In Finland, the tax authorities collect both federal and city taxes under the same regime.
The tax rate for corporate entities is 20%.
Taxation is based on profits. Accounting profits are adjusted for various tax add-backs and allowances to calculate the taxable profits.
Agricultural income is taxed differently from other business income. However, the previous separation of sources of income into passive and active income (ie, the ‘income basket system’) was abolished in 2020. There are also some tax exemptions concerning, for example, dividends between unlisted companies and certain capital gains (ie, the participation exemption).
It is a worldwide regime.
Losses may be carried forward and offset against profits for the following 10 years. Losses are utilised on a first-in, first-out basis. Capital losses may have a set-off period of five years. Certain changes of control in the loss-making company will result in forfeiture of the losses, unless permission to utilise losses is successfully obtained from the tax administration, subject to certain conditions. Only intra-jurisdiction losses may be utilised. However, based on recent case law, certain foreign losses that qualify as final losses originating from another EU/European Economic Area country may also be utilised, under certain conditions.
The concept of beneficial ownership in tax treaties limits the application of tax treaty provisions. Under domestic law, there is no definition of ‘beneficial owner’. The general anti-avoidance rule may be applied, according to which the substance over form principle will apply. In addition, Finland has adopted controlled foreign corporation legislation.
No.
Yes – for example, foundations, funds and cooperative associations are also subject to corporate taxes. Partnerships are taxed at the level of the owners. There is no concept of a trust under Finnish law.
There is a special tax regime for the shipping industry.
Under certain conditions, the sale of shares in associated companies may be tax exempt. This applies where:
- the shares are part of the seller’s fixed assets; and
- the seller has owned at least 10% of the share capital of the company, directly and continuously, for at least one year.
As an EU member state, Finland has provisions on cross-border mergers, divisions, transfers of assets and exchanges of shares in accordance with the EU Merger Directive. These rules also apply to domestic transactions.
A change of company form is possible without immediate tax consequences in many cases. For example, a partnership may be transformed into another kind of a partnership or into a limited company. However, a limited company may not be transformed into a partnership.
No.
There are rules on the exchange rates that should be applied to translate different currencies used into euros.
The tax rate for corporate entities is 20%. No patent box rules or similar beneficial regimes are available for intangibles.
Yes, employee pension insurance payments may be deducted.
No.
No.
No.
There are some differences between the depreciation rules for taxation and accounting purposes.
No. However, certain temporary regimes have been adopted concerning faster depreciation for investments, for example.
No.
No.
Non-resident corporate entities are tax liable if they have a permanent establishment in Finland. The permanent establishment rules follow the Organisation for Economic Co-operation and Development model. A ‘permanent establishment’ is a distinct place for conducting business of a permanent nature, or a place where special arrangements to conduct such business have been made. Examples given in the legislation include a place of management, a branch, an office, an industrial plant, a factory, a workshop, a shop or any other permanent place at which transactions may be effected.
There are withholding taxes concerning, for example, dividends and royalties.
Yes, tax treaties limit Finland’s right to tax.
Yes.
This will depend on the structure of the inbound migration.
Yes. As an EU member state, Finland has exit tax rules for companies according to the EU Anti-Tax Avoidance Directive.
Yes, there are statutory anti-avoidance rules.
The main rule is the general anti-avoidance rule, according to which the ‘substance over form’ principle will apply.
In addition to the general anti-avoidance rule, other major anti-avoidance tax rules are based on, for example, the EU Anti-Tax Avoidance Directive. There are also separate anti-avoidance rules on disguised dividends.
It is possible to apply for an advance tax ruling from the Finnish tax authorities if it is unclear how the legislation might apply to a specific case. However, it is not possible to obtain special tax treatment that is not based on the legislation applicable to all taxpayers.
Yes. According to the Finnish transfer pricing rules, all related-party transactions must be effected on an arm’s-length basis.
Yes. The general statute of limitations allows for a tax adjustment for a three-year period. However, there are several exceptions to this.
Company tax returns must be filed within four months of the end of the accounting period. Advance taxes must be paid during the tax year.
The penalties include a tax increase, late payment fees and penalty interest. Criminal sanctions are also possible in severe cases.
Yes, country-by-country reporting is mandatory for groups with a turnover of €750 million or more.
Tax consolidation is not permitted, but it is possible to make a deductible group contribution under certain conditions, where the parent company owns at least 90% of the share capital of the affiliated company. The legislation concerns domestic situations and also group contributions made to affiliated companies in other EU/EEA states to the extent that these cover final losses.
Indirect taxes include value added tax, broadcasting tax and excise taxes. Excise taxes are levied on products such as alcohol, tobacco, sodas, beverage packs, fuels, electricity and waste.
Transfer taxes are due, for example, on the transfer of shares which are not publicly listed.
The Finnish tax landscape is conservative. Finland follows EU rules and Organisation for Economic Co-operation guidelines. No major reforms are expected.
In case of uncertainty, it is advisable to discuss the matter with the tax authorities and obtain an advance ruling.
