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Annual information return on capital refunds taxable as capital gains, instructions 2024

1 What type of income is reported in the annual information return on capital refunds?

1.1 Limited liability companies

Refunding of capital means that assets accrued for a limited liability company because of capital investments are distributed to shareholders. Capital can be refunded from an unrestricted equity fund or from the company’s restricted equity. Restricted equity includes share capital, for example, and share-premium accounts and reserve funds formed during the old Limited Liability Companies Act. Other funds and profit from the current and previous accounting periods are unrestricted equity.

When assets are distributed from the company's unrestricted equity fund, they are usually treated as dividend income in taxation. If the distributing company is a non-listed company and if separately set conditions are met, the assets distributed are treated as taxable capital gains.

Assets distributed from a non-listed company’s unrestricted equity fund are regarded as capital gains subject to tax when all the following conditions are met:

  • a capital investment made by the taxpayer is returned to them
  • at the time of distribution, a period of no more than 10 years has elapsed since the investment
  • the taxpayer gives a reliable account of the fulfilment of the above two conditions.

Report in the annual information return on capital refunds (VSPOPAL or online form Annual information return on capital refunds taxable as capital gains) only such capital refunds that are treated as capital gains in the tax assessment.

If a capital investment is returned to the original investor’s undistributed estate, the estate is regarded as the investor.

When profit on the capital refund is calculated, the undepreciated acquisition cost of the share is deducted. However, the amount deducted cannot be greater than the amount of the capital refund. Refunding of capital cannot generate capital loss. The Tax Administration usually calculates the capital gain based on the information given in the annual information return. A deemed acquisition cost cannot be deducted from the assets distributed from an unrestricted equity fund.

Assets distributed by a listed company from an unrestricted equity fund are treated as dividend income in the tax assessment. They are reported in an annual information return on dividends (VSOSYHTV and VSOSERIT or online forms Annual information return on dividends (7812e). In the annual information return, select payment type 04 VOPR dividend (dividend paid from an unrestricted equity fund).

Distribution of assets to shareholders is not reported in the annual information return on capital refunds taxable as capital gains when the company is purchasing or redeeming its own shares.

Limited liability companies and cooperatives are liable to report information only on capital refunds paid to resident taxpayers in Finland.

Capital refunds for shares on long-term savings accounts (act on bound long-term savings [Laki sidotusta pitkäaikaissäästämisestä 1883/2009]) and on equity savings accounts (act on equity savings accounts [Laki osakesäästötilistä 680/2019]) are not reported.

The taxpayer may have bought the shares or interests for which capital refunds are paid in multiple transactions. If the shares or interests were bought in more than one transaction, file a separate annual information return on each transaction. An annual information return may not contain two or more specifications with identical identifying details because only one of the specifications will be taken into account in the tax assessment. The identifying details are listed at the end of these instructions.

Example: If the shares for which capital is refunded were bought by the same person in equal quantities on the same day, report them as a sum total in a single specification. Otherwise two separate specifications would have identical identifying details.

If no details on the purchases of shares or interests exist, report all the assets distributed to the taxpayer in a single specification.

You can read more about the taxation of assets distributed by a limited liability company in the Tax Administration’s detailed guidance:

1.2 Cooperatives

When assets are distributed from a cooperative’s unrestricted equity fund, they are usually treated as surplus in the tax assessment. If the distributing party is a non-listed cooperative and if separately set conditions are met, the assets distributed are treated as taxable capital gains. The conditions are mainly the same as in the distribution of assets from a limited liability company’s unrestricted equity fund.

If the amount of assets distributed from an unrestricted equity fund is higher than the capital contribution (membership fee), submit an annual information return on the cooperative surplus or an annual information return on capital refunds, whichever is the case. In the case of capital gains, select payment type 7 (distribution of assets from an unrestricted equity fund) in the annual information return.

Report surplus distributed by a cooperative and such distribution of assets from an unrestricted equity fund that is not taxable as capital gain in the annual information return on cooperative surplus (VSOKERIE and VSOKVYHT or online forms Vuosi-ilmoitus osuuskunnan ylijäämistä (7816) (available in Finnish and Swedish, link to Finnish).

If a member of the cooperative resigns and their membership fee is refunded, the refund is treated as taxable capital gain. Also, if the member receives assets from the cooperative’s unrestricted equity fund instead of a refund of the membership fee, those are treated as taxable capital gains insofar as they correspond to the paid-in membership fee. The cooperative does not have to submit an annual information return on a refund of a membership fee taxable as capital gain or on a corresponding distribution of assets. Instead, the cooperative can report them in the annual information return on capital refunds. In this case, select payment type 5 (refund of membership fee).

You can read more about the taxation of assets distributed by a cooperative in the Tax Administration’s detailed guidance:

1.3 Account operator’s obligation to provide information

According to § 15 of the act on assessment procedure (laki verotusmenettelystä 1558/1995), anyone who has made or handled transactions of monetary value is obliged to report them to the Tax Administration for purposes of taxation. According to § 17, subsection 10 of the same act, an account operator or another party with reporting obligation who has information on transactions with securities that is needed to calculate the taxpayer’s capital gains or losses must report the information they have.

According to the Tax Administration’s decision on the general obligation to report information, an account operator referred to in the Act on the Book-Entry System and Settlement Activities must provide information on any capital refunds for book-entry shares that they have handled. In addition, the above party liable to report must provide information required for calculating capital gains on the capital refunded to the taxpayer insofar as the information is in the party’s possession. According to the Tax Administration’s decision on the obligation to report information, a limited liability company must provide information on the capital refunds it has paid for its shares. However, the limited liability company need not report information already reported by the account operator. In other words, a capital refund paid to the taxpayer is reported to the Tax Administration only in one annual information return.

2 When must an annual information return be filed?

Annual information returns on capital refunds withdrawable in 2024 must be filed by 31 January 2025.

Distribution of assets from an unrestricted equity fund is considered income for the tax year during which it became available for withdrawal according to the AGM decision.

You must report the capital refunds that became available for withdrawal during the tax year, even if the beneficiary has not yet withdrawn their capital refund.

3 Detailed instructions

Beneficiary’s personal ID or Business ID (083)

If the beneficiary does not have a Finnish personal ID, enter an artificial ID in the format ddmmyy-UUUU, ddmmyy being the beneficiary’s date of birth. If the beneficiary’s date of birth is unknown, enter 010101-UUUU as the artificial ID.

If a foreign corporation does not have a Finnish Business ID, enter 0000000-0 as the artificial ID.

Type of capital refund (241)

7 = distribution of assets from an unrestricted equity fund
8 = distribution of assets through reducing share capital
9 = distribution of assets through reducing a share-premium account or a reserve fund
5 = refund of membership fee
6 = capital refund, source not known

If assets are distributed from restricted capital, select type 8, 9 or 6.

Amount of capital refund (242)

Report the gross amount of the capital refund or other distributed assets. Enter the amount in euros. If you need to convert the amount from another currency into euros, use the average exchange rate published by the European Central Bank valid on the date when the capital refund was paid.

The Tax Administration usually calculates the capital gains on the distribution of retained earnings by deducting from the capital refund the acquisition price (250) and acquisition costs (252) given in the annual information return.

Foreign tax withheld at source on capital refund (243)

If tax has been collected on the distributed assets elsewhere than in Finland, state the amount of tax collected. Enter the amount in euros. If you need to convert the amount from another currency into euros, use the average exchange rate published by the European Central Bank valid on the date of payment.

Date when the capital refund became withdrawable (244)

If the AGM has not set the date starting which the distributed assets are available for withdrawal, enter the date of the AGM in field 244.

The quantity of the shares or interests for which capital refund was paid (245)

If assets paid to the company’s unrestricted equity fund by a party other than the shareholder are returned to the said other party, enter 0 as the quantity of shares or interests.

Type of security (127)

Report the security type code of a non-listed company or cooperative according to the corporation's place of registered office. Report quoted shares traded on Nasdaq Helsinki as Finnish shares. Report shares quoted on other exchanges as foreign shares.

Name of the corporation that distributed assets (020)

Stating the name of the corporation that refunded capital is not mandatory.

Business ID of the corporation that distributed assets (010)

Enter the Business ID of the corporation that refunded capital.

Business ID of the account operator or other filer that submitted the return (080)

An account operator refers to a party that has been granted the right to make entries in the book-entry register.

Date when the investment was made or acquisition date of the shares or interests for which capital refund was paid (249)

If the investment date or acquisition date of the shares or interests is not known, enter 00000000.

Acquisition price deductible from the capital refund (250)

The total of the acquisition price and costs (252) cannot be higher than the amount of the capital refund (242).

Acquisition price to be deducted (251)

State whether the acquisition price of the shares or interests is known. If the price is known, report it under Acquisition price deductible from the capital refund.

Acquisition costs deductible from the capital refund (252)

If purchase costs or other acquisition costs have incurred from the purchase of the shares or interests, report the amount. The acquisition price (250) and the acquisition costs in total cannot be higher than the amount of the capital refund (242).

Name of beneficiary (085)

Enter the beneficiary’s name if their personal ID or Business ID (083) is an artificial ID.

4 Making corrections to the annual information return, and identifying details

A new return replaces the previous return if the identification details are identical. If the annual information return contains two or more specifications with identical identifying details, only one of the specifications will be taken into account in the tax assessment. If there is an error in the identifying details, first delete the incorrect specification. Then submit a new specification where the information is correct.

The identifying details of the annual information return on capital refunds taxable as capital gains are:

  • filing identifier (only for returns submitted as a file)
  • role of filer
  • beneficiary’s personal ID or Business ID
  • type of capital refund
  • date when the capital refund became withdrawable
  • the quantity of shares or interests for which capital refund was paid
  • type of security
  • name of the corporation that distributed assets (used as identifying information only if the name has been given)
  • Business ID of the corporation that distributed assets
  • Business ID of the account operator or other filer that submitted the return (used as identifying information only if the ID has been given)
  • acquisition date of the shares or interests for which a capital refund was paid
  • name of beneficiary (used as identifying information only if the name has been given)
  • identifier of the software that generated the file (only if the return has been submitted electronically).

For more information, see How to make corrections to an annual information return.

Page last updated 3/1/2024