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Tax refund moves from December to August starting in 2019

Changes to Finland's tax legislation and harmonised IT will speed up tax processing starting next year, meaning that most tax refunds will be paid to individual taxpayers already in August.

Jäännösverolasku, kolikoita ja laskin.
Image: Ismo Pekkarinen / AOP

Reforms to Finland's tax processing practices will start to become apparent in 2019, when decisions on potential tax refunds or back taxes will be announced earlier to individual taxpayers.

In Finland taxpayers are sent a new tax card in January. In April they then receive a pre-completed tax return based on their previous year's activities. Taxpayers can check the numbers and make corrections to the pre-completed form, if necessary, and return it to the tax authority. Until 2019, the tax decision was then made in September or October and any tax refunds or back taxes came due in December.

Faster decisions, refunds and back tax due dates

Pre-completed tax returns for advance tax withholdings will continue to be sent out in April, in line with the current practice, but the new streamlined tax processing will speed up the decisions.

This means that individual taxpayers that made no corrections to their pre-completed forms in April can expect their tax decisions already in June. Those that have submitted corrections to the tax authorities will start to hear back about their decisions in July, and the last of the decisions will be made by the end of October.

This expedited process means that taxpayers can likewise expect any tax refunds that may be owed them to be returned to their back accounts already in August. In the same way, for those that owe back taxes, the first payments will be due in August instead of December.

According to the Finnish Tax Administration Vero, 5.3 million pre-completed tax forms for the year 2015 were sent to taxpayers in Finland in the spring of 2016. Three-quarters of the recipients made no changes to the forms.

Estimates say that up to 85 percent of taxpayers will fall into this no-changes group in 2019. This would mean that 77 percent – or 1.8 billion euros – of the total tax refund pot of approximately 2.3 billion euros would be paid out to taxpayers already in August.

Change could affect Christmas sales

While most people will probably be happy to hear that they will receive any money that is owed them earlier, Finland's retail representatives are worried about how the change will affect their Christmas season sales. Refunds have been landing in Finnish taxpayers' bank accounts in December for decades, just in time to use the money for a surge of holiday shopping.

Juhani Pekkala, Managing Director of the Finnish Commerce Federation, says the earlier payment date will inevitability weaken consumer purchasing power in December.

"We are just going to have to get creative and think of something new," he says.

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