Finland Country Profile EU Tax Centre March 2012
Key factors for efficient cross-border tax planning involving Finland EU Member State
Double Tax Treaties
Denmark and Faroe Islands
Rep. of Korea
Bosnia & Herzegovina
Rep. of Ireland
Treaty between Finland and Yugoslavia will become applicable to relations between Finland and Kosovo with retroactive effect after the formal procedures are finalized.
New treaty signed on October 6, 2009, to become effective as of January 1, 2013.
A company is resident in Finland if it is incorporated under Finnish law. Residents are subject to tax on their worldwide income. Non-residents are subject to Finnish tax with respect to Finnish source income.
Standard corporate income tax rate: 24.5 percent.
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Withholding tax rates
On dividends paid to non-resident companies 0 percent / 24.5 / DTT rate. On interest paid to non-resident companies 0 percent. On patent royalties and certain copyright royalties paid to non-resident companies 0 percent / 24.5 percent / DTT rate.
Dividend distribution by resident/non-resident subsidiaries Tax exempt (100 percent) if the subsidiary is a non-listed company resident in the EU. Partially taxable (75 percent; 25 percent tax exempt) (i) if the subsidiary is a listed company resident in the EU and the recipient holds less than 10 percent of its share capital or (ii) if the subsidiary is a non-EU treaty resident company (if not exempted in the applicable tax treaty). Taxable income (100 percent) if the subsidiary is a non-EU and non-treaty resident company. Capital gains Exempt, if participation exemption requirements are met. Otherwise taxable. Deductibility of costs: Generally deductible.
■ Interest costs: Deductible; ■ Acquisition costs: Deductible, if the capital gain is taxable income; ■ Costs on disposal: Deductible, if the capital gain is taxable income. Tax losses
Tax losses may be carried forward for 10 years. Carry-back is not allowed. Tax loss carry-forwards are forfeited if more than 50 percent of the company’s shares are subject to direct or indirect change of ownership (dispensation can be requested).
Tax consolidation rules
Group consolidation possible via group contributions.
Small administrative registration fee.
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On the transfer of shares Yes, if the seller or buyer is resident in Finland for tax purposes. 1.6 percent. On the transfer of land and buildings Yes, 4 percent.
Controlled Foreign Company rules
Yes. Generally, if Finnish entities or individuals hold at least a 50 percent stake in a Controlled Foreign Company (“CFC”), or its foreign branch, which is subject to a low level of taxation (<15.6 percent) and does not carry out business activities in certain lines of business, the Finnish CFC rules must be considered. CFC rules are not applied to companies effectively established in EEA Member States or treaty countries not mentioned in the “black list.”
Transfer pricing rules
General transfer pricing rules Yes. Generally, the provisions of the OECD Transfer Pricing Guidelines are followed when determining the arm’s length prices. Documentation requirement? Yes.
Thin capitalization rules
No (will likely be introduced in 2013). In practice, relatively high debt-to-equity ratios have been accepted in tax rulings.
General AntiAvoidance rules (GAAR)
Specific AntiAvoidance rules/Anti Treaty Shopping Provisions
IP / R&D incentives
The standard VAT rate is 23 percent. Reduced rates are 13 percent and 9 percent.
3 © 2012 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Fininish tax law and local tax administration guidelines, updated 2012.
Contact us Markku Lepistö KPMG in Finland T +358 20 760 3390 E
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