70 Claim for removal of double taxation, filling instructions

This Form 70 is used to claim credit for foreign taxes in Finnish income taxation. The form is submitted electronically as an appendix to your tax return (e.g. in MyTax). Credit is claimed during the tax year when the income earned outside Finland was taxed in Finland. In addition, this form can be used to claim credit for income earned outside Finland in previous tax years if the income is eligible and if the income could not be fully or partly credited in Finland previously (unused credit of foreign tax) due to the limits laid down in section 4 of the act on the elimination of international double taxation (Laki kansainvälisen kaksinkertaisen verotuksen poistamisesta 1552/1995).

The form and more information are available on the form site.

Append to the form documentation indicating how much tax was paid to the other country, when and how it was paid, and the basis for the tax paid to the other country.

If your corporation deems it necessary to provide additional information for crediting taxes paid to another country, the information must be provided on a free-form document and appended to the tax return. Additional information is needed in many situations – for example, if your corporation has received interest income or royalty income from another EU country and tax has been withheld at source. Indicate the company form of the payer of the interest or royalties, and the percentage of direct ownership in that company that your corporation holds. More information: the interest and royalty payment Directive (2003/49/EC).

If income was received from a controlled foreign company (CFC) or from a permanent establishment in another country, you must also submit Form 74 (CFC) or Form 75 (permanent establishment).

For more information on how the new tax rules on the division to different sources of income affect unused credit of foreign tax from previous years, see Section 5.1 of the Finnish Tax Administration’s instructions Eräiden yhteisöjen tulolähdejaon poistaminen (Guidance on source-of-income rules for dividing income taxes of certain corporate entities).

The Finnish Tax Administration’s detailed instructions Kansainvälisen kaksinkertaisen verotuksen poistaminen yhteisöjen verotuksessa (Elimination of double taxation for corporate taxpayers).

Unused credit of foreign tax from previous tax years

A corporation can also claim credit of foreign tax from previous years, if it has not been possible to fully or partially credit the taxes in Finland previously due to the restrictions on amounts laid down in section 4 of the act on the elimination of international double taxation.

This Form 70 is only used if a corporation has claimed credit of foreign tax for the tax year in question and it was not possible to grant the credit before because the amount of the source of income tax paid to Finland was smaller than the tax subject to credit specified in the claim or because the amount of the tax paid to Finland on the income received from outside Finland was smaller than the amount of the tax that credit was claimed for (maximum amount of credit).

You cannot use this form if you have not claimed credit on foreign tax for a previous tax year during the correct tax year. In this case, your corporation must submit a claim for adjustment for crediting the tax paid to another country for the tax year during which the tax on income received from outside Finland was collected. Form 70 for the correct tax year can be appended to the claim for adjustment. The claim for adjustment must be made for the correct year for each payment regardless of whether foreign tax can be credited during that year.

If the taxes paid to another country cannot be fully credited during the relevant tax year, on the taxpayer’s request, the amount not credited (unused credit of foreign tax) is deducted from the taxes collected from income received from the same source in the following five tax years.

The claim for adjustment must include the following information:

• Amount of income (including taxes paid outside Finland)
• The expenses relating to the income
• The amount of foreign tax that credit is claimed for
• The income source country
• The date on which you paid the foreign tax you are claiming to be credited, and the name of that tax (in Finnish and either in the local language or in English)
• Income type, e.g. dividend, royalty, interest, etc.
• Documentary evidence of the taxes having been paid
• Withholding rate based on tax treaty
• The conversion rate for the other currency, if the income and the tax are not expressed in euros
• Information on the tax sparing credit possibly required by the tax treaty.

Detailed instructions

Total taxes that should be credited

Enter the total of all the foreign taxes for which you claim credit during the tax year. Also include the share of foreign tax that cannot be credited in the relevant tax year due to the maximum credit amount laid down in section 4 of the act on the elimination of international double taxation. The Finnish Tax Administration performs the calculations necessary for determining the share of the tax that can be credited in the relevant tax year. The remainder will be accounted for in the following years on your request.

However, if the other country and Finland have signed a tax treaty, the maximum amount to be credited can only be an amount determined according to the taxing rights of the country of source. If you claim for foreign tax to be credited in violation of the provisions of the relevant tax treaty, the Finnish Tax Administration orders a tax increase of maximum €25,000 (act on assessment procedure 1558/1995, section 32a, subsection 8).

Always enter this information if a corporation is reporting new foreign tax to be credited, i.e. claiming credit of foreign tax for taxes that have not been reported to the Finnish Tax Administration previously.

Do not fill in this section if you have already informed the Tax Administration of all the foreign taxes that should be credited (either during the 2017 tax year or later, because the necessary information is already stored in the Tax Administration’s database).

If you submit Form 70 on paper and you have completed several forms, enter the total amount the foreign tax you are claiming credit for only on one of the paper forms you submit.

I demand to receive credit for the taxes reported for earlier years that are creditable but have not been credited before

Tick the box for ‘Yes’ if a corporation is claiming credit for foreign tax reported in previous tax years that are eligible but have not yet been credited.

If there are no claims for credit for previous tax years, the other sections on the form do not need to be completed. The Finnish Tax Administration will process the information you enter here, combining it with your previously submitted reporting.

You cannot claim credit for previous years’ foreign taxes that still remain uncredited during a tax year during which your corporation must pay income tax to Finland on income received outside Finland.

Country code of the country of source

Identify the country from which the income was received by its country code.

Date when foreign tax was paid (ddmmyyyy)

Enter the date when your corporation paid the foreign tax.

Name of the tax to be credited

Enter the name of the foreign tax you paid in Finnish and either in the local language or in English.

Income category

These boxes are for the proper classification of the income (for example, dividend, interest, royalties, income derived from immovable property, capital gains received for the selling of assets/property, or business income).

Withholding rate based on tax treaty

Enter the percentage rate of withholding as laid down in the relevant tax treaty between Finland and the country from where the income is received. If no tax treaty exists between the countries, leave this section empty.

Exchange rate

Enter the rate used when converting the income from another country into euros. The rate should be the exchange rate that was valid on the date when you received the income.

Amount of income (including paid taxes)

Enter the gross income received from the country without subtracting the tax paid to that country, and without subtracting any expenses relating to the income.

Expenses relating to the income

Enter the appropriate expenses for the generation of income, for the maintenance of the income, and interest; these expenses are tax-deductible in Finland (e.g. personnel expenses, pass-on expenses).

Amount that should be credited

Enter the share of the foreign tax you paid to the other country that your corporation claims credit for when its Finnish tax assessment is processed. Copy the total amount of the different foreign taxes you enter in these fields to section ‘Taxes that should be credited’. Include the share of the tax that goes over the maximum amount laid down in section 4 of the act on the elimination of international double taxation. The Finnish Tax Administration performs the calculations necessary for determining the share of the foreign tax that can be credited this year. The remainder will be accounted for during following years on the taxpayer’s request. However, if the foreign country and Finland have signed a tax treaty, the maximum amount to be credited can only be an amount determined according to the taxing rights of the country of source. Please check whether foreign tax has been withheld in accordance with the tax treaty provisions. Your claim for credit may not exceed the taxing right granted to the source country in the tax treaty. If you submit a claim for crediting an amount that goes over this limit, the Finnish Tax Administration may order a punitive tax increase.

The following general rules must be considered when calculating the maximum amount of the credit:

• The calculation is made per income source.
• The credited amount cannot be higher than the amount for corresponding income determined in the Finnish income taxation process.
• The credited amount also cannot be higher than the tax payable to Finland on income from the same source. For example, if the source of income has resulted in a loss and as a result, no taxes to Finland are payable on that source of income, no credit can be granted for foreign taxes paid during the relevant tax year.
• The amount left uncredited can be deducted from the taxes that relate to the same source of income during the following five tax years if the taxpayer claims deduction. Unused credit of foreign tax is processed in chronological order, taking account of the maximum permissible amount to be credited.
• Finland will only credit foreign tax that has been collected in accordance with the provisions of the applicable tax treaty. If the source country has collected more taxes than allowed by the tax treaty provisions, your corporation must claim the excess taxes from the source country tax authorities.

*) The Finnish act on elimination of international double taxation (Laki kansainvälisen kaksinkertaisen verotuksen poistamisesta 1552/1995) and the tax treaties for the avoidance of double taxation between Finland and other countries.

Tax that should be credited

It is only possible for Finnish tax authorities to give credit for foreign taxes when the paid amount has been a final tax, or when a prepayment has been made that matches the final tax (‘Advance tax’). Tick the box ‘Final tax’ or ‘Advance tax’ based on the type of foreign tax you are claiming credit for.

If the amount of the paid foreign tax changes or the amount of the prepayment of the foreign tax for which the credit is claimed does not match the amount of the final foreign tax, report the new amount to the Finnish Tax Administration.

The tax treaty assumes fictive credit

Based on some tax treaties, Finland can also credit taxes that the income source country has not taxed based on its tax relief laws or for which it has collected a reduced amount of tax. Such credit is called ‘fictive credit’ or ‘tax sparing credit’. You should only enter the amount that you actually paid in the section ‘Amount of foreign taxes paid’. Include the possible tax sparing credit in the ‘Tax that should be credited’ section. Also tick the box ‘The tax treaty assumes fictive credit’.

Payments of tax to foreign tax authorities, relating to hybrid arrangements

This section is only for corporate entities that have participated in a hybrid arrangement and paid foreign taxes. If this applies to you, you must additionally submit Form 82, ‘Account of cross-border hybrid arrangements’.

Country code of the country of source

Identify the country from which the income was received by its country code.

Date when the foreign tax was paid (ddmmyyyy)

Enter the date when your corporation paid the foreign tax.

Name of the tax to be credited (in Finnish, in the language of the source country or English)

Enter the name of the foreign tax you paid in Finnish and either in the local language or in English.

Net income received from the source in the foreign country

Enter the net amount of income from sources outside Finland. Please note that the amount entered in this field should be the gross income minus any third-party payment that must be subtracted from it (hybrid arrangements do not usually involve any other expenses). This gives you the net taxable income for purposes of Finnish taxation.

Payments of tax to foreign tax authorities

Enter the amount of tax that was paid to the other country.

Proportion of the foreign tax in relation to the net income subject to taxation in Finland

Calculate this ratio by first dividing the net taxable income in Finland by the gross income. Then multiply the result by the tax withheld by the other country.

Net income from the other country (as calculated above)
/ Gross income from the other country
× the tax withheld at source in the other country
= tax subject to credit

The result is the share of income from the other country eligible to be credited from the taxes withheld outside Finland.

Amount that should be credited

Calculate the amount of foreign tax that you claim credit for and enter it in the ‘Amount that should be credited’ section. Please note that this cannot result in unused credit of foreign tax that could be credited in the following years.