Finland taxes 2025

1. Corporate Income Tax (CIT):

• Standard Rate: Finland applies a flat corporate income tax rate to the profits of companies.
  It is very important to verify the current exact corporate tax rate with the Finnish Tax Administration (Vero Skatt) as it may change.
• Tax Residency: Companies are considered tax residents in Finland if they are registered in Finland or if their place of effective management is in Finland.

Tax Deductions:

• Ordinary and necessary business expenses are generally deductible.
• Depreciation of assets is allowed according to Finnish tax regulations.  
• Interest expenses are deductible, subject to certain limitations.  

2. Value Added Tax (VAT):

• Standard and Reduced Rates: Finland applies a standard VAT rate and reduced VAT rates to specific goods and services. It is very important to verify the current exact VAT rates with the Finnish Tax Administration (Vero Skatt) as they may change.  
• VAT Registration: Businesses making taxable supplies in Finland exceeding a certain threshold must register for VAT.  
• Input VAT Deductions: Businesses can deduct input VAT incurred on purchases related to their taxable supplies.  
• Reverse Charge Mechanism: This may apply to certain transactions, particularly those involving services provided by non-residents.  

3. Withholding Tax:

• Finland applies withholding tax on various payments to non-residents, including:
  • Dividends.
  • Interest.
  • Royalties.
• The withholding tax rates may be reduced or eliminated under double taxation treaties.  

4. Personal Income Tax (PIT):

• Progressive Taxation: Finland has a progressive personal income tax system, meaning higher income earners pay higher tax rates.  
• Tax Residency: Individuals are considered tax residents in Finland if they have their permanent home in Finland or if they stay in Finland for more than six months in a calendar year.  

• Tax Deductions:
  • Certain expenses, such as commuting expenses and donations, may be deductible.  
  • Household deductions are also available, with rule changes happening in 2025.  

5. Real Estate Tax:

• Real estate tax is levied on properties in Finland.  
• The tax rate varies depending on the location and type of property.

6. Tax Treaties:

• Finland has an extensive network of double taxation treaties, which aim to prevent double taxation and promote international trade and investment.  

7. Tax Administration:

• Finnish Tax Administration (Vero Skatt): The Vero Skatt is responsible for administering and enforcing tax laws in Finland.  
• Electronic Filing: Finland encourages electronic filing of tax returns.  
• Key Considerations for Foreign Investors:
  • Tax Planning: Engage in proactive tax planning to optimize your tax position.
  • Compliance: Ensure compliance with all tax laws and regulations.
  • Documentation: Maintain accurate and complete records of all financial transactions.
  • Professional Advice: Seek professional tax advice from experts in Finland.
  • Stay Updated: Tax laws and regulations are subject to change, so it's essential to stay updated.