2024 and ends on 31 August 2025. This policy’s premiums are paid in 4 instalments, starting in September 2024 with the fourth and final instalment falling due in June 2025.
Because the term’s start date is 1 September 2024, the insurance-premium tax rate on the policy is 25.5%.
Apply for registration on ytj.fi as a party liable to tax on insurance premiums
Companies can access the Business Information System (BIS) on the ytj.fi website to submit notices relating to the register of parties liable to pay tax on insurance premiums. You can use the BIS forms Y1 to Y6 to submit a request for registration as a party liable to tax on insurance premiums, to report various changes to your registration, or to submit an application for deregistration. Read more about the BIS forms (ytj.fi).
Submit tax returns and pay the tax on insurance premiums in MyTax
You are required to submit a tax return on your tax on insurance premiums every month in MyTax: first go to the Your tax types, and then click the File an insurance premium tax return link under Tax on insurance premiums. You can also pay the tax in MyTax.
Although the percentage rate goes up, no changes will affect taxpayers’ reporting. When you file your tax return for the tax on insurance premiums, you will first need to add the 24% taxes and the 25.5% taxes together and then enter the sum total on your tax return.
The tax period is always the calendar month. Submit the return and pay the tax by the 12th day of the month following the end of the reporting month (in other words, if a payment of tax on insurance premiums relates to June, the due date for the tax return and payment is 12 July). If the 12th day of the following calendar month falls on a Saturday, Sunday or a public holiday, the due date is extended to the next business day. Read more about paying the tax.
Submit the tax return for insurance premium tax for every tax period even if no reportable activity had taken place in Finland during a particular period. If your insurance business is seasonal or if it is interrupted for several months, you have the option to submit your tax return beforehand. If you choose to do so, select “No activities during the tax period” when filling in the return form. You can report a no-activity period as described above for the ongoing tax period and for the 6 months that follow.
You can submit the return on paper only if there is a special reason for using the paper form, such as technical problems preventing electronic submittal of tax returns.
Enter the data on the tax return for self-assessed taxes (Form 4001e) under Information on other self-assessed taxes (tax type code 16). When you are reporting information that relates to more than one tax period, do not submit that information on one tax return. Instead, please provide such information on separate tax returns, calendar month by calendar month.
The tax period is always the calendar month. Indicate the tax period’s number as follows:
- Enter the month as appropriate (1 to 12), and the year in four digits. Example: If you are entering data for March 2022, enter “3” and “2022”.
- If no reportable activity took place during the tax period, enter zero in the “Tax payable” section.
Making corrections
If you notice an error in the insurance premium tax return, please correct it immediately. Correct errors by filing a replacement return for the tax period in question.
The replacement return replaces the previous return in full. This means that the replacement return must include all details that were already correct in the original return as well as the corrected details. You can also use the previous return’s information as basis for the replacement return.
Remember to also pay any missing VAT if you originally filed too little tax.
If you need further instructions
If you have questions about the tax on insurance premiums, you can contact the Tax Administration by e-mail (vakuutusmaksuvero(a)vero.fi).