Tax rates in Finland

Company Tax

20%

Tax Rate For Foreign Companies

Finnish companies are taxed on their worldwide income whereas non-resident companies are only taxed on Finnish-sourced income. Foreign companies with a permanent establishment are taxed at the regular corporate tax rate.
Further information can be found on the Skatt website.

Capital Gains Taxation

Capital gains derived by a company generally are taxed as ordinary business income at a rate of 20% (and, correspondingly, capital losses are generally deductible). A participation exemption is available for gains derived from the disposal of shares treated as fixed assets (corresponding capital losses are not tax deductible, conditions apply).

Main Allowable Deductions and Tax Credits

Deductions are allowed for ordinary business expenses such as payments of interest and royalties, entertainment costs (capped at 50%), fees for establishing an organization and reorganization costs, R&D expenses, and employers' social contributions. As a general rule, interest expenses are fully deductible. However, the deductibility of interest expenses for intra-group loans is restricted to 25% of fiscal EBITDA.
Goodwill obtained can be amortized for tax purposes during its useful life, with a maximum of ten years. In the determination of taxable income, start-up expenses are normally treated as deductible expenses.
Qualifying group contributions to affiliated companies may also be deducted. Donations are deductible in certain cases (with limits varying according to the type of charitable organization). Employers are allowed to make an additional tax deduction for certain education costs of their employees. Employers are required to provide for a qualifying education plan and the education relates to the current or future tasks of the employee. Bad debts are in general tax-deductible.
Normally, the maximum annual rates of depreciation calculated on the remaining acquisition cost for tax purposes (declining-balance method) are 25% for machinery and equipment and from 4% to 20% for buildings and other constructions, according to the type and estimated life of the asset. Nevertheless, accelerated depreciation on machinery and equipment is permitted for tax years 2020-2025, so that a taxable person engaged in agriculture or a business may annually deduct up to 50% (instead of 25%) of the tax-carrying value of newly acquired machinery or equipment.
Losses may be carried forward for ten years, whereas loss carrybacks are not allowed.

Other Corporate Taxes

Municipalities impose an annual real estate tax on the taxable value of buildings and land. The municipal council determines the applicable tax rates (ranging from 0.41% to 6%).
A transfer tax of 4% of the sales price is payable on the transfer of real estate situated in Finland. The transfer of shares of Finnish companies (other than housing companies and real estate companies) and other domestic securities is subject to a transfer tax of 1.6%. The transfer of shares in Finnish housing companies and real estate companies is subject to a transfer tax of 2%.
Finland does not levy stamp taxes.
Compulsory social security contributions payable by the employer include health insurance (1.53%, no cap); pension insurance (17.39% on average, no cap); unemployment insurance (0.52% for the first 2,251,500 of gross salaries and 2.06% for the portion of the gross salaries exceeding that amount, no cap); group life insurance premium (0.06% on average, no cap); accident insurance premium (0.57% on average, no cap).
Other company taxes include the public broadcasting tax (between EUR 140 and EUR 3,000) and tonnage tax for shipping companies.

Other Domestic Resources

Finnish Tax Administration

Tax Rate

Allowable Deductions and Tax Credits

The following deductions are allowed, some of which are subject to a cap:

- Work commuting expenses in excess of EUR 750 (up to a maximum of EUR 7,000)
- Interest on a loan used to buy a permanent home (limited)
- Capital losses
- Child allowance of EUR 80 maximum per child under 18
- Household expenses for certain care and repair work, up to EUR 2,250 per year (EUR 3,500 for expenses related to the move from oil heating to more sustainable energy sources and for expenses incurred from household work, nursing, and care)
- Mandatory unemployment insurance premiums are deductible from earned income for both national and municipal tax purposes
- Accommodation costs of a second home needed because of two (or more) permanent workplaces can be deducted. The maximum deduction is EUR 450 per month
- A child deduction of EUR 50 per under-aged child is granted as a deduction against taxes payable on employment income. The deduction of EUR 50 is granted per under-aged child, up to a maximum of four children. In case the individual is a single parent, the deduction is EUR 100 per child
- Several deductions apply for remote working (e.g. EUR 920 if the employee works from home more than 50% of the total number of working days)
- Individuals are allowed to deduct cash donations of between EUR 850 and EUR 500,000 from earned income if the purpose of the donation is the development of science or art and the donation is made to a university with public financing that is located in the European Economic Area or to a related university fund
- A tax credit is available for electricity costs in the months of January, February, March and April 2023, equivalent to 60% of the part going in excess of EUR 2,000 (capped at EUR 2,400 per permanent residence).

For further information, visit the dedicated pages on the Skatt website.

Special Expatriate Tax Regime

A non-resident individual (e.g. occasionally working in Finland) is taxed on Finnish-source income only. Tax rates are 35% on employment income and 30% on dividends, interest and royalties; unless differently stated in a tax treaty. Certain types of interest income that a non-resident may receive from a Finnish source are not taxable: for example, interest on a bank deposit, or on bonds or debentures, are tax-exempt when the beneficiary is a non-resident.
In principle, no itemised deductions are allowed, however, a standard deduction of EUR 510 per month is deducted from the income.

Foreign employees whose work requires special knowledge and whose cash salary is at least EUR 5,800 can adhere to the "foreign expert tax regime" which provides a flat tax rate of 32%. The regime can be applied for a maximum of 48 months and the application must be filed within 90 days from starting to work in Finland.

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