DOING BUSINESS IN FINLAND

Posted By Romain Ponsot on Oct 6, 1907 in Doing Business


Date de publication : 06-10-1907

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The following information are for the sole purpose  of providing a general overview of  the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.

 

Yes we tax in Finland

 

Flash News

New tax reform : Project of modification of the import VAT regime.

New tax treaties :

  • Tax treaty between Finland and Germany is ratified by Germnay.
  • Tax treaty between Finland and Turkmenistan enters into force.

Local tax advisors

No specific information on the local tax advisors.

Useful Links

Website Ministry of Finance: Click here

Website Tax administration: Click here

VAT identification number within EU:

Permanent Establishment

Resident companies are taxed on their worldwide income.

The definition of resident company for tax purposes, corresponds to the definition of the OECD Model Convention.

Entities are deemed to be resident in Finland, for tax purposes, if their place of management & control is in Finland.

However, the place of residence is subject to the relevant provisions of any applicable double tax treaty, if any.

Corporate Income Tax

The general CIT tax rate is 20%.

Non-taxable income includes the following:

  • Dividends (participation exemption)
  • Certain capital gains (10% minimum participation, 1 year and the country of the mother signed a tax treaty)
  • A local branches of a non-resident company is taxed on its Finland-source income attributable to the branch (resident companies are subject to tax on their worldwide income).

 

Non-deductible expenses includes the following:

  • Dividends
  • Fines and penalties
  • CIT and similar taxes (including foreign withholding taxes)
  • Late interest penalties related to payment of taxes

 

Carry forward: Yes 5 years for capital losses and 10 years for ordinary losses, but some restrictions may apply

Carry back: No

Companies should submit the tax return annually within 4 months before the end of the accounting year.

Companies shall pay monthly advance payments on the current taxable year (only two advance payments for small companies in Mach and September).

Whithholding Taxes (payment to foreign companies)

The local tax rates in Finland are the following, subject to the provisions of an applicable double tax treaty, if any.

There is no WHT on the profits paid from a branch to its foreign head office

The general rate of WHT on dividends is 20%.

The general rate of WHT on interest is 0%.

The general rate of WHT on Royalties is 20%.

The general rate of WHT on management fees is 0%.

The general rate of WHT on technical services is 0%.

Capital gains

Capital gains are taxed as general income under the regular CIT.

Note: in many cases capital gains are not taxable (10% and 1 year minimum of participation and the country of the mother signed a tax treaty with Finland)

VAT

Standard VAT tax rate is 24%

Reduced tax rates are:

  • 14% (among others, food, animal feed and restaurants)
  • 10% (among others, passenger transport services, books, newspaper…)

Zero-rated supplies include, subject to certain conditions:

  • exports of goods and services;
  • Vessels over 10 m in length and related containers
  • Aircraft engaged in commercial international traffic
  • Services related to zero-rated vessels and Aircraft

Exempt services and goods:

  • Financial and banking services]
  • Insurance services
  • Training and education

Certain non-resident companies (which are not required to register and incur Finland VAT in the course of their business activities in Finland) may apply for a refund.

No other specific information of VAT in Finland.

Miscellaneous

The general statute of limitation is 5 years.

There is a foreign exchange control in Finland.

There is no thin capitalization rules in Finland.

 

 

 

Do not hesitate to share your experience in Finland with us in the comments below. Any comments are welcome !

 

Romain Ponsot

Romain est conseiller en fiscalité au sein d’un leader mondial du shipping. Grâce à son expertise tant en matière de TVA, fiscalité internationale, problématiques intragroupe qu’en matière de fiscalité des particuliers, Romain vous guidera au travers d’articles professionnels et humoristiques. 

Romain, poète dans l’âme, aime particulièrement le couscous et passe beaucoup de temps à glacer ses souliers. Profil LinkedIn
Romain Ponsot

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