Financial Equalization

The state supports the municipalities to a significant extent in the fulfillment of municipal tasks. The main pillars of these financial benefits are the statutory share of income tax and payments as part of financial equalization.

The non-dedicated funds transfer payments are summarized under the term "financial allocations" and include 35% of the income tax of companies operating in the country as well as financial equalization payments, the amount of which depends on a municipality's own earning power per capita.

The facts described regarding financial equalization are set out in the Financial Equalization Act. The regulations on the direct tax shares of the municipalities can be found in the Tax Act.

More detailed information on the annual financial equalization to the municipalities can be found in the government report.