Professional Documents
Culture Documents
in Finland
2009
Tax issues
7/2009
Taxation in Finland 2009
Tax issues
Keywords
Abstract
The text describes Finnish tax system and taxes levied in Finland. All areas of taxation (with exception
of customs taxation) are covered. Taxes described include income tax, VAT, inheritance tax, excise
duties but also many other taxes ranging from car tax to fishing management fee. The text also gives a
description of prepayment of taxes, tax administration and appeals.
Preface
This twelfth edition of the information booklet "Taxation in Finland" takes
into account all the recent changes in the Finnish tax legislation.
The booklet is based on tax legislation in force in Finland as at 1 January 2009
and all figures refer to 2009 unless otherwise stated. A brief description of the
Government’s proposals to Parliament in the autumn 2008 has been included in
Appendix 14 in order to give a more update picture of the current situation.
The aim is to give an outline of the principles of the Finnish system of taxa-
tion and to describe briefly the individual taxes – how they work and how much
they yield. The booklet has no binding force and does not affect a taxpayer’s
rights and liabilities.
The booklet was compiled and edited by Mr Anders Colliander, Consulting
Official at the Ministry of Finance (VM, BOX 28, 00023 Valtioneuvosto, Hel-
sinki, Finland, telefax 358-9-16034747 or -8). Some passages of the language have
been revised by Mr John Calton, Lecturer in English, and by Mr Jarl Hagelstam,
former Senior Adviser, Legal Affairs, Ministry of Finance.
Any comments on the booklet will be gratefully received (Internet addresses
for commenting the booklet: anders.colliander@vm.fi, or VMFintaxJL@
vm.fi).
Ministry of Finance
Contents
1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.1 Right of taxation and enactment of tax law.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.2 Main sources and level of taxation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2 Taxation of income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Taxes imposed .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1.1 State income taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1.2 Communal tax.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.3 Church tax.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.4 Corporate income tax.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.5 Tax withheld at source from interest.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.6 Health insurance contribution, etc... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.7 Withholding tax on non-residents’ income.. . . . . . . . . . . . . . . . . . . . . 21
2.1.8 Withholding tax for foreign wage earners with
special expertise.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1.9 Maximum combined rate of tax.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1.9.1 General maximum combined rate of tax. . . . . . . . . . 22
2.1.9.2 Tax relief for persons deriving earned income
both from abroad and from Finland.. . . . . . . . . . . . . . . 22
2.1.10 Recipients of tax revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2 Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2.1 Unlimited and limited tax liability.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2.2 Residents and non-residents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2.3 Individuals.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2.3.1 Married persons.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2.3.2 Minors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.2.4 Corporate bodies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.2.5 Partnerships and undistributed estates.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.2.6 Permanent establishments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2.7 Exempt persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.3 Income taxation of individuals: investment income.. . . . . . . . . . . . . . . . . . . . . 27
2.3.1 The concept of income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.3.2 Definition of investment income, exemptions.. . . . . . . . . . . . . . . . . 28
2.3.3 Interest income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3.4 Dividend.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3.4.1 Dividend received from publicly listed
companies .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3.4.2 Dividend received from non-listed companies...... 30
2.3.4.3 Dividend received from non-resident
companies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.3.4.4 Other comparable income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.3.5 Capital gains.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.3.6 Investment income share of agricultural income and
business profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.3.6.1 Agricultural income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.3.6.2 Income from partnerships.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.3.7 Sole proprietors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.3.8 Other investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.3.8.1 Rental income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.3.8.2 Income from forestry and income from
reindeer farming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.3.8.3 Income from real property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.3.8.4 Pension or other income based on
voluntary pension insurances .. . . . . . . . . . . . . . . . . . . . . . . . . 38
2.3.8.5. Benefit from a life insurance policy.. . . . . . . . . . . . . . . . . 39
2.3.9 General deductions, losses and deficit in the
category of investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.3.9.1 General deductions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.3.9.2 Voluntary pension insurance premiums.. . . . . . . . . 40
2.3.9.3 Losses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.3.9.4 Investment income deficit and credit for
the deficit against tax on earned income.. . . . . . . . . . 41
2.4 Income taxation of individuals: earned income.. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.4.1 Definition of earned income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.4.2 Exempt income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.4.3 Deductions and allowances.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
2.4.4 Income spreading, training fund and
sportsperson’s fund.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.5 Taxation of business profits, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.5.1 Business profits and income from professional activities.. 51
2.5.2 Chargeable income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.5.3 Dividend received by corporate bodies.. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.5.3.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.5.3.2 Domestic situations .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.5.3.3 Dividend is distributed by a company
resident in an EU Member State.. . . . . . . . . . . . . . . . . . . . . . 53
2.5.3.4 Dividend is distributed by a company resident
outside the EU area.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.5.4 Exempt income.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.5.5 Participation exemption for capital gains.. . . . . . . . . . . . . . . . . . . . . . . . 56
2.5.6 Allowable expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
2.5.7 Allocation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
2.5.8 Reserves and provisions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
2.5.9 Losses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
2.5.9.1 General rules.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
2.5.9.2 Restructurations and the treatment of
losses of a permanent establishment of a
Finnish corporate body.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
2.5.9.3 Restructurations and the deduction of
losses of a permanent establishment which a
foreign corporate body has in Finland .. . . . . . . . . . . . 67
2.5.10 Tax incentives (developing regions).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
2.5.11 Contributions between affiliated
companies (group contribution).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
2.5.12 Change in a company’s form, mergers and divisions.. . . . . . . 69
2.5.12.1 Change in a company’s form............................... 69
2.5.12.2 Mergers and divisions etc... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
2.5.13 Controlled foreign companies (CFCs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
2.5.13.1 Shareholders covered. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
2.5.13.2 Controlled foreign company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
2.5.13.3 Chargeable income, credits and losses .. . . . . . . . . . . . 74
2.5.14 Taxation of real estate companies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
1 Introduction
1.1 Right of taxation and enactment of tax law
According to the Finnish Constitution, the right of taxation lies with the State
(central government), the municipalities (communes) and the local communi-
ties of the Evangelical-Lutheran and Orthodox Churches.
Tax legislation is modelled along the lines of the tax legislation in the other
Nordic (Scandinavian) countries.
million % of total
euro tax revenue
2 Taxation of income
The Income Tax Act (1992) is a general act covering all types of income. How
ever, the net income from agriculture and business profits and income from
professional activities are determined, for the purposes of income taxation,
under the provisions of the Act on the Taxation of Farm Income (1967) and
the Act on the Taxation of Business Profits and Income from Professional
Activities (1968), respectively.
For a description of the special features of taxation in the Province of Åland,
see Section 10.
The state income tax on investment income is levied at a flat rate of 28 per
cent.
20
2.1.2 Communal tax
Communal (municipal income) tax is levied at flat rates on the earned income
(of at least 10 euros) of individuals and the estates of deceased persons. Each
municipal council sets the tax rate annua lly in advance for the following year
on the basis of the municipal budget. In 2009 the rate varies between 16,50
and 21 per cent, the average being 18.59 per cent.
2.1.8 Withholding tax for foreign wage earners with special expertise
Under the Act on Withholding Tax for Foreign Wage Earners with Special
Expertise (1995) a withholding tax of 35 per cent is levied in lieu of communal
tax and State income tax on earned income. For a detailed presentation, see
5.2.2.3.
22
2.1.9 Maximum combined rate of tax
After the abolition of the net wealth tax in 2005 there is no longer a general
maximum combined rate of tax.
2.1.9.2 Tax relief for persons deriving earned income both from abroad and from Finland
A person deriving earned income both from abroad and from Finland is enti-
tled to a tax relief if the following conditions are fulfilled:
• the person is resident in Finland, derives from a foreign country earned
income that is taxable only in that country under a double taxation agree
ment between Finland and the country, and
• the person also derives other earned income that is subject to tax in
Finland, and
• t he total amount of the Finnish income tax on this total income and the
foreign income tax on the foreign income is higher than it were had the total
earned income been income that is taxable only or may be taxed in Finland.
2.2.3 Individuals
2.2.3.2 Minors
Minors, i.e. children under the age of seventeen, are taxed on their own
income, separately from their parents.
2.3.4 Dividend
An annual return of 9 per cent is calculated on the value of the shares in non-
listed companies. The dividend is tax exempt up to an amount of 90,000 €
of such return. The amount of such dividend that exceeds 90,000 € is taxed
by applying 70/30 per cent rule and so 70 per cent of the dividend is taxed as
investment income at a rate of 28 per cent and 30 per cent is tax exempt.
Examples:
1. Dividend received 80,000 euros
Calculated return 100,000 euros,
The amount that exceeds the 9 per cent return is also taxed by applying
70/30 per cent rule, but now 70 per cent is taxed as earned income (progressive
income tax scale).
The value of the shares is defined as the mathematical value based on Act
on the Valuation of Assets for Taxation.
31
If a company’s shareholder who is not regarded as an employee of the com-
pany (a person in a leading position) has used a flat belonging to the company’s
assets as his own or his family’s dwelling, the value of the flat is deducted from
the value of shareholder’s shares when the annual return is calculated.
If a company conducting business gives a money loan which is a part of the
company’s assets, to a shareholder or to a member of his family, and the share-
holder alone or together with members of his family control at least 10 per cent of
the shares or the voting power in the company, the loan is deducted from the value
of his or his family members’ shares when the annual return is calculated.
In the case of disguised dividend 70 per cent of the dividend is taxed as
earned income (progressive income tax scale) and 30 per cent is tax exempt.
The only difference is that the annual return is calculated on the basis of the
current value, which the shares had in the possession of the owner at the end
of the year preceding the year in which the dividend is distributed. The current
value means the probable alienation price of the property.
In all other cases dividend is fully taxable. Thus it is taxable income if it is
distributed by a company resident in a non-EU Member State with which Fin-
land does not have a tax treaty in force. It is also taxable if a tax treaty cannot
be applied, for instance on the basis of a provision limiting the benefits of the
treaty. Moreover, it is taxable if the distributing company is not a company men-
tioned in Article 2 of the EU Parent–Subsidiary Directive but in that case also
a tax treaty may be applicable and thus the dividend may be taxed in the same
way as domestic dividend.
2. When that income is attributed to a partner, the tax exempt (on the basis
of Act on the Taxation of Business Profits and Income from Professional
Activities or the Act on the Taxation of Farm Income) part of the dividend
included in his share is deducted from his share. If the share is not big
enough, the deduction is made from the share within the same income
source and in the same partnership in the ten subsequent years when
income arises. The deduction is made before calculating the amounts of
investment share.
36
3. When the other income of a business partnership is determined, dividend
received by the partnership is not taken into account. Dividend is attributed
to a partner according to his share in the partnership’s income and dividend
is deemed to be his income according to those rules of Income Tax Act
which are applied to the partners.
Remuneration paid at the normal going rate to a partner for services ren-
dered to the partnership is deductible from the partnership’s income (and taxed
as the income of the partner).
When property or rights are used by a partner for investment in a partner-
ship, this investment must be valued at the market price in the taxation of both
the partner and the partnership.
When real property, buildings or securities are transferred from a partner
ship to its partner (a "transfer to private use") the market price must be applied
(regulated reorganisations are excluded from this provision). If the transfer
involves other assets, services or benefits, whichever is the lower, the book value
or the market value, must be applied. These principles are also applied when
ever a partnership is dissolved.
If the assets of a business partnership include a flat used as a dwelling of a
partner or his family, the value of the flat is deducted from the partner’s share in
the net assets. A loan taken out by a general partner in order to acquire a share
of a general or limited partnership is deducted from the general partner’s share
in the business assets of the partnership. The interest on such a loan is deducted
from the general partner’s business profits share from a business partnership
before calculating the amount of investment share. Claims from partners are
not deemed to be business assets.
In real property partnerships losses are attributed to the partners. A part-
ner’s interest expenses relating to agricultural activity and his losses from the
partnership from previous years are deducted before calculating the invest-
ment income. If a real property partnership has income other than income
from agriculture, the partner’s share of the other income is taxed wholly as
investment income.
The value of timber for constructing and repairing buildings other than
residential buildings or similar buildings for personal use and the value of tim-
ber for heating purposes or for other personal use are not included in the tax-
able income.
An individual, an estate of a deceased person, or a real property partner-
ship whose members are individuals or estates of a deceased person are entitled
to a forest deduction before expenses incurred in acquiring and maintaining
income from forestry are deducted. The deduction is at most 60 per cent of the
annual investment income from the forestry. The total amount of this deduc-
tion and similar deductions of earlier years (excluding amounts that have been
added to the taxable capital gains) cannot exceed 60 per cent of the total acqui-
sition costs of forests that the taxpayer owns at the end of the tax year and that
would entitle to the forest deduction.
The above-mentioned persons are also entitled to form a cost reserve on the
basis of investment income from forestry if the forest is part of a farm and is
not used as part of a business. The reserve is at most 15 per cent of such income
38
after the forest deduction has been made. The reserve is taxed as income for one
or more of the subsequent tax years (at the latest for the sixth tax year) depend-
ing on the geographical area in which the farm is located.
The deductible expenses in this form of taxation include all the necessary
costs of practising forestry.
The income from reindeer farming is investment income with the exception
of work done for the reindeer farming. In order to calculate the total reindeer
farming income of a farmer, the income generated by one reindeer (more than
one year old) in the previous year is estimated by using rates of return confirmed
for taxation purposes and taking into account the typical costs in the farming
locality and then multiplying the income generated by one reindeer with the
number of reindeers owned by that farmer.
The increase is not imposed to the extent that the taxpayer shows that the
premiums were not deducted in taxation in Finland.
2.3.9.3 Losses
The concept of loss in the current tax system has several meanings. The loss
of earlier tax years in the category of investment income is deducted from
the investment income of the tax year according to the carry forward prin-
ciple during the ten years following the loss year. Losses from business prof-
its or agricultural income sources are deducted from the investment income
of the same tax year if the taxpayer or, in the case of spouses, both spouses
so demand; otherwise the losses are carried forward for ten years and set off
against income from the same source.
2.3.9.4 Investment income deficit and credit for the deficit against tax on earned income
If the amount of natural deductions, deductible interests, earlier losses and
losses for the tax year from business profits and sources of agricultural income
which the taxpayer demands to be deducted, exceeds the amount of invest-
ment proceeds for the tax year, the excess is the deficit in the category of
investment income.
A taxpayer is entitled to a credit for the deficit against his income tax on
earned income according to the following rules:
• the credit is 28 per cent of the deficit up to 1,400 euros; the amount is increased
by 400 euros if the taxpayer or the spouses have supported a minor during
the tax year and by 800 euros if they have supported two or more minors; a
credit which is due to premiums paid for a voluntary pension insurance are
deductible irrespective of the limits in euros;
• the maximum amounts in euros are not applied in 2005–2009 to the credit
for the investment income deficit to the extent that the credit is due to inter-
est on a loan used for acquiring the shares of a entrepreneur–shareholder or
to a paid back shareholder loan;
42
• if the taxpayer had been granted the credit for an owner-occupied dwell
ing under the Income and Capital Tax Act (1988) and this credit would be
bigger than the ordinary credit for the deficit, the former is the minimum
credit for the deficit;
• the rate of the credit is increased by two percentage points (from 28 per cent
to 30 per cent) on the part of the deficit that is due to interest on a loan which
the taxpayer has taken for the acquisition of his first dwelling;
• the credit is deducted from the state income tax on earned income for the
same tax year after the disability credit and the child maintenance credit
have been deducted from this tax; the maximum credit is then 75 per cent
of the overall credit; the credit that has not been deducted from state tax is
deducted proportionately from the state tax (including tax on investment
income), communal tax, medical care contribution of health insurance con-
tribution and church tax;
• in the case of spouses, the deficit can also be deducted from the income tax
of one of the spouses if the other has no investment income.
The amount of the deficit for which credit cannot be given is converted into
a loss for the tax year and, as such, can be carried forward and deducted from
investment income over the next ten years (thus effectively becoming a loss for
earlier tax years, see above 2.3.9.3).
See also the last paragraph of 2.3.9.2 concerning a separate investment
income deficit which is usually treated in the same way as the ordinary invest-
ment income deficit and the corresponding credit.
Investments comprise securities, real property and other similar property of a financial, in-
1
surance or pension institution, excluding claims, acquired for investment purposes or for the
safeguarding of investments.
52
• such unrealised profits from investments related to unit-linked insurance
contracts that are entered into profit and loss account (in the case of insur-
ance companies);
• unrealised gains from financial instruments at fair value through profit or
loss and fair value hedge entered into profit and loss account in accordance
with the Act on Credit Institutions or a corresponding foreign Act;
• income from timber and the transfer of the right to fell trees;
• corrections made to items in the accounting books in certain cases if the
probable acquisition cost or disposal price exceeds the book value for tax
purposes; the deductions relate to credit losses of business claims and final
losses of other financial assets, investments and inventory valuation as well
as depreciations calculated for fixed assets not subject to wear and tear.
2.5.3.1 General
The dividend taxation system is also applied to interest paid on the participa-
tion capital of a co-operative society, that part of the profit which is paid on
the basic reserves of a savings bank, the interest paid on the investment in the
additional reserves of a savings bank, interest which is paid on the guarantee
capital of a mutual insurance company or insurance association.
If diidend is paid on a share which has been lent (under a security lending
contract), the amount paid by the borrower as a substitute (substitute dividend)
is treated in the same way as ordinary dividend.
In the case of disguised dividend 70 per cent is taxable.
Of dividend received by an individual or an estate of a deceased person 70
per cent is taxable income (subject to the rules explained in 2.3.4.4 first para-
graph).
For taxation of individual shareholders see 2.3.4.
This rule concerns dividend not received on the basis of investment shares
and not covered by 3) (a publicly listed company distributes dividend to a
non-listed company). It covers the ordinary case where a Finnish resident
company receives dividend on the basis of its participation in a company
resident in an EU Member State. As there is no minimum participation
requirement, it also covers portfolio dividends.
54
If the conditions in 1) a)–c) are not fulfilled and between Finland and the
EU Member State in which the distributing company is resident there is
not in the tax year in force a tax treaty or the treaty is not applied to the
dividend in question (for instance due to a limitation of benefits rule), 100
per cent (instead of 75 per cent) of the dividend is taxable.
3. Moreover, 75 per cent of dividend is taxable (at the corporation tax rate of
26 per cent), where the distributing company is a publicly listed company
(see 2.3.4.1) but the recipient company is a non-listed company which does
not own directly at least 10 per cent of the share capital of the distributing
company at the time of distribution.
It should be noted that all tax treaties between Finland and EU Member
States include an intercompany exemption. Therefore, if the recipient Finnish
company has at least 10 per cent participation in the voting power of the dis-
tributing company, dividend is tax exempt in Finland. This exemption, which
overrides the Finnish domestic legislation, is complete (100 per cent of dividend
is exempt) and it usually applies to all types of dividends and irrespective of the
character of the distributing company and the receiving company.
Some intercompany exemptions do not use the 10 per cent voting power
threshold but refer directly to the Finnish domestic tax law. Foreign dividend is
then exempt from Finnish tax to the extent that the dividend would be exempt
from tax under Finnish domestic tax law if both companies were resident in
Finland. In that case the Finnish domestic tax law (described above in 2.5.3.2)
is applied as such.
For these reasons the relevant tax treaty should always be consulted when
determining how dividend distributed by a company resident in an EU Mem-
ber State is treated in the hands of the Finnish recipient.
In 1) and 2) where the type of shares and the types of (distributing and
receiving) companies are decisive, the taxable part of the dividend is always
75 per cent.
3. Moreover, 75 per cent of dividend is taxable (at the corporation tax rate of 26
per cent) in all other cases, if between Finland and the country of residence
of the distributing company there is in that tax year in force a tax treaty,
which is applied to the dividend distributed by that company. In practice this
is the most important case that includes the ordinary relationships between
a parent company and its subsidiary (direct and portfolio investments) in
tax treaty situations under the assumption that the treaty is applicable.
The capital loss is not deductible when the transferred company is resident
in a State other than Finland and it is not a company referred to in Article 2 of
the EU Parent–Subsidiary Directive (for details, see 2.5.3.3) and between Fin-
land and the country of residence of the transferred company there is not in
that tax year in force a tax treaty, which is applied to dividend distributed by
the transferred company.
2.5.7 Allocation
As a rule, chargeable profits are allocated for purposes of taxation to the tax
year in which goods are delivered or services rendered. Minor receipts may be
allocated to the tax year during which the taxpayer receives the payment. If
the taxpayer receives interest or rent in advance, he may either disclose it in
full immediately or allocate it in equal annual instalments over the years of the
loan or rental period. The same holds for any other income of a similar nature,
61
provided that it can be attributed to at least two subsequent years. Items other
than interest may not be allocated to a period of more than ten years, and in
no case may income be allocated to two or more years if the taxpayer does not
follow the same procedure in his own bookkeeping.
In the case of products which take a long time to manufacture, expenses
and income may be allocated according to the degree to which manufacture is
complete if the same principle is followed in accounting (and taking into account
international accounting standards).
In principle, income and expenses are allocated on an accruals basis. This
means that, apart from several exceptions set out below, an expense is allocated
to the year during which the obligation to pay it arises, i.e. generally when the
taxpayer receives the goods or services for which money was paid. However,
minor expenses may be allocated to the tax year during which the taxpayer
made the payment.
Interest, rents and similar expenses must be allocated to the year in which
they are incurred. However, the taxpayer may, if he or she so elects, deduct inter-
est incurred on loans used to finance the construction of a new power station,
factory or mine as annual depreciations of not more than 10 per cent. Thus, the
annual deductions for depreciation need not be equal, but in no year may they
exceed 10 per cent of the original amount to be depreciated. Interest paid on
the capital investment made by the Government or the Government Guarantee
Fund must always be allocated to the year in which it is incurred.
Unless otherwise provided for, other expenses which generate or maintain
income over a period of at least three years are allocated equally to the years
in question up to a maximum period of ten years. This provision covers such
expenses as organisational costs and the costs of long‑term advertising cam
paigns. Expenses incurred in research and development work (except expenses
incurred for the acquisition of research buildings) may, at the taxpayer’s dis
cretion, be either deducted in the year in which the obligation to pay them arises
or depreciated over two or more years.
The premium received by an option writer is allocated to the tax year when
the option was written. However, if the exercise period of a publicly traded
option is at most 18 months, the premium is allocated to the tax year in which
the option is closed or exercised or when it expires. If the writer of a put option
buys the underlying instrument or commodity of the option as a consequence
of exercising the option the deductible acquisition cost of the acquired instru-
ment or commodity is the acquisition price of the instrument on the basis of
the contract minus an amount corresponding to the premium.
The premium paid by an option holder to the writer of the option is deduct-
ible in the year when the option is closed or exercised or when it expires. If the
holder of a call option exercises the option and buys the underlying instru-
ment or commodity, the acquisition cost of the instrument or commodity is the
amount corresponding to the underlying instrument’s or commodity’s acquisi-
tion price on the basis of the contract plus the amount of the premium paid.
62
Profits arising from the appreciation or depreciation of claim certificates,
securities and derivatives (and other financial assets) made in the account
ing books are allocated to the year in which they are entered in the taxpayer’s
bookkeeping as earnings or losses. The acquisition cost of such financial assets
is deemed to be the original acquisition cost of the asset increased or decreased
by the amounts that have been treated as earnings or losses in taxation.
In principle, the acquisition costs of inventories are disclosed when assets
are sold, consumed or lost. However, inventories (goods in stock) at the end of
the tax year are estimated for tax purposes at a value not exceeding the acquisi-
tion cost or market value, whichever is lowest. The acquisition cost is calculated
on a first‑in first-out (FIFO) basis. Overhead expenses which are related to the
acquisition and manufacturing of the goods may be added to the acquisition
costs of the inventory if they are entered in the taxpayer’s book-keeping and if
their amount is significant in comparison to the variable costs.
Investments (see footnote on page 31), excluding buildings, owned by a bank
or an insurance company, are valued in the same way as inventories at a value
not exceeding the acquisition cost or market value, whichever is lowest.
Expenses incurred in acquiring fixed assets are deductible through dep
reciation. The acquisition cost of the taxpayer’s entire stock of machinery and
equipment is written off annually as a single item using the declining balance
method. Under this method, the depreciation base consists of the net book value
of all such assets at the beginning of the year plus the acquisition value of assets
put into use during the tax year less any sales proceeds, insurance compensation
and the like received for assets sold, damaged or lost during the tax year. The
maximum annual depreciation is 25 per cent of this base, although the taxpayer
may claim a smaller allowance if he wishes. If the taxpayer can show that the
current value of these assets is less than the depreciation base reduced by the
full 25 per cent, he is entitled to an additional depreciation that will reduce the
depreciation base to the current value.
With regard to machinery and equipment with an economic life not exceed
ing three years or with a maximum acquisition price of 850 euros (this latter
rule is not applied if the taxpayer is taxed on the basis of the Income Tax Act),
the taxpayer may either write them off in full in the tax year in which they were
acquired or depreciate them along with other machinery and equipment. Such
deduction must not be greater than 2,500 euros in any tax year. The acquisition
cost of cars, buses and lorries used in a transportation business may be depre-
ciated by applying the following maximum depreciation rates: 25, 20, 20 and
15 per cent for the remaining years. If the taxpayer chooses to write off these
products (machinery, equipment, cars etc.) in full in the year of acquisition, all
proceeds from the sales of such assets, including damages, insurance compen-
sation, etc., must be entered in the books as income for the year in which they
were received.
63
Another exception to the main rule is that the acquisition cost of boats and
ships that are not directly used in the business activities of the taxpayer may be
depreciated at annual rates of no more than 10 per cent in a single tax year.
The acquisition cost of real property (to which no depreciation method is
applied) is deducted when the real property is alienated. This principle also
applies to securities, but if the taxpayer can show that the current value of secu-
rities other than shares (in a limited company) or of fixed assets other than land
area is at the end of the tax year substantially lower than its book value (and
taking into account earlier extraordinary depreciations) the taxpayer is entitled
to an extraordinary depreciation that will reduce the book value to the current
value. If the asset’s current value at the end of any future tax year substantially
exceeds the book value the excess will be added to the taxable income.
Buildings and other constructions are depreciated using the declining bal-
ance method. Each building must be depreciated as a separate item. Maximum
rates of depreciation range from 4 to 20 per cent, depending on the use of the
building. The taxpayer may vary the depreciation from year to year within the
applicable percentage range. If he can show that the current value of the build-
ing is less than its book value he is entitled to an additional depreciation. Large
repair costs can either be set off against taxable profits immediately or included
in the depreciation base of the building.
The depreciation rates for buildings and other constructions are as follows:
Type of building or construction Rate per annum applied to
reducing balance, %
– Shops, warehouses, factories, work-shops, power
stations or similar buildings 7
– Residential buildings, office buildings or other similar
buildings 4
– Tanks for storage of liquid fuel and acids and other
similar storage buildings and constructions made of
metal or other similar material 20
– Light constructions of wood or other comparable
material 20
– Buildings or constructions or parts ofbuildings or
constructions used exclus-ively for research and
development 20
The acquisition cost of bomb shelters or that part of the acquisition cost of
a building which relates to a bomb shelter is depreciated at an annual rate of
not more than 25 per cent, i.e. over four years or more. This also applies to the
acquisition cost of constructions, equipment, machinery and other items for
the prevention of water and air pollution and to the acquisition cost of a natu-
ral gas pipeline connection.
64
The acquisition cost of gravel and sand pits, mines, quarries, peat bogs and
similar property may be depreciated by an amount equivalent to the quantity
of the resource used up annually.
The acquisition cost of fixed assets other than those referred to above, such
as railways, bridges, quays, dams and basins, are depreciated by the straight line
method over their probable economic lives (maximum 40 years). The acquisition
costs of patents, copyrights, trade‑marks, etc., are depreciated by the straight-
line method over ten years or over a shorter period if the taxpayer can show that
the probable economic life of the asset is shorter than ten years.
Any sum calculated on the basis of traffic density and paid in compensa-
tion by the State to a private company for constructing and maintaining a road
(or a railway) whose ownership is to be made over to the State at a future date,
is allocated as income – following the main rule – to the year in which the ser
vice has been provided. Costs for constructing and maintaining such a road
(with the exception of maintenance costs of less than three years’ duration) as
well as the interest incurred during the period of construction on loans used to
finance the construction, are depreciated by the straight line method over the
remaining period (minimum 10 years) for which the contract between the State
and the private company has been concluded and starting from the tax year in
which the road or railway was put in use.
As a rule, the proceeds of sales and other compensation from assets which
are sold or have suffered a loss through destruction, theft or other crime, as well
as the non‑depreciated part of the acquisition costs of such assets, are allocated
for the purposes of taxation to the year in which the assets are disposed of or
when the loss has been noticed. In the same manner, if the depreciation base for
machinery and equipment is negative, i.e. if the sales proceeds, insurance com-
pensation, etc., received for machinery and equipment exceed the balance of the
acquisition cost of all assets, the excess is treated as that year’s income.
In the case of destruction or damage of fixed assets through fire or accident,
the taxpayer may deduct the remaining acquisition costs from expenses due to
repairs or the acquisition cost of new depreciable fixed assets (which are subject
to wear and tear) within the two following tax years, the balance thus forming
the depreciation base (replacement reserve). The replacement reserve is formed
on the taxpayer’s demand and only if the taxpayer intends to continue in busi-
ness. The reserve must also be shown in the bookkeeping; it must be deducted
from the acquisition cost of new assets during the following three years. Any
part of the reserve which has not been deducted as described is included in the
taxable income of the last year (with an increase of 20 per cent) in which it could
have been deducted. For special reasons the taxpayer may apply for an exten-
sion of the deduction period (up to three years).
The replacement reserve can also be formed on the basis of sales of shares
carrying the right to the enjoyment of business premises in a building owned
by a real estate company. In this case, the reserve may be deducted from the
65
acquisition cost of new shares carrying the right to the occupation of business
premises or expenses due to repairing such premises only when the replacement
reserve has been formed on the basis of proceeds from the sale of a building or
shares carrying the right to the enjoyment of business premises.
As a rule, any asset may be depreciated for tax purposes at a slower, but not
faster, rate than for the purposes of accounting.
When the income is calculated for the purpose of estimating whether the
actual rate of income taxation in the country of residence of the corporate body
is less than 3/5 of the Finnish tax rate of a corporate body resident in Finland,
dividend is not taken into account if it has been received by a CFC from another
CFC and it has been distributed on the basis of the last-mentioned CFC’s profit
that has been taken into account in Finland in estimating the rate of income
tax of the last-mentioned CFC for any of the five years immediately preceding
the distribution of dividend for any of the five years immediately preceding
the distribution of dividend (such dividend is not included in the chargeable
income either).
1. On the basis of the type of activity (subject to evidence on how the income
has accrued)
a) acorporate body whose income is mainly derived from industrial
activities, any other comparable production activities or shipping busi-
ness exercised in its country of residence;
b) a corporate body whose income is mainly derived from sales and market-
ing activities exercised in and mainly directed to its country of residence
73
and directly serving a corporate body with industrial activities, any other
comparable production activities or shipping business (in other words,
activities mentioned in a) and;
c) a corporate body whose income is mainly derived from payments made
by a corporate body of the same group, and the latter is resident in the
same country as the former (the corporate body receiving the payments)
and conducts there activities mentioned in a) or b);
The tax that corporate bodies in the treaty partner must pay for their prof-
its deviates significantly from the tax that corporate bodies must pay in Fin-
land for their profits if the corporate bodies are resident in a non-EU Member
State and are there on the basis of existing tax legislation liable to pay to the
State or its part a tax for their profits, the actual and total amount of which is
on average less than ¾ of the actual tax paid by corporate bodies in Finland
for their profits.
Tax Treaty States where such a substantial deviation is deemed to exist are
mentioned in a decree of the Ministry of Finance.
The requirement in c) is fulfilled if, taking into account the character of the
activity:
1. the corporate body has at its disposal in its State of residence necessary
premises and assets for carrying on its activities;
2. the corporate body has at its disposal in its State of residence sufficient staff
with the authority to independently carry on its business; and
3. that staff independently decides upon the day-to-day activities of that cor-
porate body.
3.3 Preassessment
The preassessment of taxes on income not subject to withholding is carried
out (in practice) by the local tax office. Assessment is made on the basis of
the taxpayer’s income in the latest ordinary assessment according to the tax
rates for the current tax year. The National Board of Taxes decides whether the
income estimates forming the basis for the preassessment should be adjusted.
If similar reasons apply with regard to an individual taxpayer, an increase or
reduction is made by the tax office.
The amount assessed is collected monthly in the case of corporate bodies. In other
cases the number of instalments is two (for 170–500 euros), three, six or twelve
(for more than 10,000 euros). If the taxpayer is dissatisfied with his preassess-
ment, he may apply to the tax office for a new assessment.
Rates of inheritance and gift tax are determined on the basis of two classes
of relationship between the beneficiary (the donee) and the deceased (the
donor).
Tax class I: Spouse, direct heir in ascending or descending line, spouses’
direct heir in descending line and fiancé(e) receiving a certain allowance on
the basis of Code of Inheritance). The concept of direct heir in ascending or
descending line includes persons in adoption relationships and foster children
in certain cases. Class I rates also apply if the provisions of the Income Tax Act
concerning spouses are applicable for the year of death to the deceased and an
individual who had lived with the deceased in free union, in other words class
I rates apply to spouses who previously have been married to each other or who
have (or have had) a child together.
82
Tax class II: All other cases (relatives or non-relatives).
4.2 Residence
For the purposes of the Inheritance and Gift Tax Act a person is deemed to be
resident in Finland if he has his main abode in Finland.
83
4.3 Inheritance tax
The following persons are exempt from inheritance tax when they receive an
inheritance or a bequest:
1. the State and its institutions, municipalities, joint municipal authorities,
religious communities and non-profit-making organisations;
2. persons serving in Finland at foreign diplomatic missions, other similar rep
resentations or consular posts headed by career consular officers and persons
serving in Finland as employees of the United Nations, its specialised agen-
cies or the International Atomic Energy Association as well as members of
their families and their private servants who are not Finnish nationals; how-
ever these persons are liable to pay inheritance tax on real property situated
in Finland and shares or other rights in a corporate body where more than
50 per cent of the total gross assets of the company consist of real property
situated in Finland (i.e. item 2 in 4.3.1).
Previously paid gift tax is deducted from inheritance tax in these cases.
Deduction is given also for transfer tax that has been paid when registration of
title to a real property has been sought and that has not been earlier deducted
from gift tax. The part of gift tax that exceeds inheritance tax is not refunded.
Deductions are allowed for all debts, including taxes relating to the lifetime
of the deceased (but excluding inheritance tax) as well as funeral and tomb
85
stone costs and expenses incurred in drawing up an estate inventory, up to rea-
sonable amounts. Expenses incurred in distributing estates are not allowed as
deductions.
Moreover, the spouse, or a person to whom the provisions of the Income Tax
Act concerning spouses are applicable for the year of death (see 2.2.3.1) is enti-
tled to a deduction of 60,000 euros from the chargeable share of the inheritance
(spouse allowance). Heirs in direct descending line (including person adoption
relation) who were both under 18 years of age and next entitled to inherit the
deceased person at the moment of the person’s death are entitled to a deduc
tion of 40,000 euros (minority allowance). If the value of a heir’s share of estate
or the same value after deducting spouse allowance and minority allowance is
less than 20,000 euros it is exempt from tax. Inheritance tax is not levied on
the ordinary household effects used by the deceased or his family for that part
which does not exceed 4,000 euros.
The liability to pay gift tax begins when the beneficiary takes possession of
the gift.
In cases where the financial consideration in a contract of sale or exchange
does not exceed three‑quarters of the current price of the property sold or
exchanged, the difference between the current price and the consideration is
regarded as a gift.
The assets that are not included in net wealth are valued as follows:
• forests which are a part of a farm are valued at 40 per cent of the amount deter-
mined according to Act on the Valuation of Assets for Taxation (Article 7);
• residential buildings of a farm and building sites for processing buildings
of forestry are valued at 40 per cent of the amount determined according to
Act on the Valuation of Assets for Taxation (Chapter 5);
• processing buildings, machines and appliances of forestry are valued at 40
per cent of the undepreciated balance for taxation purposes;
• other assets are valued at 40 per cent of their current value.
5.2 Non‑residents
5.2.1 Source rules
Non‑residents are taxed in state and municipal income taxation on their income
from investments in Finland and on other income derived from Finland.
The following items, inter alia, are considered as income derived from Fin-
land ("Finnish source income"):
• income from real property situated in Finland;
• income from letting a flat held by virtue of shares in a Finnish residential
housing company;
• capital gains on the sale of real property situated in Finland and capital
gains on the sale of shares in a Finnish residential housing company or in
90
any other company, if more than half of the company’s total assets consist
of real property situated in Finland;
• profits from a business, agriculture and forestry carried on in Finland and
income from professional activities performed in Finland;
• wages, salaries and pensions paid by the State, a Finnish municipality or any
other domestic statutory body, including pensions based on work, duty or
service for the State or such municipality or body as well as pensions which
are based on pension or traffic insurance taken out in Finland;
• wages and salaries derived in respect of employment exercised solely or
mainly in Finland for an employer in the private sector who is located in
Finland, as well as pensions paid in consideration of such employment;
• wages and salaries paid by a foreign employer in respect of employment exer-
cised in Finland where a foreign hirer has hired out an employee to a per-
son (orderer, commissioner) who is in Finland and who has the work done
(hiring out of labour);
• remuneration paid on the basis of membership of a board of directors or
another similar organ of a Finnish corporate body or partnership;
• income arising from the personal activities of a sportsperson or artiste if
these activities are exercised in Finland or on board a Finnish vessel;
• dividends from Finnish limited companies and co‑operative societies and
shares in the income of Finnish partnerships;
• interest in cases where the debtor is a resident individual or a Finnish cor
porate body, partnership or undistributed estate of a deceased person;
• royalties in cases where the property or right in respect of which the royal-
ties are paid is used in a business carried on in Finland or where the person
liable to pay the royalties is a resident individual or a Finnish corporate body,
partnership or undistributed estate of a deceased person;
• distributions by investment funds and employee investment funds;
• a non-resident sleeping partner in a Finnish limited partnership is liable to
tax for only that part of his share in the partnership’s income which would
have been taxable income when derived directly from Finland by a non-
resident; the partnership must be engaged solely in the business of venture
capital investing (according to its articles of partnership and de facto) and
an agreement for the avoidance of double taxation between Finland and the
state of residence of the partner must be applicable to that partner; if the tax-
able income of the partner exceeds the partner’s share in the partnership’s
income the exceeding part is included in the taxable income during the next
10 years as soon as such share in the income accumulates.
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5.2.2 Taxation of non‑residents
Unless lower rates of tax are provided for in a double taxation agreement, the
rates of withholding tax (which is accounted for to the State) are as follows:
1. 5 per cent for salary and wages, distribution from an employee investment
fund, non-salary remuneration paid for work done or service provided by an
individual (referred to in Article 25 of Prepayment Act), disguised dividend
as well as any other payment, which according to the Income Tax Act is
taxed as earned income; a 510 euros monthly or a 17 euros daily deduction
(the maximum being the amount of income) is made from the total amount
of all income subject to 35 per cent rate except distributions from employee
investment funds and directors’ fees; in order to get the deduction a tax card
must be presented to the payer of the income;
2. 28 per cent for dividend (excluding disguised dividend), interest (exempt, see
2.2.1) and roya lty (royalty for cinematograph films is taxed in assessment)
as well as insurance compensation and any other payment, which according
to the Income Tax Act is taxed as investment income;
3. 19.5 per cent for dividend if the recipient is a non-resident corporate body
(see 2.2.4) and:
a) the recipient’s shares in the distributing (Finnish) company are part of
the recipient’s investment assets (only financial, insurance or pension
institutions can have such shares); and
b) the recipient is not a company referred to in the EU Parent–Subsidiary
Directive, which owns directly at least 10 per cent of the capital of the
distributing company at the time of distribution; and
94
c) the distributing company is a publicly listed company referred to in
Article 33 a 2 of Income Tax Act; and
d) the recipient company is a non-listed company which does not own
directly at least 10 per cent of the share capital of the distributing
company at the time of distribution.
4. 19 per cent for income from selling of timber; however, the rate is (temporarily)
0, 10, 10 and 15 per cent if the selling concerns cases that are described on
page # and that fulfil the criteria mentioned there;
5. 15 per cent for a remuneration paid on the basis of the activities of a
sportsperson or artiste (if the remuneration is paid to a foreign corporate
body or a non-resident person, only that corporate body or person is deemed
to be liable to tax).
6. 13 per cent for a non-salary remuneration (other than in 5) above) paid for work
done or service provided by a corporate body, partnership or joint interest.
The tax is always computed on the gross amount of the income in the case
of div idends, interest, royalties and pensions.
Tax must be withheld when the income is paid to the recipient or to his
account.
Income received from Finland includes in 1–6 only income that Finland is
entitled to tax under an international agreement and that is taxed under the
Act on Assessment Procedure.
If a non-resident taxpayer has carried on business (or practised a profession)
through a permanent establishment situated in Finland also income subject to
withholding is taxed in the assessment procedure if the income is attributable
to the permanent establishment.
Taxable income in State taxation is taxed according to the ordinary progres-
sive tax scale. All the deductions of the Income Tax Act are granted. A taxpayer
who is non-resident during the whole tax year must pay tax on income taxable
in communal taxation according the average of all municipal income tax rates
of the preceding tax year. The whole tax goes to the State. A taxpayer who has
been resident in Finland for part of a tax year must pay tax on income taxable
in communal taxation according to the rate of the municipality where he is resi-
dent (and the tax goes to the municipality).
In the case of income taxed as investment income the ordinary 28 per cent
State income tax on investment income is levied.
A non-resident corporate body must pay 26 per cent corporate income tax
for income derived from Finland other than income subject to withholding. If
a non-resident corporate body has carried on business through a permanent
establishment located in Finland, it must pay 26 per cent corporate income tax
also for income subject to withholding.
Non-resident pensioners have to declare their income (a prefilled tax return
will be widely used). Pensions are subject to the same prepayment procedure
that is used in the case of resident taxpayers (PAYE, pay as you earn).
The income for which the withholding rate is 35 per cent (salary and wages,
non-salary remuneration referred to in Article 25 of Prepayment Act and paid
for work done or service provided by an individual, disguised dividend as well
as any other payment, which according to the Income Tax Act is taxed as earned
income ) and which is later taxed in assessment procedure is first subjected to
the ordinary withholding procedure. The rate is 35 per cent and a monthly/daily
deduction of 510/17 € is granted. This tax is then deducted from the tax calcu-
lated in assessment procedure.
When the withholding tax is levied, provisions of international agreements
are followed if the recipient of the income before the payment of the income
presents to the payer documentation concerning his place of residence and other
conditions for applying the agreement. The recipient may present his (source)
tax card or tell his name, date of birth or any other identifying information and
his address in his State of residence. If such documentation is presented after
the payment the excessive amount of tax has to be adjusted.
97
However, in the case of dividend paid on a share registered in the nomi-
nee register the withholding tax is always levied at the rate of 15 per cent, if the
payer has carefully enough ascertained that the provisions of a Double Taxa-
tion Agreement apply to the recipient of the dividend. If Finland according to
such an agreement is entitled to levy a withholding tax exceeding 15 per cent,
withholding tax is levied accordingly.
A contract between the account operator or its agent and the foreign admin-
istrator of property on safekeeping a share registered in the nominee registry
is deemed to show that the applicability of provisions of a Double Taxation
Agreement has been ascertained carefully enough. According to the contract
the administrator shall:
1. for the payment of the dividend announce the State of residence of the
ultimate recipient of the dividend and warrant, that the provisions concerning
dividend in the Double Taxation Agreement between Finland and that State
apply to the recipient of the dividend;
2. undertake to announce without delay to the account operator or its agent
any changes in the circumstances mentioned in 1); and
3. undertake to announce on a request the recipient’s name, date of birth, any
other identifying information and address in the State of residence and to
supply a certificate concerning the recipient’s State of residence for taxation
purposes.
Under the Act on Withholding Tax for Foreign Wage Earners with Special
Expertise (1995) a withholding tax of 35 per cent is levied instead of State
income tax on earned income and communal tax. The Act is applied to sal-
ary received after 1st January 1996 if the salary is paid for work done in 2011
at latest.
The withholding tax is applied to foreign employees under the following
conditions:
1. the individual becomes resident in Finland at the beginning of the period
of employment to which the Act applies;
2. the pecuniary salary for this employment is at least 5,800 euros a month
during the total period of employment to which the Act applies;
3. his tasks require special expertise;
4. he is not a Finnish national and he has not been resident in Finland in the
five years preceding the year in which this employment began.
5.3.1.1 General
The Act on Elimination of International Double Taxation (1995) is a general
law which is applied both in the unilateral elimination of double taxation and
elimination under a double taxation agreement.
The Act applies to State income taxes, communal tax, church tax and cor-
porate income tax.
5.3.1.4 Procedure
The taxpayer has to claim the credit for foreign taxes by making an applica-
tion to the regional tax office. The taxpayer should include the evidence nec-
essary for the calculation of the tax credit, e.g. the amount of foreign tax, the
basis on which the tax is paid, proof that the tax is final and that it has indeed
been paid. If the taxpayer cannot present all this information but has shown
that the conditions for granting a tax credit exist, the credit can be granted up
to a reasonable amount.
The taxpayer has to claim the tax credit before the end of fifth year calcu-
lated from the beginning of the year following the assessment year.
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5.3.2 Double taxation agreements
2
After the dissolution of Yugoslavia, the Agreement concluded between Finland and
Yugoslavia applies only between Finland on the one hand, and Bosnia-Herzegovina, Croatia
and Montenegro on the other.
3
Multilateral Nordic Treaty.
102
• most pensions are taxed ("may be taxed" or "shall be taxable only") in the
state from which they originate;
• the article on teachers and professors is not included in the agreements;
• the latest agreements do not include tax sparing provisions;
• the latest agreements include provisions concerning hiring out of labour.
In addition Finland has concluded with China, Hong Kong and USA limited
agreements, which cover the avoidance of double taxation of profits from ship-
ping and/or air transport.
Finland has concluded
• double taxation agreements concerning taxes on inheritances with France
(1958), the Netherlands (1954), Switzerland (1956) and the United States of
America (1952) and concerning taxes on inheritances and gifts with the other
Nordic Countries (Denmark, Iceland, Norway and Sweden) in 1989;
• 10 conventions (all in 2005) concerning the automatic exchange of informa-
tion about savings (in the context of the EU Savings Directive, 2003/48/EC)
income in the form of interest payments: Anguilla, Aruba, British Virgin
Islands, Cayman Islands, Isle of Man, Jersey, Guernsey, Montserrat, Neth-
erlands Antilles and Turks & Caicos Islands;
• in 2008 with Isle of Man agreements, which are already partly applicable
and which concern exchange of information relating to tax matters, mutual
agreement procedures in connection with the adjustment of profits of asso-
ciated enterprises, avoidance of double taxation with respect to enterprises
operating ships or aircraft in international traffic and avoidance of double
taxation on individuals (a restricted double taxation agreement). Similar
agreements have been signed with Guernsey and Jersey in 2008;
• a multilateral agreement on administrative assistance in tax matters with the
other Nordic Countries (Denmark, including the Faroe Islands and Green
land, and Iceland, Norway and Sweden) in 1989 and a bilateral agreement
with Germany (1935). Moreover, Finland is a party to the OECD/Council of
Europe Convention on Mutual Administrative Assistance in Tax Matters;
• working agreements concerning mutual assistance in its various forms
(exchange of information etc.) with Estonia, Italy, Latvia, Lithuania and
Poland.
103
As an EU Member State, Finland has implemented the Directive concerning
mutual assistance by the competent authorities of the Member States in the field
of direct taxation and taxation of insurance premiums (77/799/EEC), and the
Directive on mutual assistance for the recovery of claims resulting from ope
rations forming part of the system of financing the European agricultural guid
ance and guarantee fund, and of agricultural levies and customs duties, and in
respect of value added tax and certain excise duties (76/308/EEC). Finland has
signed the Convention on the elimination of double taxation in connection with
the adjustment of profits of associated enterprises (90/436/EEC).
6 Value-added tax
6.1 General
Value-added tax (VAT) is a general multi-stage, non-cumulative tax on con
sumption. VAT is a broad-based tax on most goods and services; it is levied
at each stage in the production and distribution of goods and services; the
accumulation of the tax is prevented by means of a deduction system. When a
person liable to tax purchases taxable goods or services, the supplying enter
prise charges VAT. The person liable to tax may deduct the tax paid by him
on purchases (input tax) from the tax charged for his taxable supplies (out-
put) tax. The difference between the output tax and the input tax is paid to the
State. The final tax is borne by the consumer.
In Finland, VAT replaced the Sales Tax at the beginning of June 1994. As an
EU Member State, Finland has subsequently harmonised its VAT system entirely
with the EU rules by amending the VAT Act.
6.6 Exemptions
The following supplies of goods and services are exempted from VAT:
• hospital and medical care undertaken by publicly administered hospitals and
recognised private hospitals or other similar institutions, and the provision
of medical care in the exercise of the medical professions;
• social welfare services;
108
• educational services which are provided in accordance with the law or which
are subsidised from State funds in accordance with the law;
• financial services and transactions concerning securities (excluding con
sultation and safety-deposit serv ices);
• insurance services and services performed by insurance brokers and
insurance agents;
• transactions concerning bank notes and coins used as legal tender (excluding
collectors’ items);
• lotteries and money games;
• the serv ices of performing artistes, the sale of performances intended to
be sold to arrangers and the transfer of copyright to literary and artistic
works;
• real property, including building land;
• certain transactions carried out by blind persons;
• interpretation services for deaf persons;
• cemetery services rendered by a public cemetery;
• uncultivated berries and mushrooms sold by the person who picked them.
The supplier of exempt goods and services does not have the right to a deduc
tion or refund of (input) VAT on goods and services purchased for these trans-
actions.
In some cases the exemption has been realised through a refund to the sup-
plier. This corresponds to zero‑rate. The following supplies are exempted in
this way:
• subscriptions to newspapers and per iodicals (loose-copy sale is fully
taxed);
• printing services for membership publications of corporate bodies for the
public good;
• vessels (excluding those used for sport and leisure); exemption covers the
sale, hire and charter of such vessels as well as repair, maintenance and other
work carried out on them;
• supply of gold to the Central Bank.
Moreover, there are some exemptions with refunds associated with inter
national trade (see 6.13).
A special exemption scheme is applied to investment gold.
109
6.7 Construction and services related to real property
Although the sale and rental of real property is exempted the following serv-
ices are taxable:
• construction services (including supplies of new buildings by property devel-
opers);
• the transfer of the right to take materials from the ground, right to fell trees
as well as fishing and hunting rights;
• the hiring out of hotel rooms and camping sites and other similar accommoda
tion;
• the hiring out of meeting rooms, exhibition space, places for sporting activi-
ties and other similar space;
• airport and harbour services for aircraft and vessels;
• the hiring out of safes;
• the hiring out of parking space;
• the hiring out of advertising space;
• the letting of space for gaming machines, vending machines or suchlike
equipment.
The lessor of real property may opt for taxation when renting premises to
persons liable to tax.
In order to avoid distortion of competition, persons exempt from tax (real
estate companies, banks and insurance companies, lessors of real property)
are liable to pay tax on certain services which are related to real property and
produced by themselves for themselves (construction services, cleaning, waste
disposal, care taking and management services), if the salaries including social
security contributions of the personnel engaged in these services exceed 35 000
euros per year. If the owner or possessor uses the real property mainly as his
own residence, he is not liable to tax.
6.10 Deductions
When the tax payable is calculated, the tax included in the purchase price
of goods and services (input tax) acquired for taxable business activities is
deductible. The taxpayer also has a right to deduct the tax paid by him for
goods acquired via import or intra-Community acquisition for the same pur-
pose. However, as a consequence of certain restrictions, the following acquisi-
tions are not deductible:
• goods and services related to dwelli ngs or buildings provided for the
recreation of personnel;
• travelling costs of personnel between home and the workplace;
• representation and entertainment expenses;
• boats and aircraft used for sporting and leisure purposes, cars, motorcycles
and caravans (any means of transport which are to be resold, rented out or
used in professional passenger transport or in driving lessons as well as pas-
senger cars used only for taxable transactions are deductible).
6.12 Refunds
As an exception to the general rule that only persons liable to tax are entitled
to make deductions, the following exempted persons are entitled to a refund
of (input) VAT on goods or services purchased in Finland:
112
• enterprises established abroad, prov ided that they would be liable to tax if
they carried on business activities in Finland;
• foreign diplomatic missions and consular posts headed by career consular
officers as well as the organs of the European Communities situated in
Finland;
• enterprises supplying certain exempted goods and services (see 6.6);
• e nterprises supplying goods and serv ices outside the Community or cer-
tain services mainly related to such goods (see 6.13.3);
• enterprises supplying exempted financial or insurance services provided
that the purchaser is an enterprise which does not have domicile or fixed
establishment in the Community or that the sale is associated with goods
intended to be exported outside the Community;
• enterprises supplying goods via intra-Community supply (see 6.13.2).
Supply of goods
A special rule is applied to distance sales effected in the Community i.e. sales
of goods transported to Finland from another Member State and vice versa, when
the supplier arranges the transport. The rule is applied only when the purchaser
is a person whose acquisition does not qualify as intra-Community acquisi-
tion (see 6.12.2). Goods transported to Finland from another Member State are
deemed to be sold in Finland if the total value of distance sales of the supplier
exceeds 35 000 euros in the same calendar year or the preceding year. Corre
spondingly, the supply of goods transported from Finland to another Member
State is effected in Finland if the total value of such sales does not exceed the
applicable distance sales threshold in that other Member State. Irrespective of
the value of the distance sales, the supplier has a right to opt for taxation in the
country of destination.
Supply of services
As a general rule, services are sold in Finland if the supplier has a fixed
establishment in Finland from which the service is supplied. When the service
is not supplied from any fixed establishment, the service is deemed to be sold
in Finland if the supplier has his domicile in Finland. However, as to hiring
out the means of transport, the service is deemed to be sold in Finland if the
service is actually consumed only in Finland.
The services of agents and intermediaries who act for and on behalf of
another person are deemed to take place principally in Finland if the mediated
114
goods or services are sold in Finland. However, as far as intra-Community trade
is concerned, if the purchaser uses a Finnish VAT identification number in the
purchase, the services are in every case deemed to be sold in Finland. Corre-
spondingly, if the purchaser uses a foreign VAT identification number, the serv-
ices do not take place in Finland.
2. invoices issued for retail sales or made almost exclusively to private indi-
viduals;
8. the quantity and nature of the goods supplied and nature of the services
rendered;
9. the amount of tax per rate or the tax base per rate.
7 Excise duties
In order to ensure the functioning of the internal market and because the
Member States are not allowed to exact taxation at the borders and carry out
border checks, the EU has harmonised the indirect taxation, in other words,
excise duty and value-added tax.
For administration, appeals and advance rulings see 9.3.
The system is applied to mineral oils, alcohol and alcoholic beverages and
manufactured tobacco. It is also applied – to a certain degree – to products which
are subject to national laws on excise duties. Such products are soft drinks, coal,
milled peat, natural gas, electricity, pine oil, certain lubricating oils, drink con-
tainers and cigarette paper.
122
Provisions concerning the production, processing, holding and movement
of products as well as certain tax exemptions for and the procedure relating
to products subject to excise duty are included in the Directive 92/12/EEC. In
Finland they are included in the Excise Taxation Act which has been in force
as of 1 January, 1995.
According to the Excise Taxation Act, authorised warehouse keepers, regis
teredtraders and tax representatives must apply to the National Board of Cus-
toms for a licence. The same procedure is followed in the case of the holdings
of tax warehouses under duty-suspension arrangements.
In order to cover the risks associated with the movement of goods under
the duty-suspension arrangement, a guarantee corresponding to the amount
of excise duties is obligatory.
Goods moving under the duty-suspension arrangement between Member
States are accompanied by a document for which there is a separate registration
and information system in the EU. The use of this document serves to monitor
the movement of goods without border formalities. For goods moving within a
single Member State other documents may be substituted for the accompany
ing EU document. An authorised ware housekeeper dispatching products under
the duty-suspension arrangement has to draw up the accompanying document.
The consignee has to return a signed copy of the document within a specified
time to the consigner to confirm the (the consigner’s) exemption.
7.2 Taxpayers
The following are liable to pay excise duty: authorised warehouse keepers, reg-
istered and non-registered traders (in the system of duty-suspension arrange
ment) and tax representatives, a person who is in the position of debtor accord
ing to the customs legislation of the European Community (for goods impor
ted from the area outside the Community), persons who have acquired duty-
exempt products that have not been used for duty-free purposes and persons
who hold products already taxed in another Member State in the course of
their business in Finland.
7.4 Exemptions
In addition to products actually exempted from the excise duty under the
duty-suspension arrangement, the following products are exempted:
• products exported outside the EC, including goods placed under the cus-
toms warehousing procedure or moved to tax -free shops;
• a shortage or loss of products under certain conditions;
• f uels and lubricating oils as well as provisions for vessels and aircraft in inter-
national commercial traffic; fuels (for own use and in fuel tanks) of other
vessels coming from outside the EC;
• p
roducts intended for delivery in the context of diplomatic or consular
relations, and products for international organisations or their members
under certain conditions;
• products delivered to the organs of the EC (subject to certain restrictions);
• p
roducts intended for consumption under an agreement with third countries
or international organisations provided that such an agreement is allowed
or authorised with regard to exemption from VAT;
• certain non-commercial gifts of minor value (excluding alcoholic beverages)
sent by an individual from a third country to an individual in Finland and
the fuel of motor vehicles coming from third countries; these gifts and fuels
are exempt under the same conditions under which they are exempt from
customs duty;
• products that have been granted exemption in various excise tax Acts.
The exemption is usually implemented through tax declarations. A refund
is possible in certain cases.
124
7.5 Travellers’ allowances
The excise duty on products imported by private individuals for their own use
is levied in the Member State where the products have been acquired.
A traveller is entitled to import tax-free for his own use without any quanti-
tative restrictions alcoholic beverages and tobacco products that he has acquired
inclusive tax in an other EU Member State. Such importation is tax-free on the
condition that the traveller brings the products along and they are intended for
the traveller’s or his family’s personal use or to be given as a present.
In the case of countries that became EU members on 1 May 2004 the tax-free
importation of tobacco products has been limited during the period of transi-
tion (periods for Czech Republic, Slovenia, Slovakia, Hungary and Poland have
already expired).
If the products are imported from a third country, maximum tax-free quan
tities of smoking products are 200 cigarettes or 100 small cigars (with a maxi-
mum weight of 3 grams) or 50 cigars or 250 grams pipe- and smoking tobacco.
Alternatively a traveller is entitled to import different sorts of tobacco products
if the aggregated amount of the used maximum tax-free quantities (as percent-
age shares) is at most 100 per cent (e.g. 100 cigarettes and 25 cigars, in other
words 50 % + 50 %).
The quantities of alcoholic beverages are 4 litres of still wines and 16 litres
of beer and in addition to that 1 litre of distilled alcoholic beverages and spirits
(with an alcoholic strength exceeding 22 % volume) or 2 litres of distilled alco-
holic beverages (with an alcoholic strength not exceeding 22 % volume).
Passengers arriving by air or by sea from outside the EU can bring with them
goods (other than alcohol and tobacco) duty- and tax-free up to the value of 430
euros. For passengers arriving by other means of transport the limit is 300 euros.
For gifts the limit is 45 euros and for consignments subject to a charge, ordered
from outside the EU over Internet by a private person, the limit is 150 euros (but
VAT is always levied if the value of the consignment exceeds 22 euros). Moreo-
ver, commercial import is always subject to customs duties and taxes
125
7.6 Declaration and payment of excise duty
Authorised warehouse keepers, registeredtraders and tax representatives have
to file a tax declaration not later than on the eighteenth day following the fis-
cal period (calendar month). Other taxpayers have to file a tax declaration not
later than on the second weekday after the receipt of the products.
In the case of an authorised ware housekeeper, the excise duty is assessed
by the district customs office within which jurisdiction the warehouse falls. In
other the cases the residence of the taxpayer is decisive.
The excise duty must be paid not later than on the twenty-seventh day of
the month following the tax period. Non-registered traders and certain other
taxpayers must pay the duty not later than on the tenth weekday after receiv-
ing the products.
The retail selling price is the highest retail selling price declared by the tax-
payer, including all taxes. This price may be set freely by the taxpayer.
Beer
– 0.5 – 2.8 (11.) 2.00 cent/cl ethyl alcohol
– more than 2.8 (12.) 23.60 cent/cl ethyl alcohol
Wines
– more than 15 but at most 18 (25.) 257.0 cent/l of finished product
Intermediate products
– more than 1.2 but at most 15 (31.) 312.0 cent/l of finished product
– more than 15 but at most 22 (32.) 515.0 cent/l of finished product
The packaging of beer into retail packages is not taken into account in cal-
culating the amounts of production.
If two or more such breweries co-operate in production, they are not under-
stood to be legally or economically dependent. Co-operation in production is
defined as purchasing raw materials and equipment, and the packaging, mar-
keting and distribution of beer. A further condition is that the breweries’ total
annual production does not exceed 10,000,000 litres.
The excise duty on liquid fuels is levied on certain mineral oils. In practice the
most important taxable products are motor petrols and gas oil used as propel-
lant as well as gas oil (light fuel oil) for commercial, industrial or heating pur-
poses, and heavy fuel oil. The duty consists of a basic duty and an additional
duty. The duty on sulphur free petrol and gas oil used as a propellant is differ-
entiated for environmental reasons.
A duty corresponding to the duty on motor petrol or gas oil used as a pro-
pellant is also levied on other than the above-mentioned products if they are
used as motor fuels. Correspondingly, the duty on light or heavy fuel oil is lev-
ied on all mineral oils and hydrocarbons used as heating fuel.
Additives and extenders in fuels are subject to the excise duty under the
same principles as the fuel to which they are added. Fuel intended to be used
as gas oil for heating purposes and paraffin oil must contain a reactive reagent
to reveal unauthorised use.
TABLE 5. Rates of excise duty on liquid fuels 2009 (with product group numbers)
Petrol
–r eformulated and with
extremely low sulphur content (11) 57.24 4.78 0.68
If a fuel does not have a rate in the rate table (published in the Act on Excise
Duty on Liquid Fuels), it is taxed according to the rate of a motor or heating fuel,
to which it corresponds taking into account the purpose of use. The same rule
applies to all other products, which are used or are intended or sold to be used
as motor fuels or their additives and extenders. A similar rule applies to hydro-
carbons (excluding peat) which are used or are intended or sold to be used for
heating. However, solid and gaseous fuels subject to the Act on Excise Duty on
Electricity and Certain Fuels are not covered by these rules.
130
The following products are exempt from excise duty and strategic stock pile
fee:
1. fuels which are sold, delivered or imported to strategic stock;
2. fuels used as a source of energy in an oil refining process;
3. fuels used in industrial production as raw material or auxiliary material or
consumed as immediate inputs in the manufacturing of goods;
4. fuels consumed in vessels used for commercial purposes inside Finnish ter-
ritorial waters or on inland waterways; fuels for fishing vessels are exempt
to the extent that the vessels are used for professional fishing;
5. fuels used in electricity production (including maintenance of production
potential and start-up and shutdown of separate electricity production) ex-
cept for fuels for generating electricity in a generator with a capacity of less
than 2 MVA if the electricity is not transmitted to an electricity network.
6. fuels used in air traffic excluding fuels used in private recreational flying;
7. bio fuel for the purposes set out in Articles 8 and 9 in Council Directive
2003/96/EC (energy tax directive) is exempt. These purposes include bio
fuel used for heating, stationary motors and the use and maintenance of
certain type of machinery (e.g. off-road vehicles), and
8. liquid petroleum gas.
A person who carries on professional greenhouse cultivation may apply for
a refund of 5.85 cent/l for gas oil and 2.75 cent/kg for heavy fuel oil used in that
cultivation (subject to a minimum aggregated use of at least 16 000 units per
application filed by that person).
If electricity is produced in a combined production of electricity and heat
(in a power plant), the duty on fuels used for the production of heat is paid
according to the ordinary tax table for such an amount of fuel that is calculated
by multiplying the amount of heat delivered for consumption by 0.9. Fuels for
the production of heat are defined on the basis of heat delivered for consump-
tion and by using effective temperature levels. Heat delivered for consumption
means the amount of heat that has been delivered by a power plant into district
heating or process steam networks and to corresponding utilization. Each fuel
is considered to have been used in the same proposition for the production of
electricity and the production of heat.
Under the Act on Refunding of Excise Duties for Energy Products Used in
Agriculture (21st July 2006) professional farmers are (on application) entitled to
refunds for heating oil and electricity used in agriculture.
The Act is not applied to energy products used in private household or in
greenhouse cultivation if the cultivator is entitled to refund under Article 10 a
of the Act on Excise Duty on Liquid Fuels and if the electricity used in green-
131
house cultivation is subject to excise duty mentioned in Table II in the Annex
to the Act on Excise Duty on Electricity and Certain Fuels (see 7.11.2).
The refund is granted both to individuals, partnerships of legal persons and
corporate bodies, which carry on farming business (including grain drying) and
have received in the tax year direct EU subsidies or other similar EU or national
subsidies (defined in the Act).
Agriculture covers following activities carried on the farm of the applicant:
cultivation of agri- and horticultural plants, fallowing, maintenance of non-
cultivated fields as cultivable, domestic animal production and its products,
beekeeping, horse management, storing of agri- and horticultural products
produced on the farm, packaging, turning products commercially disposable
and grain drying.
The refund is 5,85 cents/litre for light fuel oil and 2,75 cents/kilo for heavy
fuel oil (both taxed in Finland and referred to in the Act on Excise Duty on
Liquid Fuels) and 0,62 cent/kWh for electricity (taxed in Finland and referred
to in the Act on Excise Duty on Electricity and Certain Fuels), which the appli-
cant has used in agriculture during a tax year, and subject to a minimum limit
of 50 euros.
An authorised ware housekeeper is entitled to deduct from the excise duty
and strategic stockpile fee which it has to pay for a tax period the corresponding
duty and fee it has to pay (on the basis of release for consumption) for hydro
carbons which have been recovered from motor petroleum. A further condition
is that the recovered hydrocarbons are liquefied to petroleum in a tax ware-
house. The amount of hydrocarbon which entitles to the deduction is 0.14 per
cent of the volume of petroleum released for consumption if the hydrocarbons
are recovered both in a tax warehouse and service station and 0.07 per cent if the
hydrocarbons are recovered in a tax warehouse. The refund is calculated on the
basis of the duty on unleaded petrol, normal grade. The ware housekeeper from
whose tax warehouse the motor petroleum has been released for consumption
is entitled to the deduction.
According to the Act on Fuel Fee for Private Pleasure Boats of 21st Decem-
ber 2007 a fuel fee has to paid for private pleasure boats if duty exempt fuel or
fuel with a low rate of duty has been substituted for petrol or gas oil taxed at
the ordinary rates. The purpose is to prevent the use of such fuels in such boats
(e.g. heating oil in diesel-driven boats).
The Act is applied to a private pleasure boat whose owner (individual or a
legal person) is resident in Finland but also to a private pleasure boat whose
owner is non-resident, if the boat is used in Finland.
A private pleasure boat is defined as a boat (or a vessel), which an individual
or legal person uses as an owner or a lessee (or on some other basis) for other
than commercial purposes and in particular for purposes other than the trans-
port of persons and goods or providing services for a payment or for the pur-
poses of public authorities.
132
The fee must be paid if illicit use of exempt or mildly taxed fuel in a private
pleasure boat is detected, in other words if it is verified that such fuel is in the
fuel tank. It is of no importance how and where the boat is used. The fee is not
levied for fuel in the tank of boats coming into Finland. However, this is not
applied and the fee may be levied if a reagent to reveal unauthorised use has
been added to the fuel (according to the Act on Liquid Fuels).
The fee is payable by the boat’s owner or by its possessor if it is in the pos-
session of a person other than the owner. Separate rules apply to cases where
the possession is a result of crime. Ownership and possession are determined
on the basis of register entries if no other evidence is presented. If the owner or
possessor cannot be determined, the fee is payable by the driver.
TABLE 6 a). Rates of excise duty on electricity and certain energy sources 2009 (with
product group numbers)
Electricity cent/kWh
– category I (1) - 0.87 0.013
– category II (2) - 0.25 0.013
The tax period is one calendar month. The duty must be paid for the amount
of electricity
1. delivered by a electricity network operator for consumption;
2. produced by a person producing electricity in his earning activity includ-
ing electricity bought by him tax exempt and then used by him or delivered
for consumption subject to the duty;
134
3. used by persons who have produced or bought electricity taxed at the rate of
category II when the electricity is used or delivered the purposes of category
I; the duty is calculated as a difference between duties in categories I and II;
4. which persons other than operators of electricity network receive in their
earning activity from another EU Member State or import from outside
the Community.
Exempted from the excise duty and strategic stockpile fee is electricity
• transmitted between electricity networks;
• delivered to electricity network by persons producing electricity in their
earning activity;
• delivered to an electricity network by persons other than possessors of elec-
tricity networks who in their earning activity receive electricity from another
EU Member State or import electricity from an area outside the Commu-
nity; or
• delivered to an area outside of the European Community or to an area in
the Community to be consumed outside Finland;
• delivered to be used directly in rail traffic;
• used in power plants in the machinery and equipment, which are necessary
for producing (including maintenance of production potential and removal
and minimising of environmental impact) electricity or producing electric-
ity and heat (combined production);
• transmitted by an electricity network operator or person producing electric-
ity in their earning activity to another person who produces electricity;
If the electricity is produced with wind power, recyclable fuel, biogas or for-
est processed chips or with hydro generator with a nominal maximum capacity
of 1 MVA, the producer of the electricity may apply for a refund for electricity
135
delivered to the network. The refund is not applied to electricity which is exempt
as it is used in power plants in the machinery and equipment, which are neces-
sary for producing (including maintenance of production potential and removal
and minimising of environmental impact) electricity or producing electricity
and heat (combined production) and electricity produced in a generator with a
capacity of less than 2 MVA if the electricity is not transmitted to an electricity
network and electricity produced in a vessel, train, car or other transport vehi-
cle for the vessel’s or vehicle’s own needs.
The refund is 0.42 cent/kWh but for electricity produced with wind power
or forest processed chips 0.69 cent/kWh and for electricity produced by using
recyclable fuel 0.25 cent/kWh. A minimum amount of 100 MWh per applica-
tion is applied.
If electricity is produced in a combined production of electricity and heat
(in a power plant), the duty on fuels used for the production of heat is paid
according to the ordinary tax table for such an amount of fuel that is calculated
by multiplying the amount of heat delivered for consumption by 0.9. Fuels for
the production of heat are defined on the basis of heat delivered for consump-
tion and by using effective temperature levels. Heat delivered for consumption
means the amount of heat that has been delivered by a power plant into district
heating or process steam networks and to corresponding utilization. Each fuel
is considered to have been used in the same proposition for the production of
electricity and the production of heat.
TABLE 6 b). Rates of excise duty on electricity and certain energy sources 2009 (with
product group numbers)
In the case of coal and lignite, the following are liable for duty and the stra-
tegic stockpile fee:
• a uthorised warehouse keepers for the amounts which according to their
accounts have been released for taxable consumption during a tax period;
and
• a uthorised warehouse keepers for the amount used for their own con
sumption.
136
Exempted from the excise duty and strategic stockpile fee is coal
• u
sed in industrial production as raw material or auxiliary material or con-
sumed as immediate inputs in the manufacturing of goods;
• delivered by authorised warehouse keepers for consumption in the Com-
munity area outside Finland;
• u
sed in electricity production (including maintenance of production
potential and start-up and shutdown of separate electricity production)
except for coal used for producing electricity in a generator with a capac-
ity of less than 2 MVA if the electricity is not transmitted to an electricity
network.
In certain cases taxpayers other than authorised warehouse keepers are enti-
tled to a deduction for coal on which the duty has been paid and which is used
by other persons for non-taxable use. This concerns coal used in industrial pro
duction as raw material or auxiliary material or consumed as immediate inputs
in the manufacturing of goods and also coal used in electricity production
(including maintenance of production potential and start-up and shutdown of
separate electricity production) but not coal used for producing electricity in a
generator with a capacity of less than 2 MVA if the electricity is not transmit-
ted to an electricity network.
Persons liable for duty and strategic stockpile fee for natural gas are those
who import natural gas from areas outside the Community.
TABLE 6 c). Rates of excise duty on electricity and certain energy sources 2009 (with
product group numbers)
Persons who are involved in industrial production and use pine oil for heat-
ing purposes are liable for duty on pine oil.
It should be noted that some of the latest changes in car tax are applicable as
of 1st April 2009.
The car tax is a purchase tax, which must be paid before the first registration
or use of the vehicle in Finland. The car tax is levied on the following vehicles
(all defined in Vehicles Act of 11 December 2002):
The amount of car tax is the taxable value of the car multiplied by the cor-
responding percentage in the Car Tax Table I (see Appendix 12), i.e. 12.2–48.8
per cent of the taxable value of the car. The percentage is determined by using
the carbon dioxide emission level (grams per kilometre) that corresponds to
combined consumption of the car.
When emission data is not available, the percentage is determined on the
basis of table I by using a computational carbon dioxide emission level that
corresponds to weight and (engine) power of the car. If the car’s power (in kW)
divided by its weight (in kilograms) equals 0.15 or more, the computational
carbon dioxide emission level is increased by multiplying it with 1.5. This rule
is not applied if a taxpayer or a registered agent shows that the carbon dioxide
emission level for a passenger car or a van has been confirmed in certain EU
Directives (93/116/ EU or 2004/3/EU) or in corresponding legislation, or if the
level has been defined in the EU legislation in force at the time of taxation.
The percentage points (or figures) mentioned in Car Tax Table II are deducted
from the percentages (figures) mentioned in Car Tax Table I in the case of a van
in the category N1 (delivery vans) if the van has been equipped with only the
seats beside the driver’s seat (and appliances for transporting wheel chairs) or
with appliances for their fixing and if the van has a total weight of more than 2
500 kg and fulfils certain other criteria concerning its carrying capacity. How-
ever, the tax is always at least 12.2 per cent of the taxable value.
For buses or coaches weighing less than 1,875 kg the rate is 31.7 per cent of
the taxable value.
141
The tax on motorcycles, motor tricycles, quadricycles and light quadricycles is
calculated on the basis of engine capacity as follows:
up to 130 9.8
131 – 255 12.2
256 – 355 15.9
356 – 505 19.5
506 – 755 22.0
756 or more 24.4
Electric vehicles in category L 12.2
The tax on the propelling force is levied annually on all vehicles using, entirely
or partly, fuel other than petrol, i.e. diesel oil, kerosene, liquefied petroleum
gas or electricity. The tax is assessed for 12-month tax periods. The rates per
day are as follows:
• for passenger cars and dual-purpose cars, 6.7 cents/100 kg of the total weight or
a fraction thereof and for motor caravans and delivery vans 0.9 cents /100 kg;
• for two‑axled lorries 1.0 cent/100 kg and up to 12,000 kg, and 2.2 cents
for each additional 100 kg; for three‑axled lorries 1.3 cents/100 kg and for
four‑axled lorries 1.2 cents /100 kg, and for five- or more axled lorries 1.1
cents/100 kg;
• f or lorries with a bogie construction 3.1 cents/100 kg if the vehicle has two
axles, 2.3 cents/100 kg, if it has three axles, 2.0 cents/100 kg, if it has four
axles, and 1.8 cents/100 kg, if it has five axles or more;
• f or lorries with a bogie construction approved and used for the tract ion
of semi‑trailers or trailers 3.1 cents/100 kg if the vehicle has two axles, 2.5
cents/100 kg if it has three axles, 2.3 cents/100 kg if it has four axles, and 2.0
cents/100 kg, if it has five axles or more.
Certain state-owned vehicles, fire engines, ambulances and lorries less than
12,000 kg unladen, cars used by EU bodies in Finland and foreign diplomatic
missions, etc. and members of their personnel who are not Finnish nationals
(under the condition of reciprocity), cars used temporarily in Finland or used
for test driving, vintage cars subject to certain conditions and buses are just
some examples of exempted vehicles. Motor vehicles using mainly wood- or
peat-based fuel are also exempt.
The tax is refunded for lorries transported by rail in Finland (subsidy for
combined transports). The transport has to be a part of an international trans-
portation and the minimum dista nce must be at least a 100 km radius. The
refund is 50 euros for each transportation.
144
8.1.4 Fuel fee
Fuel fee is payable if certain lightly taxed fuels are substituted for highly taxed
fuels. The purpose is to prevent the use of such fuels in vehicles (e.g. heating
oil in diesel-driven vehicles). The amount of the fee is 100–1,000 euros a day
according to the vehicle group. Public works vehicles, tractors used on sites
where peat is handled, motor sleds, buses and lorries using liquid gas, natu-
ral gas or other similar gaseous fuel, passenger cars and vans using fuel con-
sisting of methane, motor vehicles in which mainly wood- or peat-based fuel
is used, vehicles used in a competition or while preparing for a competition
which is included in the competition register of the branch (sports) organisa-
tion and tractors used in agriculture and forestry subject to certain conditions
and restrictions.
For more information, see also Act on Fuel Fee for Private Pleasure Boats
(in 7.11.1), which is based on similar principles and is applied to pleasure boats
in similar situations.
In order to partly finance the State’s costs for maintaining a rail network a
track tax is levied on the use of the network. Liable to tax are persons who
carry on railway traffic.
In the transport of persons and redeployment of locomotives the rate is 0.01
cent/gross tonne kilometre. In the transport of goods the rate is 0.05 cent if the
propelling power is electricity and 0.1 cent if it diesel oil (an investment tax is
levied on the use of a southern short cut at a rate of 0.05 cent in all cases). A
gross tonne kilometre means a train’s total weight multiplied by the amount of
kilometres run. The weight consists of the weight of all the machinery and the
weight of the load. Traffic for museum purposes is exempt.
The rate is based partly on the amount of environmental costs of goods and
passenger transport (which are highest when diesel oil is used) and also on the
paying capacity in each type of transport.
Taxpayers have to give a monthly declaration on their own initiative.
Track tax is administered by Finnish Rail Administration.
In the case of a transfer of assets (see 2.5.12.2) the tax levied on the transfer
of real property or securities is refunded on application by the recipient cor-
porate body.
Furthermore, if the consideration, which has been used in the transfer, is
real property or securities (i.e. if the transfer is an exchange) the tax must be
paid for both transfers.
Besides ordinary real property, real property also includes the following
items:
149
• unseparated parcels and specified shares of real property;
• l easehold or usufruct of real property, which must be registered under the
Land Law Code;
• buildings and constructions for the permanent use on the real property.
The tax rate is 4 per cent. The tax base may be the transfer price, the value of
any other consideration or the market value. The tax must be paid at the latest
when applying for registration of the deed and title to the acquired real property.
If the registration has not been applied for or an application is not necessary, the
tax must be paid within six months of concluding the transfer contract. If the tax
has not been paid for transfers that have been realised within ten years prior to
the transfer in question, the transferee must also pay the tax for these transfers.
The Province of Åland, municipalities, local communities of a church or
registered religious communities are not liable to pay tax on transfers of real
property.
Securities are defined as shares and interim certificates of share issues, cer-
tificates of participation, bonds or other certificates of claim issued by a corpo-
rate body where the interest is calculated on the basis of the debtor’s dividend
or annual result or where the bond or certificate carries the right to participate
in the debtor’s profits, letters of right of subscription and electronic book entries
in a computerised trading system.
Transfer of securities issued by an unregistered corporate body is also lia-
ble to tax.
Exempt are transfers of securities against a fixed monetary consideration on
the condition that the securities have been admitted to be traded in a regular
trading which is open to the public:
150
1) publicly in a way referred to in Chapter 1 Article 3 of the Finnish Securi-
ties Markets Act or on some other regulated market referred to in Directive
2004/39/EC on markets in financial instruments amending Council Direc-
tives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European
Parliament and of the Council and repealing Council Directive 93/22/EEC;
2) on other regulated market supervised by public authorities and located in
non-EEA Member State that has accepted the (Council of Europe and OECD)
Convention on Mutual Administrative Assistance in Tax Matters; or
3) in multilateral trading referred to in Chapter 1 Article 3 a of the Finnish
Securities Markets Act or similar multilateral trading, which is referred
to in Directive 2004/39/EC and takes place within EEA, on the condition
that the securities emitted by a company have been admitted to trading on
application by the company or with its consent and that the securities have
been taken into the computerised trading system or a similar foreign reg-
istry system; if it is obvious that tax avoidance is the only or principal pur-
pose of the application by the company for taking the securities to trading,
the transferee is ordered to pay the tax, although the transferor also remains
liable for it; the same principle is applied to a company has given its consent
to taking the securities to trading.
A general condition for the tax exemption is that the broker or a party to
the transfer is a security broker referred to in Chapter 1 Article 1 paragraph 1
subparagraph 4 of Finnish Securities Markets Act or that transferee has been
accepted as a trading party on the market where the transfer takes place.
If the broker hired by the transferee or the party of the transferee is a broker
other than a broker mentioned in Article 22 paragraph 3 of the Transfer Tax Act
the tax exemption requires that the transferee who is liable to tax declares the
transfer within two months after the transfer or that the broker gives to the Tax
Administration an annual declaration. Tax exemption is not applied to
1) transfers based on bids made after the trading (according to 1 – 3 above) with
the security has stopped or before it has started; this rule is not applied (so
the exemption is applied) to a sale of a company’s old shares on the basis of
a combined offer to buy and subscribe, if the sale takes place directly in the
context of a share issue (stock exchange listing) and the object of the trans-
fer is not identified until after the start of trading and the sales price is equal
to the price paid for new shares.
2) transfers for fulfilling a redemption obligation concerning minority shares
in a limited company;
3) transfers where the consideration consists partly or wholly of work input;
4) transfers that are capital investments or distributions of assets.
151
If none of the parties to the transfer is resident in Finland (Income Tax Act
-based residence) or a Finnish branch of a foreign credit institution, a foreign
investment firm or a fund management company, no tax is levied. If in cases
other than those referred to in the preceding sentence the transferee is a non-resi-
dent and not a Finnish branch of a foreign credit institution, a foreign investment
firm or a fund management company, the transferor is obliged to charge the tax
to the transferee. However, transfer of shares in a residential housing company
or other real property company (including co-operatives), is subject to tax.
The tax rate is 1.6 per cent. The tax base is either the transfer price, the value
of any other consideration or the market value.
The tax must be paid when the transfer contract is concluded if:
• o
ne of the parties to the transfer is a dealer in securities (defined as an invest-
ment service company, a credit institution or a Finnish branch of a foreign
investment service company or credit institution) or if such a dealer acts as
a broker or commission agent for one of the parties to the transfer;
• t he security is sold at an auction; or
• t he transfer is made through a real estate agent.
• In all these cases the dealer in securities or the auctioneer is obliged to recover
the tax from the transferee and to pay the tax on their behalf.
A landfill is a waste disposal site for the deposit of waste onto or into land,
and one
• which is operated by a municipality or any other body on behalf of a munic-
ipality; or
• which is operated by any other entity for the purpose of receiving waste pri-
marily produced by other entities excluding waste produced by a company
of the same group.
A site where waste is deposited separately from other waste and temporarily
for a period of less than three years before its disposal or recovery, is not con-
sidered a landfill (in this case there is an obligation to keep records concerning
the deposited waste).
The following kinds of waste are exempted (assuming that they are separated
from other waste when they are delivered to a landfill site):
• contaminated soil, which may be deposited at the landfill site in question;
• waste from the de-inking of waste paper;
153
• fly ash and desulphurisation waste from power plants;
• w
aste (excluding glass waste and uncrushed concrete waste which consists
of blocks with a diameter of more than 150 millimetre), which is used at a
landfill in constructions or buildings, which are necessary for establishment,
use, closure or aftercare of the site.
The landfill operator is entitled to a credit for taxes paid or payable on waste,
which has been removed from the landfill site during a tax period.
The tax base is one tonne of waste and the tax rate is 30 euros per tonne of
waste. In order to determine their taxable weight, a conversion coefficient based
on the volume of the waste is applied to the waste, which has not been weighed.
Tax is accounted for quarterly on the basis of waste delivered to the land-
fill site. The landfill operator has to file a tax declaration not later than on the
12th day following this tax period and the tax must be paid not later than on
the 27th day.
Rate:
The fairway dues are payable when the ship arrives in Finland from a for-
eign port or in a Finnish port from another Finnish port.
The fairway dues are only payable once, if, during the same voyage,
• t he ship unloads the cargo it has carried from a foreign port or leaves the
passengers it has carried from a foreign port at more than one Finnish port
or takes cargo or passengers destined for a foreign port from more than one
Finnish port,
• a nd between loading cargo in Finland, the ship calls at a foreign port to take
additional cargo for loading or stowing reasons.
No fairway dues are payable for ships that, for compelling reasons and solely
for the purpose of receiving orders pertaining to the continuation of their voy-
age, for repairs on the ship, for assessing the need for repairs or for bunkering,
call at Finnish ports without taking or leaving cargo or passengers.
The unit price (in euros) for fairway dues payable for a cargo ship and a pas-
senger ship is determined in accordance with the ship’s ice class, as follows:
The unit price for a cruising ship is 0.954 euros, for a high-speed ship 5.756
euros and for a ship without propulsion machinery of its own 3.172 euros.
158
The amount of fairway dues of a cargo ship and a passenger ship is calcu-
lated by multiplying the unit fee by the net tonnage of the ship. However, if the
net tonnage of a cargo ship exceeds 25 000, the exceeding part is multiplied by
a figure that is half the unit price. In the case of vessel combinations the total
net tonnage is used.
The maximum amount of fairway dues for one call is 98 400 euros, but for
passengers ships 29 620 euros and for cruise ships 40 640 euros. When, for a pas-
senger ship or a high-speed ship, fairway dues have been paid for 30 calls, and,
for a cargo ship, fairway dues have been paid for 10 calls, the due is no longer
levied in that calendar year. In the case of vessel combinations the number of
calls is calculated on the basis of the vessel with propulsion machinery. If the
circumstances affecting the fee change in a rate increasing manner, the fees
payable for the calendar year are equivalent to the 30 highest fees payable for a
passenger ship or a high-speed ship for a calendar year and, correspondingly,
10 highest fees for cargo ships.
In the case of cargo ships the fee is reduced by 75 per cent if the ship’s load-
ing capacity utilisation rate is at most 15 per cent and by 50 per cent if the rate
is more than 15 per cent but less than 30 per cent.
The fairway due is levied by Customs districts and it goes to the State.
159
After the assessment a tax office can change the assessment, if the conditions
mentioned in the Act on Assessment Procedure are fulfilled. Moreover, the
taxpayer and the Tax Recipients’ Legal Services Unit may lodge an appeal.
Tax authorities may change the assessment for the benefit of the taxpayer but
also to the disadvantage of the taxpayer. If the assessment made was too big, the
tax office corrects the assessment. A correction is not possible, if a decision solv-
ing the matter has already been rendered. All kinds of errors and deficiencies
can be corrected. A correction for the benefit of the taxpayer has to made in five
years calculated from the beginning of the year following the assessment year.
An correction to the disadvantage of the taxpayer is possible, if the taxpayer
was assessed only partly or not at all or if otherwise tax has not been levied.
A correction is not possible, if a decision solving the matter has already been
rendered.
If the taxpayer has failed to file his return, the time limit for adjustment is
five years calculated from the beginning of the year following the assessment
year. Taxpayer is usually also ordered to pay surtax and tax penalty.
The time limit for a correction to the disadvantage of the taxpayer is two
years calculated from the beginning of the year following the assessment year.
This rule is applied to writing errors (made by the administration), calculation
errors and other comparable errors, as well as errors caused by erroneous or
inadequate information given by third parties. In other cases errors in the deci-
sions can be corrected within one year calculated from the beginning of the year
following the assessment year. If the matter is open to various interpretations or
unclear, a correction to the disadvantage of the taxpayer is not possible.
A taxpayer and Tax Recipients’ Legal Services Unit may lodge an appeal.
The time limit for the former is five years calculated from the beginning of the
year following the assessment year, and to the later one year.
A taxpayer dissatisfied with the assessment has a right to appeal to the assess-
ment adjustment board which is the first instance of appeal in every tax district.
The chairman and other members of the board are appointed by the National
Board of Taxes on the recommendation of the regional tax office. One quar-
ter of the seats is reserved for the officials of the regional tax office, one quarter
for the representatives of the municipalities (or for the representatives of the
Association of Finnish Local and Regional Authorities, if the territory of the
board covers the whole of Finland) and one half for the representatives of dif-
ferent taxpayer groups.
An appeal to the board must be made before the end of the fifth year fol-
lowing the assessment year. However, the appeal may be made within sixty
days after the taxpayer received notification of the decision against which he
is appealing.
163
The representatives of the State, the municipality, local communities of the
Evangelical-Lutheran and Orthodox Churches and the Social Insurance Institu-
tion are also entitled to appeal to the assessment adjustment board. The appeal
must be made within one year from the end of the date when the assessment of
the taxpayer’s income has been completed.
An appeal against a decision of the assessment adjustment board to the
regional Administrative Court, which is an intermediate administrative court,
may be filed by the taxpayer or the above-mentioned authorities. The taxpayer
must file the appeal to the regional Administrative Court of the province where
he is resident, or if he is a non-resident, to the Administrative Court of Helsinki.
For the taxpayer, the appeal period is five years calculated from the beginning
of the year following the assessment year but in any case sixty days after the
taxpayer received notification of the decision against which he is appealing. For
the authorities, the appeal period is one year from the end of the date when the
assessment of the taxpayer’s income has been completed but in any case sixty
days from the date on which the assessment adjustment board made its deci-
sion. The appeal must be filed with the local tax office.
Appeals against the decisions of an Administrative Court may be made,
both by the taxpayer and the representatives of the State and the municipality
etc., within 60 days to the Supreme Administrative Court if the court grants
permission for a retrial on the basis of the following criteria:
• t he hearing of the appeal has an important bearing on other similar cases
or for securing the uniformity of legal practice;
• t here are special grounds for granting permission because an obvious error
has been made in the case;
• t here are other important grounds for granting permission.
9.3 Penalties
The penalty system includes administrative fines and penalties imposed by
general (criminal) courts.
Administrative fines, up to the amount of the tax assessed, are levied in the
case of intentionally or negligently false returns (and for failure to file a return
on time).
Serious violations are a criminal offence and punishable by law. Under the
Penal Code, the punishment for tax fraud is a fine or imprisonment. When the
tax fraud is the result of defective book-keeping for instance, the minimum
punishment is four months’ imprisonment.
9.4 Confidentiality
According to the Act on Publicity and Secrecy of Tax Information (1346/1999),
tax secrecy applies to all taxation documents concerning a taxpayer’s economic
situation and documents containing information on an identifiable taxpayer.
Confidential taxation documents and information include tax returns, tax
proposals, tax audit reports and appeal documents, including their annexes.
Information provided by employers and others obliged to disclose information
for taxation purposes are also covered by confidentiality.
Tax administration may give information concerning a document subject
to tax secrecy only in the cases provided in the Act.
In the annual taxation public are (individual) taxpayer’s name, date of birth
and municipality of residence and the following:
1) taxable earned income in State taxation;
2) taxable investment income in State taxation;
3) taxable (earned) income in municipal taxation;
4) income tax, municipal tax and the total amount of taxes etc. charged;
5) tax paid in advance (advance withholding);
6) taxes to be collected or tax to be refunded.
166
In the annual taxation public are in the case of a corporate body, its name,
municipality of residence and Business Identity Code and the following:
1) taxable income;
2) the total amount of taxes charged
3) tax paid in advance (advance withholding);
4) tax to be collected or tax to be refunded.
All this information is public as such as it was when the assessment was ter-
minated and it becomes public in November following the tax year.
Concerning the municipal tax on real property and certain other cases the
following information is public:
1) the amount of the calculated municipal tax on real property and the name
of the taxpayer liable to tax;
2) tax concessions granted to non-profit-making organisations: name of the
organisation and tax years in which the concession is applied;
3) names of taxpayers who have been accepted as persons liable to tonnage tax,
the date when the tax period begins and withdrawal of the acceptance.
The information must not be used for purposes other than those they were
given for. The applicant must also secure a sufficient protection of the infor-
mation.
167
Tax administration may also, on its own initiative, disclose information
(usually under the condition that the information is necessary for performing
the task in question) in the following cases:
1) to authorities of State and municipalities and to certain public or other cor-
porations or foundations if there is reason to doubt that certain crimes (sub-
sidy fraud, aggravated subsidy fraud, subsidy misuse and subsidy violation)
have been committed; also subsidies from the EU budget or another budget
maintained by or for the European Communities are covered;
2) to authorities of State and municipalities and to corporations with public
duties for the purpose of monitoring, in the context of their public duties,
whether a crime has been committed; the maximum punishment for the
crime must be more than 6 months of imprisonment;
3) to public authorities, pension and accident insurance institutions, corpora-
tions or foundations in charge of statutory pension and accident insurance
coverage for monitoring whether an employer or other person has fulfilled
his statutory obligations;
4) to authorities in charge of prosecuting and criminal investigations (pre-
trial investigations) or prosecuting and investigating tax and bookkeeping
crimes and for court proceedings;
TABLE 10. Rates of state income tax on earned income 2009 (euro)
The state income tax on investment income is levied at a flat rate of 28 per
cent.
172
Appendix 2
Rates of inheritance and gift tax are determined on the basis of two classes
of relationship between the beneficiary (the donee) and the deceased (the
donor).
Tax class I: Spouse, direct heir in ascending or descending line, spouses’
direct heir in descending line and fiancé(e) receiving a certain allowance on
the basis of Code of Inheritance). The concept of direct heir in ascending or
descending line includes persons in adoption relationships and foster children
in certain cases. Class I rates also apply if the provisions of the Income Tax Act
concerning spouses are applicable for the year of death to the deceased and an
individual who had lived with the deceased in free union, in other words class
I rates apply to spouses who previously have been married to each other or who
have (or have had) a child together.
deductions and allowances granted in both state and municipal income tax
ation of earned income:
1) A discretionary allowance of up to 1,400 euros for circumstantial incapac-
ity to pay taxes. On the basis of expenses arising from sickness, the capac-
ity to pay is deemed to be affected only if the taxpayer’s or his or her fam-
ily’s expenses are at least 700 euros and amount to 10 per cent of the total
earned income (after natural deductions) and investment income for the
tax year in question.
2a) Standard deduction for work‑related expenses 620 euros the maximum
being the amount of employment income (expenses incurred in acquir-
ing and maintaining chargeable employment income and not relating to
travel expenses or membership fees paid to employment organisations are
deductible only if their amount exceeds 620 euros).
2b) Deduction for a rented flat that enables a taxpayer to reach his regular place
of work
A taxpayer
• who has rented a flat in order to reach the location of his regular place of
work; and
• who has also another home (ordinary home) where he lives with his
spouse or minor children and this home is at least 100 kilometres from
the rented flat and the regular place of work for the location of which
the flat was rented,
• is entitled to deduct as expenses incurred in acquiring and maintaiing
income ("natural deduction") 250 euros (but not more than the rent paid
for the flat) for each full calendar month when such a situation (of two
homes) prevails.
The deduction is also granted if the taxpayer in addition to his rented flat
has a regular home because of the location of another regular place of work and
even though the taxpayer would live alone in his regular home.
175
The deduction is granted under the same conditions if the taxpayer receives
a flat as a fringe benefit but the maximum amount of the deduction is then the
value of the fringe benefit.
The deduction is not granted if the taxpayer has received tax exempt remu-
neration or benefit related to living in another locality or if he has deducted costs
for living in another locality in his taxation for the tax year in question. How-
ever, a credit for domestic work (see Appendix 4) does not hinder the granting
of the deduction.
If both spouses fulfil the requirements for granting the deduction and they
both claim the deduction it is given to the spouse with higher earned income.
3) Deductions for forest workers are based on the use of certain equipment,
tractors and working animals.
4) Deduction for pension insurance premiums
2) Disability credit is 115 euros for a person who has lived in Finland for the most
part of the tax year if his degree of disability is 100 per cent. In other cases the
credit is the part of 115 euros which corresponds to the degree of disability, if it
is at least 30 per cent. Disability credit is set off against tax on earned income.
Study loan credit is given to a taxpayer who has passed a qualifying examination
within a prescribed period of time. Such person is entitled to deduct annually
from his tax an amount corresponding to the instalment of a study loan that
he has paid. The total maximum amount of deductions that are to be granted
annually is 30 per cent of the loan capital that exceeds 2,500 euros. Loan capital
is determined on the basis of a nine-month academic term and without capi-
talizing interests.
The credit is first deducted (after other credits against tax and deficit in the
category of investment income have been deducted) deductions from both the
State taxes on investment income and earned income, and if the deduction
exceeds the amount of those taxes it is deducted from the communal income
tax, medical care contribution of employees’ health insurance contribution and
church tax, following the principle of proportionality in all these cases. If the
credit still cannot be deducted, the taxpayer is entitled to deduct the credit or
credits (in the order in which they are incurred) over the next ten years from
the corresponding taxes. The maximum period is in any case fifteen years after
the year in which the taxpayer passed his examination.
The credit is also granted in cases where a taxpayer belongs to a study loan
system of the Provincial Government of Åland or any EEA Member State.
It is up to the Social Insurance Institution to decide whether a taxpayer is
entitled to the credit and what is the credit’s maximum amount.
179
4) A credit for domestic work is granted on the basis of following types of
domestic work:
– ordinary housekeeping
– nursing and provision of care and maintenance excluding health care
services which are exempted from VAT
– repair and fundamental improvement of dwellings (excluding repair and
installation of domestic appliances)
– installation, maintenance and guidance concerning equipment, software,
security and telecommunications links relating to information and
communication technology.
The credit is granted on the basis of the deductions listed above. The maxi-
mum annual credit is 3,000 euros, but the credit is granted only for that part of
deductions which exceed 100 euros. The credit is not granted if other subsidies
(excluding energy subsidies for changing heating systems in one-family houses)
180
are paid for the same work. Work done by the taxpayer himself or by a person
living in the same household does not entitle to the credit.
The credit is deducted primarily from state income tax. It is deducted from
tax on earned income and tax on investment income in proportion of these
taxes. In the case of tax on earned income the credit is deducted after other
deductions and before the credit for the deficit against tax on earned income.
If the credit exceeds the amount of state income tax, the exceeding part is
deducted from municipal tax, nursing charge of health insurance and church
tax in proportion.
The credit is granted to both spouses and according to their demand. If the
demand cannot be accepted the credit is granted to the spouse with the higher
state income tax (after credits against tax have been deducted). If the amount of
credit exceeds the amount of tax the excess is transferred to the other spouse.
5) The earned income credit is deducted from (State) tax on earned income. If the
credit exceeds the amount of tax, it is deducted (proportionally) from municipal
tax, medical care contribution of the health insurance and church tax. The credit
is calculated on the basis of chargeable wages and salaries, earned income from
work done and services provided to another person, dividend taxed as earned
income, earned income share of business profits which are to be apportioned
and a partner’s earned income share of agricultural income and business prof-
its from a partnership (the basis is the same as in the earned income allowance
of municipal taxation). The credit is 5.2 per cent of such total income exceeding
2,500 euros. If the taxpayer’s earned income after natural deductions exceeds
33,000 euros, the credit is reduced by 1.2 per cent of the excess. The maximum
credit is 600 euros. The credit is given before other credits against tax on earned
income in state taxation.
181
Appendix 5
the following table gives only a general outline of the withholding tax rates (as
a percentage and as whole numbers) on payments to foreign companies and
non-resident aliens. The relevant agreement should be studied for the excep-
tions included in the agreements. For historical data, see 5.3.2.
Kazakstan 5 15 10 10
Morocco 0 0 10 10
Philippines 5 0 15 15/25
Profits 1,000
Corporate income tax 26 % 260
The total tax burden is the corporate income tax 26 %, i.e. 260
Glossary
English - Finnish - Swedish
Act on Assessment Procedure of 18 December 1995 (1558/1995) – Verotusmenettelystä annettu
laki – Lag om beskattningsförfarande;
Act on Central Tax Board of 26 July 1996 (535/1996) – Laki keskusverolautakunnasta – Lag om
centralskattenämnden;
Act on Credit Institutions of 9 February 2007 (121/2007) – Laki luottolaitostoiminnasta – Kredit-
institutslagen;
Act on Fairway Dues of 22 December 2005 (1122/2005) – Väylämaksulaki – Lag om farled-
savgift;
Act on Contributions between Affiliated Companies of 21 November 1986 (825/1986) – Laki
konserniavustuksesta verotuksessa – Lag om koncernbidrag vid beskattningen;
Act on Elimination of International Double Taxation of 18 December 1995 (1552/1995) – Laki
kansainvälisen kaksinkertaisen verotuksen poistamisesta – Lag om undanröjande av interna-
tionell dubbelbeskattning;
Act on Exceptions for the Province of Åland with respect to Valued-added Tax Legislation and
Excise Tax Legislation of 30 December 1996 (1266/1996) – Laki Ahvenanmaan maakuntaa koske-
vista poikkeuksista arvonlisävero- ja valmisteverolainsäädäntöön – Lag om undantag för land-
skapet Åland i fråga om mervärdesskatte- och accislagstiftningen;
Act on Excise Duty on Alcohol and Alcoholic Beverages of 29 December 1994 (1471/1994) – Laki
alkoholi- ja alkoholijuomaverosta – Lag om accis på alkohol och alkoholdrycker;
Act on Excise Duty on Certain Beverage Packages of 3 December 2004 (1037/2004) – Laki eräi-
den juomapakkausten valmisteverosta – Lag om accis på vissa dryckesförpackningar
Act on Excise Duty on Electricity and Certain Fuels of 30 December 1996 (1260/1996) – Laki sähkön
ja eräiden polttoaineiden valmisteverosta – Lag om accis på elström och vissa bränslen;
Act on Excise Duty on Liquid Fuels of 29 December 1994 (1472/1994) – Laki nestemäisten polt-
toaineiden valmisteverosta – Lag om accis på flytande bränslen;
Act on Excise Duty on Soft Drinks of 29 December 1994 (1474/1994) – Laki makeis- ja virvoitus-
juomaverosta – Lag om sötsaks- och läskedrycksaccis;
Act on Excise Duty on Tobacco of 29 December 1994 (1470/1994) – Laki tupakkaverosta – Lag
om tobaksaccis;
Act on Fire Protection Fund of 11 April 2003 (306/2003) – Palosuojelurahastolaki – Lag om
brandskyddsfonden;
Act on Fishing of 16 April 1982 (286/1992) – Kalastuslaki – Lag om fiske;
Act on Forest Management Associations of 10 July 1998 (534/1998) – Laki metsänhoitoyhdistyksistä
– Lag om skogsvårdföreningar;
Act on Fuel Fee for Private Pleasure Boats of 21 December 2007 (1037/2007) – Laki yksityisestä
huvialuksesta suoritettavasta polttoainemaksusta – Lag om bränsleavgift som betalas för pri-
vata fritidsbåtar;
186
Act on Game Management Fee and Hunting Licence Fee of 28 June 1993 (616/1993) – Laki riistan-
hoitomaksusta ja pyyntilupamaksusta – Lag om jaktvårdsavgift och jaktlicensavgift;
Act on Municipal Tax on Real Property of 20 July 1992 (654/1992) – Kiinteistöverolaki – Fas-
tighetsskattelagen;
Act on Oil Damage Fund of 30 December 2004 (1406/2004) – Laki öljysuojarahastosta – Lag
om oljeskyddsfonden;
Act on Oil Waste Duty of 5 December 1986 (894/1986) – Laki öljyjätemaksusta – Lag om olje-
fallsavgift;
Act on the Openness of Government Activities of 21 May 1999 (621/1999) – Laki viranomaisten
toiminnan julkisuudesta – Lag om offentlighet i myndigheternas verksamhet;
Act on Pharmacy Fee of 21 February 1946 (148/1946) – Laki apteekkimaksusta – Lag om apotek-
savgift;
Act on Postal Fee for Securing the Postal Services in Rural Areas on 6 April 2001 (313/2001) – Laki
haja-asutusalueiden postitoiminnan turvaamiseksi perittävästä maksusta – Lag om avgift för
tryggande av postförmedling i glesbygden;
Act on Publicity and Secrecy of Tax Information of 30 December 1999 (1346/1999) – Laki vero-
tustietojen julkisuudesta ja salassapidosta – Lag om offentlighet och sekretess i fråga om beskat-
tningsuppgifter;
Act on Refunding of Excise Duties for Energy Products Used in Agriculture of 21st of July 2006 –
Laki maataloudessa käytettyjen eräiden energiatuotteiden valmisteveron palautuksesta – Lag
om återbäring av accis på vissa energiprodukter som använts inom jordbruket (603/2006);
Act on Seamen’s Welfare and Rescue Levy of 8 May 1936 (189/1936) – Laki lästimaksusta – Lag
om lästavgift;
Act on Surtax and Penal Interest of 18 December 1995 (1556/1995) – Laki veronlisäyksestä ja
viivästyskorosta – Lag om skattetillägg och förseningsränta;
Act on Tax on Certain Insurance Premiums of 20 December 1966 (664/1966) – Laki eräistä vaku-
utusmaksuista suoritettavasta verosta – Lag om skatt på vissa försäkringspremier;
Act on Tax on Lottery Prizes of 26 June 1992 (552/1992) – Arpajaisverolaki – Lotteriskattelag;
Act on Tax Withheld at Source from Interest of 28 December 1990 (1341/1990) – Laki korkotulon
lähdeverosta – Lag om källskatt på ränteinkomst;
Act on the Taxation of Business Profits and Income from Professional Activities of 24 June 1968
(360/1968) – Laki elinkeinotulon verottamisesta – Lag om beskattning av inkomst från närings
verksamhet;
Act on the Taxation of Farm Income of 15 December 1967 (543/1967) – Maatilatalouden tulovero-
laki – Inkomstskattelag för gårdsbruk;
Act on the Taxation of Non‑residents’ Income of 11 August 1978 (627/1978) – Laki rajoitetusti
verovelvollisen tulon verottamisesta – Lag om beskattning av begränsat skattskyldig för
inkomst;
Act on the Taxation of Shareholders in Controlled Foreign Companies 16 December 1994
(1217/1994) – Laki ulkomaisten väliyhteisöjen osakkaiden verotuksesta – Lag om beskattning
av delägare i utländska bassamfund;
Act on Valuation of Assets for Taxation of 22 December 2005 (1142/2005) – Laki varojen arvos-
tamisesta verotuksessa – Lag om värdering av tillgångar vid beskattningen;
Act on Withholding Tax for Foreign Wage Earners with Special Expertise of 18 December 1995
(1551/1995) – Laki ulkomailta tulevan palkansaajan lähdeverosta – Lag om källskatt för lönta-
gare från utlandet;
187
Book-keeping Act of 30 December 1997 (1336/1997) – Kirjanpitolaki – Bokföringslagen;
Car Tax Act of 29 December 1994 (1482/1994) – Autoverolaki – Bilskattelagen;
Dog Tax Act of 29 June 1979 (590/1979) – Koiraverolaki – Lag om hundskatt;
Excise Taxation Act of 29 December 1994 (1469/1994) – Valmisteverotuslaki – Lag om påförande
av accis;
Fuel Fee Act of 30 December 2003 (1280/2003) – Laki polttoainemaksusta – Lag om bräns-
leavgift;
Health Insurance Act of 4 July 1963 (364/1963) – Sairausvakuutuslaki – Sjukförsäkringslagen;
Income Tax Act of 30 December 1992 (1535/1992) – Tuloverolaki – Inkomstskattelagen;
Inheritance and Gift Tax Act of 12 July 1940 (378/1940) – Perintö- ja lahjaverolaki – Lag om skatt
på arv och gåva;
Prepayment Act of 20 December 1996 (1118/1996) – Ennakkoperintälaki – Lag om förskottsupp-
börd;
Securities Markets Act of 26 May 1989 (495) – Arvopaperimarkkinalaki – Värdepappersmarknad-
slagen;
Tax Accounting Act of 10 July 1998 (532/1998) – Verontilityslaki – Lag om skatteredovisning;
Tax Administration Act of 18 December 1995 (1557/1995) – Verohallintolaki – Lag om skatte-
förvaltningen;
Tonnage Tax Act of 5 June 2002 (476/2002) – Tonnistoverolaki – Tonnageskattelag;
Transfer Tax Act of 29 November 1996 (931/1996) – Varainsiirtoverolaki – Lag om överlå-
telseskatt;
Value-added Tax Act of 30 December 1993 (1501/1993) – Arvonlisäverolaki – Mervärdesskat-
telagen;
Vehicle Tax Act of 30 December 2003 (1281/2003) – Ajoneuvoverolaki – Lag om fordonsskatt;
Waste Tax Act of 28 June 1996 (495/1996) – Jäteverolaki – Avfallsskattelag;
Åland Municipal Income Tax Act of 19 June 1993 (37/1993) – Kommunalskattelagen för land-
skapet Åland;
Bank of Finland (Central Bank) – Suomen Pankki – Finlands Bank;
Central Tax Board – Keskusverolautakunta – Centralskattenämnden;
District customs house – Piiritullikamari – Distriktstullkammare;
Local tax office – Verotoimisto – Skattebyrå;
National Board of Customs – Tullihallitus – Tullstyrelsen;
National Board of Taxes – Verohallitus – Skattestyrelsen;
Regional tax office – Lääninverovirasto – Länsskatteverk;
Social Insurance Institution – Kansaneläkelaitos – Folkpensionsanstalten;
Supreme Administrative Court – Korkein hallinto-oikeus – Högsta förvaltningdomstolen;
Vehicle Administration – Ajoneuvohallintokeskus – Fordonsförvaltningscentralen
188
Appendix 8
cl – centilitre
CN-code - Combined Nomenclature code
g – gram(me)
kg – kilogram(me)
kWh – kilowatt-hour
l – litre
MWh – megawatt-hour
MVA – megavoltampere
nm3 – normal cubic metre
1. EU Member States
Index
Accident insurance contribution 2.1.6
Accruals basis 2.5.7
Advance rulings
- income taxation 9.1.3
- other taxes 9.2.2
Affiliated company 2.5.11
Agriculture 2.3.6.1
Allocation of business expenses 2.5.7
- accruals basis 2.5.7
- buildings and other constructions 2.5.7
- declining balance method 2.5.7
- degree of manufacture 2.5.7
- depreciations, 2.5.6
- FIFO 2.5.7
- fixed assets 2.5.7
- inventories 2.5.7
- investments 2.5.7
- proceeds of sales 2.5.7
- replacement reserve 2.5.7
Allocation of income of individuals 2.3.1
Amendment of assessment 9.1.3
Appeals
- income taxation 9.1.3
- other taxes 9.2.2
Artistes 2.4.4, 5.2.1, 5.2.2.1, 6.1, 6.9, 6.13 (VAT)
Assessment year 9.1.2
Associated enterprises 5.3.2
Arm’s length principle 5.4
Breweries 7.8
Buildings and other constructions
- depreciations 2.5.6
Business profits 2.5, 2.5.1
Health insurance contribution 2.1.6, 2.3.9.2, 2.3.9.4, 2.4.2, 3.1, 5.2.2.3, Appen-
dix 4
Hunting licence fee 8.17
Partners
- deduction from earned income 2.3.6.2
- flat used as a dwelling of a partner 2.3.6.2
- loans taken up by partners 2.3.6.2
- social security contributions 2.1.6
Partnerships
- dividends from shares belonging to partnerships 2.3.6.2
- distributions made by partnerships 2.5.4
- general principles 2.2.5
- income from partnerships 2.3.6.2
- remunerations paid to partners 2.2.5
- transfer tax 8.7.3
Penal interest 9.1.2
Permanent establishment
- definition, 2.2.6
- in mergers, divisions, transfers of assets 2.5.12.2
- tax liability 2.2.1
- withholding tax 5.2.2.1–2
Permanent home (capital gains) 2.3.5
Pensions in double taxation agreements 5.3.2
Pension insurance contributions 2.1.6
Pharmacy fee 8.13
Postal fee 8.10
Pre-filled tax proposal 9.1.2
Province of Åland 10
Provision for bad, doubtful debts 2.5.8
193
Radio, television broadcasting service 6.9, 6.13.1
Rates for withholding tax 5.2.2.1
Real estate companies 2.5.14, 5.3.2
Removal goods 8.1.2
Reserves and provisions
- guarantee provision 2.5.8
- irrevocable order for the purchase of goods 2.5.8
- operating reserve 2.5.8
- provision for bad and doubtful debts 2.5.8
- replacement reserve 2.5.7
Residents 2.2.2
Retired persons
- national pension contributions 2.1.6
- health insurance contributions 2.1.6
- deductions and allowances 2.4.3 C and D, Appendix 3
Royalties 5.3.2
Rural areas 8.10
Tax credit
- for the investment income deficit 2.3.9.4
- child maintenance credit 2.4.3 E, Appendix 4
- disability credit 2.4.3 E, Appendix 4
- credit for domestic work 2.4.3 E, Appendix 4
- credit for study loans 2.4.3 E, Appendix 4
- earned income credit 2.4.3 E, Appendix 4
Tax incentives 2.5.10, 5.1
Tax sparing 5.3.2
Tax year 9.1.2
Taxation of municipalities 2.2.7
Taxation of religious communities 2.2.7
Teachers 5.3.2
Telecommunication service 6.13.1
Temporary deduction for money donations (individuals) 2.4.3 B
Three-year rule 2.2.2
Training fund 2.4.4
Transfers of assets 2.5.12.2
Transfer of real property 8.7.2
Transfer of securities 8.7.3
Transfer of taxes to another Nordic country 3.1
Transferring company 2.5.12.2
194
Undistributed estates of deceased persons 2.2.1–2, 2.2.4–5, 2.5.4
Unemployment fund 2.2.7, 2.4.3
Unemployment insurance contribution 2.1.6
Unilateral relief 5.3.1
Unit trust, see Investment fund
United Nations, see Officials of the United Nations
Unlimited tax liability 2.2.1
VAT
- annual turnover criterion 6.3
- construction 6.7
- corporate bodies for promoting the public good 6.3
- deductions 6.10
- exemptions 6.5, 6.6
- exportation 6.13, 6.13.3
- foreign enterprises 6.4
- foreign trade 6.13
- general structure 6.1, 6.2
- government bodies 6.3
- group registration 6.3
- importation 6.13.3.
- intra-Community acquisition and supply 6.13.2
- municipal authorities 6.3
- own consumption 6.5
- persons liable to tax 6.1
- place of transaction 6.13.1
- procedure 6.14
- rates 6.9
- real property 6.5, 6.7
- refunds 6.12
- reindeer owners 6.3
- services related to real property 6.7
- taxable amount 6.8
- taxable transactions 6.5
Vehicle tax 8.1.3
Voluntary pension insurance 2.4.3 B
Waste 8.9
Waste tax 8.9
Works of art 6.1, 6.8, 6.9, 6.14
Åland 10
195
Appendix 10
Addresses
When calling from outside Finland the number for Helsinki Tax Office is 358
(the Finland country code) 9 (Helsinki and Uusimaa) 731120.
196
Appendix 11
TABLE 13. Rates of excise duty on liquid fuels, electricity and certain energy sources
2009 (with product group numbers in brackets)
Petrol
reformulated and with extremely low
sulphur content (11) cent/l 57,24 4,78 0,68
normal grade (21) cent/l 59,89 4,78 0,68
Electricity
category I (households, services and
agriculture) (1) cent/kWh - 0,870 0,013
category II (industry, glasshouse
cultivation) (2) cent/kWh - 0,250 0,013
Coal, lignite (3) euro/
tonne - 49,32 1,18
Natural gas (5) cent/
MWh - 2,016 0,084
Pine oil (6) cent/kg 6,7 - -
197
Appendix 12
2501–2550 6,8
2551–2600 8,5
2601–2650 9,8
2651–2700 10,8
2701–2750 11,7
2751–2800 12,4
2801–2850 13,1
2851–2900 13,7
2901–2950 14,2
2951–3000 14,8
3001–3050 15,3
3051–3100 15,7
3101–3150 16,1
3151–3200 16,6
3201–3250 16,9
3251–3300 17,3
3301–3350 17,7
3351–3400 18,0
3401–3450 18,4
3451–3500 18,7
203
Appendix 13
The Government has presented following (still pending) proposals to the Par-
liament:
A. Qualifying companies
According to the Act on Tax Exemption for Apartment Rental Companies income
tax exemption is granted to resident companies engaged in apartment rental.
2. At the end of the previous tax year at least 80 per cent of assets in the com-
pany’s balance sheet consist of real property, shares in residential housing
companies or shares entitling to the enjoyment of an apartment in other
mutual real property companies whose only business is owning or holding
of real property and buildings on it. These rules also apply to comparable
companies and corporations resident in other EEA Member States.
5. No shareholder owns more than 10 per cent (30 per cent in tax years
2009—2012) of the company’s share capital.
Real property is deemed to be used for living purposes if more than 50 per
cent of the total area of apartments in buildings on that real property are apart-
ments for living purposes. The same goes for empty building lots (for living
purposes) in town plan areas.
2. Similar rule applies to such property mentioned in B.2, which is other than
the property mentioned in F.1 above if more than 10 per cent is alienated.
1. The company must distribute at least 90 per cent of its annual profit as
dividend. Profit does not include changes in values (appreciation etc. that
has not realised, and subject to the exceptions caused by Limited Liability
Companies Act).
2. The company may leave at most 40 per cent of its profit undistributed to be
used for the acquisition of assets mentioned in B.2 (real property, shares
in residential housing companies, shares entitling to the enjoyment of an
apartment in other mutual real property companies whose only business is
owning or holding of real property and buildings on it) in the seven follow-
ing accounting periods.
3. If the undistributed amount is not used in such a way for the acquisition
of real property or shares in residential housing companies or mutual real
property companies whose buildings have been taken into use (for living
purposes) during the three years before the acquisition, the company has
to pay an amount equal to 10 per cent of the undistributed amount.
4. The part of the undistributed amount, which has not been used in the way
described above during the seventh accounting period at the latest, must
be distributed as dividend for that period in addition to the amount that is
to be distributed on the basis of 1 and 2 above (subject to the provisions of
Limited Liability Companies Act).
H. Taxation of distributions
Dividend that the company distributes for the exemption period to its share-
holders is tax exempt to its recipients.
If a shareholder’s share in the company’s capital is at least 10 per cent (30 per
cent in tax years 2009—2012) on the record date, the company has to pay (by
an order of the tax administration) an amount calculated by multiplying the
dividend distributed to the shareholder by corporation tax rate.
L. Miscellaneous
Exemption must be applied for at the end of the tax year (at the latest) for
which it is applied. The exemption is granted by tax administration.
2) t hat the income tax exemption of Ekokem Oy (a company for treating haz-
ardous waste) be abolished (as of the tax year 2008).
3) t hat the credit method of Act on Elimination of International Double Tax-
ation (and the whole Act) be also applied to remunerations, removal com-
pensations, pensions, unemployment and family pensions received on the
basis of the membership of the EU Parliament. Taxes paid to a foreign State
would include taxes paid to the European Communities.
MINISTRY 0F FINANCE
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7/2009
Ministry of Finance publications
April 2009