FINLAND Law and Practice Contributed by: Petteri Rapo, Markku Renko, Henri Becker and Jaakko Niskala, Svalner Atlas Finland
Finnish Tax Administration guidance for foreign com - panies describes typical PE examples consistent with treaty practice, including places such as a place of management, branch, factory or workshop, and notes that construction/installation projects may consti - tute a PE where the relevant treaty time threshold is exceeded. The same guidance also notes that a fixed place of business requires a distinct geographic loca - tion and a degree of permanence, and that in some circumstances a PE may also be linked to a depend - ent agent, depending on the facts and applicable treaty provisions. 3. Taxation of Cross-Border Income 3.1 Income From Immovable Property Income from immovable property located in Finland (eg, rental income, certain usage compensations) is taxable in Finland regardless of the taxpayer’s resi - dence. This follows both Finnish domestic law and Finland’s tax treaties, which allocate taxing rights over immovable property income to the state where the property is located. Rental income from immovable property is treated as capital income for residents and non-residents. Capi - tal income is taxed at: • 30% on the first EUR30,000, and • 34% on the excess. Rental income from property located outside Finland is also taxable in Finland for residents, subject to dou - ble tax relief under the applicable tax treaty (typically credit or exemption methods). 3.2 Business Profits In Finland, corporate business profits are taxed at a flat 20% corporate income tax rate, with resident companies taxed on worldwide income and non-res - ident companies taxed only on profits attributable to a Finnish permanent establishment. Partnerships are transparent for tax purposes, with profits taxed at partner level.
Self-employed individuals are taxed under the individ - ual income tax system, where business profits are split into capital and earned income, while non-residents are taxed only if they have a permanent establishment or fixed base in Finland. Tax treaties mainly limit Finland’s taxing rights for for - eign businesses without a Finnish presence. 3.3 Passive Income For payments from Finland to non-residents, the payer must generally withhold tax at source at 20% where the beneficiary is identified as a corporate entity, 30% where the beneficiary is identified but its status is unclear, and 35% where required beneficiary informa - tion is missing (notably nominee-registered shares). Treaty benefits or other legal grounds can reduce the rate where eligibility is documented. In addition to rate mechanics, Finnish practice plac - es strong emphasis on beneficial-owner identifica - tion and treaty‑eligibility verification as conditions for granting treaty relief at source, particularly for divi - dends on nominee‑registered shares. Treaty benefits are granted only where the beneficiary is identified and eligibility has been verified. 3.4 Capital Gains In Finland, capital gains arise from the disposal of assets, such as shares, real estate, business inter - ests or other property. For individuals, capital gains are taxed as capital income (taxable at the standard capital income tax rate of 30% or 34%). For compa - nies, capital gains are generally treated as part of tax - able business income (taxable at the 20% corporate income tax rate), unless a specific exemption applies. In cross-border contexts, treaty provisions (eg, Article 13 of the OECD Model structure) can affect the allo - cation of taxing rights, especially for share disposals linked to immovable property or permanent establish - ment assets, depending on the treaty wording. 3.5 Employment Income Finland distinguishes between resident and non-res - ident taxpayers:
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