[quote]Taxation at source on interest applies to domestic interest accrued by[br][br][list][*]deposits held in accounts created for the receipt of public deposits located in banks or corresponding co-operative savings and loan associations or financial service offices[/*][*]bonds that are open to public subscription.[br][/*][/list][br]Only income from interest accrued by natural persons and estates of the deceased is subject to taxation at source on interest. The tax at source on interest is 30% of the interest accrued. The tax at source on interest is collected by those responsible for paying the interest, including banks, financial service offices, or the issuer of the bond.[br][br]The state is the recipient of tax revenues derived from tax at source on interest. Deposits and bonds subject to taxation at source on interest are exempt from income tax.[br][/quote][br]Source: [url=https://vm.fi/en/taxation-at-source-on-interest]https://vm.fi/en/taxation-at-source-on-interest[/url] (date 12.2.2024)[br][br]The Taxation at source on interest is withheld upon payment of the interest. So it never comes to the customer's account.

The interest rate on a person's current account is 0.25% p.a., i.e. per year. How much is added to a person's account if interest is calculated based on the lowest balance of the year? The person's lowest balance during the year in question was 537€.[br][br]i = 0.25% =0.0025, t = 1 a (= a year) and k = 537€. In this case, the deposit rate in euro would be:[br][br][math]r=0.25\%\cdot 537€\cdot 1\text{ a }=0.0025\cdot 537€= 1.34 €.[/math][br][br]As this is subject to a withholding tax of 30% on the state, i.e.[br][br][math]30\%\cdot 1.34 = 0.40€, [/math][br][br]so a person's account is deposited[br][br][math]1.34€ - 0.40€ = 0.94€.[/math][br][br][u]Method 2[/u]: A person receives 70% of the deposit rate because 30% goes as a tax at source on interest to the state. In this case, the interest rate can be solved as[br][br][math]70\%\cdot 0.25\% = 0.00175\%.[/math][br][br]In this case, the interest in euros would be[br][br][math]r=0.00175\%\cdot 537€\cdot 1\text{ a }= 0.94 €.[/math][br][br]Most banks calculate the interest rate on a monthly basis according to the lowest balance. The interest is only paid once a year. The principle in the calculations is the same but the annual rate must be divided by 12 to make it a monthly rate.

The person invested 1500 euros in a three-year fixed-term account, which was not allowed to be deposited into or withdrawn from during the investment period. The annual interest rate for the account is 2.8 \%. How much money is in the account at the end of the investment period if the interest is paid to that account?[br][br][u]1. year:[/u] [br][br]Interest in euros is [math]2.8 \%\cdot 1500€= 42€,[/math] from which 30\% is paid for the state as an tax at source on interest, so . Tästä maksetaan lähdeveroa 30 % , so [br][br][math]42€-30\% \cdot 42€ = 42€-12.6€=29.4€[/math]. [br][br]is added to the account. The same result would be obtained with Sama tulos olisi saatu laskemalla [math]70\%\cdot 42€= 29.4€.[/math] After first interest payment, the accound would have [br][br][math]1500€+29.40€ = 1529.40€.[/math][br][br][u]2. year:[/u][br][br]Interest is now calculated according to the new balance, i.e. the account is added [math]70\%\cdot 2.8\%\cdot 1529.40\,€= 70\%\cdot 42.82€=29.97€.[/math] [br][br]It is worth noting here that counting all at once will get you 29.98€. The difference is due to the fact that the exact values are rounded down in the example: [math]2.8\%\cdot 1529.40€=42.8232\,€\approx 42.82\,€.[/math][br][br]After the second year of investment, the account has [math]1529.40€+42.82€ = 1572.22€.[/math][br][br]The third-year interest rate is calculated according to the balance at the end of the second year, so when the deposit ends, the account will have 1603.03 euros.