2012-finland+kpmg.unlocked

Finland Country Profile EU Tax Centre March 2012

Key factors for efficient cross-border tax planning involving Finland EU Member State

Yes

Double Tax Treaties

With: Argentina

Denmark and Faroe Islands

Kazakhstan

New Zealand

Sweden

Armenia

Egypt

Rep. of Korea

Norway

Switzerland

Australia

Estonia

Kosovo(a)

Pakistan

Tanzania

Austria

France

Kyrgyzstan

Philippines

Thailand

Azerbaijan

Georgia

Latvia

Poland

Turkey(b)

Barbados

Germany

Lithuania

Portugal

UAE

Belarus

Greece

Luxembourg

Romania

UK

Belgium

Hungary

Macedonia

Russia

Ukraine

Bosnia & Herzegovina

Iceland

Malaysia

Serbia

US

Brazil

India

Malta

Singapore

Uzbekistan

Bulgaria

Indonesia

Mexico

Slovakia

Vietnam

Canada

Rep. of Ireland

Moldova

Slovenia

Zambia

China

Israel

Montenegro

South Africa

Croatia

Italy

Morocco

Spain

Czech Rep.

Japan

Netherlands

Sri Lanka

Note:

Residence

(a)

Treaty between Finland and Yugoslavia will become applicable to relations between Finland and Kosovo with retroactive effect after the formal procedures are finalized.

(b)

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.

Tax rate

Standard corporate income tax rate: 24.5 percent.

1 © 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.

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.

Holding rules

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.

Registration duties

Small administrative registration fee.

2 © 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.

Transfer duties

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)

Yes.

Specific AntiAvoidance rules/Anti Treaty Shopping Provisions

Yes.

Ruling system

Yes.

IP / R&D incentives

No.

VAT

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.

Source:

Hybrid Instruments

No.

Hybrid Entities

No.

Fininish tax law and local tax administration guidelines, updated 2012.

Contact us Markku Lepistö KPMG in Finland T +358 20 760 3390 E

markku.lepisto@kpmg.fi

www.kpmg.com © 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International.

KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Country Profile is published by KPMG International Cooperative in collaboration with the EU Tax Centre. Its content should be viewed only as a general guide and should not be relied on without consulting your local KPMG tax adviser for the specific application of a country’s tax rules to your own situation. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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