The new government says it plans to look into abolishing inheritance tax, to see it replaced by capital gains tax levied when the inherited property is sold.
That move could increase the tax rate paid by those who inherit, according to the Managing Director of the Taxpayers' Association of Finland, Teemu Lehtinen.
Inheritance tax is paid on the whole amount of the inheritance, whereas capital gains tax is only paid on the increase in value. That doesn't necessarily mean that less tax would be paid if capital gains tax replaced inheritance tax.
At present the capital gains tax rate is 30-34 percent. Lehtinen says that the rate levied on even larger inheritances is relatively small.
"On a million euro inheritance, the tax is no more than around 15 percent," said Lehtinen.
If inheritance tax was replaced by capital gains tax, those who keep their inherited property and don't convert it into cash would be the winners. Lehtinen said that in that case, there would be no sales profit and therefore no capital gains to tax.
Capital gains tax is calculated based on the sales price minus the cost of acquisition.
The acquisition cost in the case of inheritance would be the cost paid by the person leaving the inheritance.
"The losers are clearly those people who want or need to sell the inheritance for cash," said Lehtinen. "That would incur capital gains tax, which could easily be a greater amount than inheritance tax."
Most inheritances tax-free
Inheritance tax is not a popular tax. On the other hand the majority of inheritances are so small that they fall under the threshold for incurring inheritance tax, which is 20,000 euros.
According to Lehtinen most inheritances also have some kind of discount applied based on the type of property inherited or the age of the recipient, or the family relationships they had with the deceased.
The average inheritance and gift tax levied is between 9 and 12 percent, according to the Office of the Prime Minister.
"We should investigate carefully all the options and consider how a switch to capital gains tax could be executed," said Lehtinen.
Home sales could be taxable
Switching to capital gains tax could slow down the process of selling property, as the tax is only paid after a sale has been completed, according to Head of Processes Essi Eerola from the Bank of Finland's research arm.
From a national economy perspective that could be damaging, as it would lock in property and capital into investments that would not ordinarily be profitable to make.
Officials looking at making this switch should also consider taxation on sales of homes, according to Eerola.
At present there is no capital gains tax on the sale of homes if the owner has lived in the property for at least two years.
That would create a loophole if an inherited home was not liable for inheritance or capital gains tax.
"That would have a big impact, as a big part of Finns' wealth is locked into home ownership," said Eerola.
Inheritance tax is efficient
Getting rid of inheritance tax would make the tax system less efficient, says Essi Eerola, as inheritance tax is regarded by economists as an efficient tax.
That means that its impact on people's behaviour, such as desire to work, is not affected as much as it is by an increase in income tax rates.
"In addition inheritance tax evens out wealth inequality, which is positive from the perspective of equality of opportunities in society," said Eerola.
Inheritance tax is a significant source of income for the state. Last year inheritance and gift tax brought in some 900 million euros, and the state estimates that the figure will increase in the coming years.
"There would have to be some adjustments to capital gains tax, if the whole amount is to be replaced," said Eerola.
Extended payment times a positive
Lehtinen believes the report on inheritance tax will take the whole four-year parliamentary term.
"That's good, because they should investigate and investigate all the options," said Lehtinen.
The other issue around inheritance tax in the government programme is a proposal to extend payment times for inheritance tax to ten years.
That gets the thumbs up from both Eerola and Lehtinen.
"That would be a sensible reform, especially when property is not easy to sell," said Eerola. "It would surely make inheritance tax a little easier [for people] to accept."