Finnish business in cross-border and international tax situations
This section deals with tax issues arising for Finnish businesses in cross-border and international situations.
Finnish companies must pay tax in Finland on their income from both Finnish and foreign sources. Income from abroad is assessed under Finnish tax legislation; accounts must be presented in accordance with the Finnish Accounting Act.
If you are treated as having a permanent establishment in a foreign country, income attributable to it is assessed under the local tax rules of that country. Similarly, local rules are applied to the arrangement of its accounting and bookkeeping system.
In international situations, the taxation of dividends, interest and royalties depends on the provisions of the bilateral treaty for avoidance of double taxation signed between Finland and the domicile country of the payer. Similarly, the provisions of the treaties also affect the foreign tax treatment of Finnish-sourced dividends, interest and royalties received by beneficiaries abroad.
If you are at risk of being taxed twice on the same income by Finland and a foreign country, you can enter details of it on your corporate tax return form to seek relief from double taxation. If your income from abroad has not been taxed as provided for in the applicable tax treaty, you should seek a refund from the country concerned.
Foreign companies as contractors
Finnish companies may have to withhold tax at source on payments to foreign companies for work carried out in Finland. If the foreign company is not on the Prepayment Register or does not show you a zero-rate tax card, you must withhold and pay tax at source.
If you hire leased employees, you must report the name and address of every foreign leasing agency you have contracted to provide people to work for you in Finland, together with details of any individuals from abroad concerned. This reporting requirement applies to all leased employees regardless of whether they are from countries with tax treaties permitting Finnish taxation of their earnings or not.
See below for further guidance.
International operations — other pages
- Dividends, interest and royalties from abroad
- Relief for double taxation
- Tax treatment abroad not in line with the tax treaty
- Mutual Agreement Procedure (MAP)
- Reportable cross-border arrangements (DAC6)
- Buying services from a foreign company
- Operating a business abroad
- Employees posted overseas
- Employees from overseas
- Work done by foreign leased employees
- Credit calculator for foreign tax at source