The taxation of earned income and capital income in Finland

In Finland there is a dual income tax system according to which an individual taxpayer has two categories of income, namely earned income or capital income. Earned income is taxed at progressive rates whilst in capital income there is only one nominal tax rate. However, it is not always simple to keep those two categories separate. On the other hand, one nominal tax rate in income taxation is not the whole truth: real effective tax rates vary a lot, one reason for which is inflation.