Foreign companies in Finland – income taxes

These instructions are for nonresident foreign corporate entities. A foreign corporate entity is considered a resident taxpayer in Finland if it's place of effective management is in Finland. Read more about the place of effective management and a tax resident corporate entity’s tax obligations.

Permanent establishment for income tax purposes

A foreign company's operations in Finland may give rise to a permanent establishment in Finland in income taxation. In this case, the foreign company is liable to pay income tax to Finland on all income attributable to this permanent establishment.

A permanent establishment is a fixed place of business, through which the business of an enterprise is wholly or partly carried out. If the company has a fixed place of business in Finland that falls into one of the following categories, a permanent establishment may be formed:

• a place of management
• a branch
• a factory
• a workshop
• a mine, an oil or gas well, a quarry or any other site for extraction of natural resources
• a construction and installation project lasting longer than 6, 12 or 18 months (the time limits vary in different tax treaties)
• a dependent agent.

When must a foreign corporate entity file an income tax return?

A foreign corporate entity must file a tax return on its taxable income and deductible expenses if at least one of the following conditions applies.

The foreign corporate entity has:

• a permanent establishment in Finland
• immovable property in Finland (a real estate unit or shares in housing companies)
• a right to a profit share from a partnership in Finland
• a tax residence in a country that has no bilateral tax treaty with Finland.

Foreign corporate entities must also file a tax return if the Tax Administration requests it.

The tax return must be filed electronically

Foreign corporate entities must file the tax return Form 6U and any attachments electronically. Read the instructions for completing Form 6U carefully before filing the tax return. There are several ways to file the tax return electronically:

• Fill in and submit the tax return in MyTax.
• Submit a software-generated tax return in the Ilmoitin.fi portal.
• Submit information through your accounting software if it has an interface with the Finnish Tax Administration.

If you wish to add an attachment to your tax return after filing it, but there is no need to make changes to the tax return itself, only submit the new attachment. Do not submit the tax return again.

The tax return can be filed on paper only if there is a special reason, for example, if electronic filing is impossible due to technical difficulties.

You need a UID and a Suomi.fi authorisation for e-filing

A representative of a foreign corporate entity needs to have a Finnish personal ID or a UID and a Suomi.fi authorisation in order to use the Tax Administration’s e-services on behalf of the company. When you have an UID identifier and an authorisation, you can log in to the e-services with the Finnish Authenticator app and submit the tax return and any attachments electronically. Read more about obtaining a UID identifier and an authorisation.

Information to be submitted on Form 6U

A foreign corporate entity uses the tax return Form 6U to report the revenues, expenses, assets and liabilities of its permanent establishment. The section 'Calculation of taxable income (Business Tax Act)' is for reporting the business income and costs of the permanent establishment. Also, the withheld tax-at-source on the company's trade income must be filed on the tax return. The section 'Calculation of net worth' is for reporting the assets and liabilities of the permanent establishment.

Even if a foreign corporate entity does not have a permanent establishment in Finland, it is usually obligated to pay tax on the income it receives from real estate and housing-company apartments located in Finland. Income and expenses related to these are also submitted on Form 6U.

Photocopies of the permanent establishment's profit-and-loss account and balance sheet must be enclosed with the tax return. The profit-and-loss account and balance sheet must be drawn up as required by the Finnish Accounting Act.

More information:

• Income taxation of foreign corporate entities
• General Guidelines for the Attribution of Income to Permanent Establishment
• Instructions for completing tax return form 6U

When must a tax return be filed?

The tax return must be filed within four months after the end of the calendar month in which the company's accounting period ends. The accounting period of the permanent establishment of a foreign corporate entity is the same as the accounting period of the head office.

The tax return can be filed on paper only if there is a special reason, for example, if electronic filing is impossible due to technical difficulties. If the tax return is filed on paper, it must arrive at the Tax Administration by 4.15 pm on the due date.

A late-filing penalty is imposed if the tax return is filed after the deadline but before the company’s tax assessment has been completed. A late-filing penalty is also imposed if additions or corrections are made to the tax return on the company’s initiative after the filing deadline but before the completion of tax assessment. The amount of late-filing penalty is €100. Read more about penalties in income taxation (in Finnish and Swedish).

If there is no permanent establishment in Finland

If the foreign corporate entity believes its business activities in Finland do not give rise to a permanent establishment for income tax purposes, it must state this in section 2 of Form 6U and enclose a completed Form 80 (Account of local operations - Foreign corporate entity). All foreign corporate entities operating in the construction, installation and assembly sectors must report their operations and contracts in Finland with Form 80 every year.

The tax return with the attached form 80 must be filed within four months from the end of the month in which the accounting period ends.

The tax return and Form 80 do not need to be filed if the foreign corporate entity has received a binding advance ruling from the Tax Administration stating that it is not considered to have a permanent establishment in Finland. However, if there have been any changes in the corporate entity's operations or if the Tax Administration has requested it to provide more information, the entity must file a tax return with Form 80.

Tax assessment decision provides the amount of tax refund or tax to be paid

The Tax Administration confirms the final amount of income tax for the fiscal year based on the filed tax return.

The tax assessment decision is sent to the foreign corporate entity after the Tax Administration has processed the information on the tax return and completed the tax assessment process. The tax assessment decision provides the amount of tax refund or tax to be paid (residual tax).

Every taxpayer has its own end date for tax assessment which is stated on the tax assessment decision. However, for foreign corporate entities, the assessment will end no later than 10 months after the end of the last calendar month of the accounting period.

If more than one accounting period has ended during the calendar year, the end date of assessment is no later than 10 months after the end of the month when the most recent accounting period ended.

After completing of the assessment process, the Tax Administration sends the decision letter to the foreign corporate entity.

The tax assessment decision may change before the end date of the assessment procedure, if the foreign corporate entity sends additional information or corrects the tax return, or the Tax Administration informs the entity that the assessment procedure is still ongoing. The Tax Administration sends a new tax assessment decision in these situations. The final result of the tax assessment is shown on the most recent decision letter.

Read more about paying the residual tax (in Finnish and Swedish).