Inheritance Tax

Inheritance taxation is a central part of managing estate affairs in Finland. The tax liability arises when a person receives property from the deceased through inheritance, by will, or through a life insurance beneficiary designation. The taxation is based on the estate inventory deed (perukirja) prepared during the estate inventory, which is submitted to the Tax Administration.

Tax Classes

Inheritance tax is determined according to two tax classes:

Tax class I applies to close relatives: spouse, children, grandchildren, parents, and stepchildren. Taxation in this class is more lenient.

Tax class II applies to other heirs: siblings, siblings' children, distant relatives, and non-relatives. The tax rate is significantly higher.

Thresholds and Tax Scale

Inheritance shares under 20,000 euros are tax-free. Above this threshold, the tax increases progressively. In tax class I, taxation starts at 7% and rises to a maximum of 19%. In tax class II, the corresponding rates are 19–33%.

Deductions and Exemptions

The spouse deduction is the most significant: the surviving spouse is entitled to a 90,000 euro deduction from their inheritance share. A minor child who is the closest direct descendant receives a 60,000 euro minor's deduction. These deductions reduce the taxable inheritance amount before the tax is calculated.

Payment Schedule

The Tax Administration sends the inheritance tax decision after processing the estate inventory deed. The tax is typically paid in two instalments. If paying the tax in full at once is difficult, it is possible to apply for a payment extension or payment arrangement from the Tax Administration.

Practical Impact on Estate Administration

The shareholders of the estate must take inheritance tax into account when dividing assets. Tax planning is particularly important for real estate and business assets. Read more about inheritance tax practices in the estate inventory and taxation article and estate inventory costs.