A performing artist’s tax treatment in international situations

This is an unofficial translation. The official instruction is drafted in Finnish (Esiintyvän taiteilijan verotus kansainvälisissä tilanteissa, record number VH/2488/00.01.00/2021) and Swedish (Beskattning av uppträdande artister i internationella situationer, record number VH/2488/00.01.00/2021) languages.  

This guidance concerns the tax treatment of performing artists in international situations. A performing artist can themselves agree on a performance and receive the remuneration directly, or the agreement can be signed by and remuneration paid to a corporate entity acting on the artist’s behalf. This guidance concerns the taxation of natural persons and corporate entities receiving remuneration for an artist’s performance

The taxation of freelancers is discussed in the Tax Administration’s guidance on the taxation of freelancers (available in Finnish and Swedish, link to Finnish). The issues discussed in the current guidance also concern freelancers.

The examples given are imaginary and do not necessarily describe a procedure that an individual country of source follows when withholding tax at source.

1 Resident and nonresident tax liability

The Finnish income tax system has two categories of tax liability: resident tax liability and nonresident tax liability. According to the act on income tax (Tuloverolaki 1535/1992, hereafter the income tax act), a person or corporation residing in Finland during the tax year is considered a resident taxpayer. As a rule, a person is deemed to reside in Finland if their primary residence is in Finland or if they stay in Finland for more than six months (§ 11, subsection 1 of the income tax act).

Finnish citizens emigrating from Finland are considered to reside in Finland and to remain resident taxpayers for a period of three years following the year of emigration. A person can be deemed to be a nonresident before the end of the three-year period if they can show that they have not had any substantial ties to Finland during the tax year.

A corporation is a resident taxpayer if it is registered in Finland or has been established under the laws of Finland. A corporation established or registered abroad but having its place of effective management in Finland is also regarded as a resident taxpayer (§ 9, subsection 1 of the income tax act).

All parties who are not resident taxpayers are nonresident taxpayers. A person who does not live in Finland or repeatedly stay in Finland for more than six months is a nonresident taxpayer. A corporation registered abroad and having its place of effective management outside Finland is a nonresident taxpayer in Finland.

The resident and nonresident tax liability of natural persons is discussed in greater detail in the Tax Administration’s guidance Tax residency, nonresidency and residency in accordance with a tax treaty – natural persons. The resident and nonresident tax liability of corporations is discussed in greater detail in the Tax Administration’s guidance Resident and nonresident tax liability of corporate entities.

2 Provisions of the incom act

Artists who are resident taxpayers pay tax to Finland both on income received from Finland and on income received from other countries (§ 9, subsection 1, paragraph 1 of the income tax act). Taxable income refers to income received by an artist in cash or as a benefit of monetary value within the limitations specified by law (§ 29 of the income tax act). The taxation of a resident artist’s income in international situations is discussed in more detail in chapter 5 below.

A nonresident artist or corporation is liable to pay tax to Finland only on income received from Finland (§ 9, subsection 1, paragraph 1 of the income tax act). According to § 10, paragraph 4 b of the income tax act, income received from Finland refers to income earned by the artist from a personal activity either in Finland or on board a Finnish vessel. If a nonresident corporation has a permanent establishment in Finland, it is liable to pay income tax on all income attributed to the permanent establishment (§ 9, subsection 1, paragraph 3 of the income tax act).

The taxation of a nonresident person’s and corporation’s income received from Finland is discussed in greater detail in chapter 6 below.

For more information about reporting income received by performing artists, see the Tax Administration’s guidance Reporting data to the Incomes Register: international situations, chapter 5.4.

3 Performing artists

3.1 Definition of performing artist

The Finnish income tax legislation does not provide a definition for an artist or their personal activity. When the provisions on artists were included in the income tax act and the act on the taxation of nonresidents' income (Laki rajoitetusti verovelvollisen tulon verottamisesta 627/1978, hereafter the tax-at-source act), the word “personal” was used – according to the Government proposal (HE 76/1995) – to make it clear that the provisions do not apply to income that is based on other than personal activity, such as royalty income from advertising or sponsorship contracts with no link to a certain performance.                                                                                 

The terms “artist” and “personal activity” have the same meanings in Finland’s national income tax legislation as in tax treaties. The OECD Model Tax Convention (on Income and Capital) and its commentary can therefore be used as support in the interpretation of “artist” and “personal activity”, where taxation of income in international situations is concerned.

Further, article 17 of the OECD Model Tax Convention does not exactly define “artist” (or “entertainer”). It only cites examples such as theatre, motion picture, radio and television artists and musicians. According to the commentary, the list of examples is not exhaustive. The matter is always setted on the basis of case-specific deliberation, the overall situation, and the commentary of article 17 of the OECD Model Tax Convention.

The category of performing artists clearly contains at least the following: actors (theatre, television, radio), musicians, singers, dancers, circus performers and ringmasters, comedians, DJs, magicians, conductors, and authors or poets reading or reciting aloud.

Instead, the following are usually not regarded as performing artists: commentators and presenters (radio, television, live), cameramen, coreographers, designers (set, lights, costumes), fashion designers, photographers, set designers, technical staff, models, interviewers (television, radio, live), interviewed guests, reporters, conference speakers, architects, composers, visual artists, inventors, journalists, politicians, producers, managers and authors.

3.2 Performing artists’ personal activity

Artists may receive various types of income. They may receive wages, remuneration, rewards, advertising income, sponsorship income and royalties, for example.

Income based on an artist’s activity includes, for example, wage income based on the artist’s personal performance. In addition, reimbursement of travel expenses, for example, is treated as income based on the artist’s personal activity.

Income earned from personal activity also includes rewards and bonuses that are based on the artist’s performance. Practising and preparation are usually an integral part of the artist’s performance, and income earned from them is also income from the artist’s personal activity. According to the commentary of the OECD Model Tax Convention, advertising and sponsorship income can also be regarded as income earned from the artist’s personal activity when the income is closely linked to the artist’s activity in the country of source.

The artist’s personal activity refers to their personal performance with artistic or entertaining elements. Income earned from the artist’s personal activity can therefore be considered to mean income received from an actual performance. In some situations, other income may also be regarded as resulting from the artist’s personal activity if it is very closely linked to the artist’s performance in the country of source. Such activity may be, for example, practice carried out in the country of source before the performance.

If the artist’s personal performance is cancelled and they receive compensation for the cancellation, the tax convention’s article on entertainers does not apply. Instead, the right to impose tax on the compensation is determined by other articles (article on wage income or business income).

In addition to wages, artists may be paid bonuses. If a bonus is paid for a certain performance, it is taxable income in the country of performance.

An artist may also be paid for standing by. The remuneration can be considered to be associated with the performance irrespective of whether the artist standing by has actually performed or not. Income earned from standing by is treated as income received from the artist’s personal activity in accordance with the article on artists.

Remuneration paid to an artist may also cover production expenses associated with the performance. In addition, the remuneration may include a fee payable to an agent or a manager. Such fees are included in the remuneration paid to an artist for their personal activity. When provisions on remuneration paid to artists were added to the income tax act and the tax-at-source act in 1996, the Government Proposal (HE 76/1995 vp) specifically stated that the remuneration shall cover agents’ fees, for example. If an agent has signed a separate contract on the basis of which the payer pays the agent’s fee directly to the agent, the fee is not regarded as income received from an artist’s personal activity.

An artist may also be paid royalty income. Royalty income refers to compensation paid for copyright and the exercise of copyright. When an artist receives royalty income for a movie, a programme or a piece of music, it is not income earned from a personal activity. Instead, it is royalty income from copyright.

Advertising, sponsorship and promotional income may be either business income or income from an artist’s personal activity. If advertising or sponsorship income is linked to the artist’s performance in the country of source, it can be regarded as income from the artist’s personal activity. For example, when a singer is on tour, merchandise carrying the singer’s name – T-shirts, posters, etc. – may be for sale at the tour venues. The artist may receive part of the sales revenue. This is promotional income and it is usually not treated as income from the artist’s personal activity, not even when it is associated with an event such as a concert. Instead, it is treated as royalty income or business income.

Pension and other insurance-based payments are not income earned from an artist’s personal activity. They are subject to the provisions on pension income or other income of both national legislation and tax treaties. Pension income, for example, will accrue on the basis of income earned from an artist’s personal activity. However, it is not income from the artist’s personal activity but is based on different pension arrangements.

Artists may also be awarded with scholarships or grants. These are usually associated with support for the artist’s studies or other activities, especially where aspiring artists are concerned. Scholarships and grants are subject to the provisions on scholarships and grants. They are not treated as income earned from the artist’s personal activity. If remuneration or rewards are paid as scholarships or grants, they are not actual scholarships or grants. Consequently, the provisions on rewards and remuneration are applied.

It is irrelevant whether remuneration for an artist’s personal activity is paid to the artist themselves or to someone else. Even if the remuneration is paid to an orchestra, for example, on behalf of the artist, it is still income earned from the artist’s personal activity if it is based on the artist’s performance.

4 Tax treaties

4.1 General matters about the tax treaty’s effect on the taxation of an artist’s income

According to Finland’s internal legislation, Finland can impose tax on a resident artist’s income from Finland and from abroad and on a nonresident artist’s income from personal actitities conducted in Finland. If Finland has a tax treaty with the taxpayer’s country of residence, the provisions of the tax treaty may limit Finland’s taxation right.

The tax treaties concluded by Finland are primarily based on the OECD Model Tax Convention. The Model Tax Convention and its commentary can be used as support in the interpretation of tax treaties made between different countries. Article 17 of the Model Tax Convention concerns artists (“entertainers”). The provisions of the article are applied to income earned from the artist’s personal activity, usually notwithstanding the provisions of the tax convention’s articles on other income types (such as business income, wage income or royalty income).

As a rule, article 17 also assigns the right of taxation to the country in which the artist conducts their personal activities. Such a country is here referred to as the country of source. Most tax treaties separately stipulate whether the artist’s country of residence or the country of source has the primary right to collect tax on income that the artist earns from their personal activity. Tax treaties usually assign the taxing right on income earned from the artist’s personal activity to the country of sourc

4.2 Tax treaties’ articles concerning artists

Article 17 of the OECD Model Tax Convention comprises special provisions on artists. By virtue of article 17, artists can be taxed in the country where they conduct personal activity, notwithstanding the provisions on business income and wage income. It is irrelevant from which country the actual payment is made. Article 17 of the OECD Model Tax Convention of 2017 states as follows:

   Entertainers and sportspersons

1. Notwithstanding the provisions of Article 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that resident’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson acting as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Article 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

If an artist’s performance is paid for by a public sector organisation, article 19 on public services is applied instead of article 17, unless otherwise provided by the tax treaty. Under article 19, paragraph 3 of the Model Tax Convention, however, the provisions of articles 15, 16, 17 and 18 are applied to wages, pensions and other such remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

In income tax treaties concluded by Finland, the provisions on the taxing right and the order of the articles may differ from the OECD Model Tax Convention, on account of which the provisions of the applicable tax treaty must always be separately checked in the tax treaty concerned (if needed, see the Tax Administration’s guidance on Tax treaties).

For example, the said provisions in the tax treaty between Finland and the United States of America (the USA) are different, as they are based on the U.S. Model Tax Convention. Further, in many tax treaties that Finland has concluded with other countries, the article concerning artists and sportspersons includes paragraph 3, which in not included in the OECD Model Tax Convention (for details, see chapter 4.5 below).

4.3 Recipient is the artist themselves

Article 17, paragraph 1 of the OECD Model Tax Convention concerns situations where income accrues directly or indirectly from an artist’s personal activity. In some situations, remuneration for the artist’s activity is not paid to the artist themselves. Instead, the whole remuneration may be paid to a manager or an agent, for example, who will then pay the artist’s share of the remuneration to them. Paragraph 1 of article 17 also covers situations where a manager, for example, receives the remuneration on the artist’s behalf. However, if the agent or manager is paid for organising the artist’s performance, paragraph 1 of article 17 does not apply.

In some cases, the artist does not receive remuneration based on a certain performance: for example, a member of an orcherstra may be paid wages rather than a separate remuneration for each performance. The country of source then has the right to collect tax on the part of the musician’s wages that is attributed to the exercise of personal activities in the country of source. Likewise, if the artist exercises activities through their wholly-owned company, the part of income paid to the company that is attributed to the artist’s personal activity may be taxed in the country of source.

4.4 Recipient is other than the artist

Paragraph 2 of article 17 of the OECD Model Tax Convention is applied in situations where the income an artist or a sportsperson earns from personal activity is not received by the artist themselves but by another person and where the provisions of paragraph 1 of article 17 cannot be applied due to the country’s national legislation.

By virtue of paragraph 2 of article 17 of the tax convention and notwithstanding the provisions on business income and wage income, the income may be taxed in the Contracting State in which the artist exercises their activities even in situations where the payment is not made to the artist themselves but to another party, such as an orchestra or a company.

According to Finland’s internal legislation, if remuneration based on an artist’s or a sportsperson’s personal activity is paid to a foreign corporation or a person who does not reside in Finland, only the corporation or person is deemed liable for tax at source (§ 3, subsection 8 of the tax-at-source act). For purposes of tax at source, only the party receiving the payment – for example, an orchestra or a company – is then liable to pay tax.

4.5 Visit funded by a public sector organisation

In many of Finland’s tax treaties, article 17 also includes paragraph 3, which is not included in the OECD Model Tax Convention.  According to paragraph 3 of article 17 of the tax treaty, the provisions of paragraphs 1 and 2 of the said article are no applied if a visit in the country of source is funded wholly or mainly from the public funds of the other contracting state or its local authority. Further, according to some tax treaties, the provisions of paragraphs 1 and 2 are not applied when the artist or sportsperson exercises their activities in the country of source on the basis of a cultural agreement or cultural or sports exchange.

In order that the provision of article 17, paragraph 3 could be applied, the artist or sportsperson must give an account either of an existing cultural agreement or programme or of the visit’s public funding (must be direct public funding).

4.6 Income received from a public sector organisation

According to the tax treaty provisions on wages received from a public sector organisation, wages from the public sector are usually taxed in the country of source. The country of residence can also tax the income and then eliminate double taxation in accordance with the tax treaty provisions. However, many tax treaties have provisions differing from the main rule. According to them, the taxing right rests with the country of residence under the tax treaty if the work is done in the employee’s country of residence and they are a citizen of that country or they have not become a resident only to do the work in question.

The tax treaty provision on income received from a public sector organisation is a special provision in relation to the provision on artists. If an artist has signed a contract of employment with a public sector organisation, the income they receive is subject to the provision on income from a public sector organisation instead of the provision on artists.

You cannot make any conclusions on the nature of a public sector organisation merely on the grounds that it is a “public sports club” or a “city theatre”. Further, the nature of the organisation is not decided merely on the basis of ownership or authority. The decisive point is that the organisation is a public sector organisation under national legislation.

Even if a wage or remuneration is paid by a city theatre or state opera in Finland, for example, it is not always regarded as income received from a public sector organisation. Activities are often conducted by a party other than a public sector organisation (e.g. a municipality). An orchestra or a threatre may be maintained by a separate company, association or foundation. Even if such a corporation receives almost all of its funding from a public sector organisation, it does not make it a public corporation. For example, the Finnish National Opera and Ballet is not a public sector organisation because its operation is governed by the act on foundations (Säätiölaki 487/2015) and conducted by a foundation that has not been separately prescribed as a public sector organisation.

Where foreign orchestras are concerned, the matter is resolved on the basis of the country’s legislation and the definition of a public sector organisation in that country. For example, broadcasting companies of different states in Germany and orchestras operating either in connection with them or separately are often prescribed by law to be public sector organisations. The defitions given in the tax treaty should also be viewed. In the tax treaty between Finland and Japan, for example, the term “contracting state” also refers to all entities wholly owned by the Japanese Government.

There may be a difference in the tax treatment of amounts paid by a public sector organisation and amounts paid in connection with a business carried out by a public sector organisation, so it is important to determine the income type.  The obligation to show that remuneration has been paid by a public sector organisation is carried by the artist. If article 19, paragraph 3 of the tax treaty contains a reference to article 17, article 17 is usually applied to income earned from an artist’s or sportsperson’s personal activity in connection with a business carried out by a public sector organisation, even if the payer is a public sector organisation.

4.7 Tax treaty with the United States

The income tax treaty concluded between Finland and the USA differs from Finland’s other tax treaties. Instead of the OECD Model Tax Convention, the tax treaty is based on the U.S. Model Tax Convention.

According to article 17, paragraph 1 of the said tax treaty, income from an artist’s personal activity is taxed only in the artist’s country of residence if the total income received by the artist during the calendar year, including reimbursement of expenses, does not exceed $20,000 or an equivalent amount in euros. If the income exceeds the threshold, the total remuneration is taxable in the country of performance. Under article 17, paragraph 1, the amounts calculated towards the $20,000 threshold also include all the artist’s expenses that have been reimbursed to them or paid on their behalf, such as hotel bills and airline tickets. The provisions of the article are applied to artists who are deemed to reside in the United States while performing artistic activities in Finland.

Like paragraph 2 in the OECD Model Tax Convention, article 17, paragraph 2 of the tax treaty between Finland and the USA stipulates that income from an artist’s personal activity can be taxed, notwithstanding the provisions on business income, even when it is paid to a party other than the artist. However, article 17, paragraph 2 of the tax treaty with the USA is not applied if the artist does not have an interest in the company that receives the payment for the artist’s activities.  In that case, the provisions of article 7 on the taxation of business income are applied.

Consequently, article 17, paragraph 2 of the tax treaty between Finland and the USA cannot be applied if, for example, a circus or an orchestra coming to perform in Finland has performers who receive wages from the circus or orchesta and do not have an interest in the company. Even though the provisions of article 17, paragraph 2 cannot be applied to remuneration paid to the circus, this does not mean that income accured from an artist’s activities could never be taxed in Finland. The provisions of article 17, paragraph 1 can be applied to wages paid to the circus’s performers if the wages exceed $20,000 per performer.

5 Taxation of an artist living in Finland

5.1 Income taxation and elimination of double taxation

5.1.1 General information about the elimination of double taxation

Resident taxpayers must pay tax to Finland on income they receive from Finland and abroad. The income an artist receives from abroad is usually also taxed in the country in which the artist has exercised their personal activity. Double taxation arises when the same income is taxed in both the country of source and the income earner’s country of residence. The double taxation is eliminated in the income earner’s country of residence in accordance with the provisions of the tax treaty.

The act on elimination of international double taxation (Laki kansainvälisen kaksinkertaisen verotuksen poistamisesta 1552/1995, hereafter the act on the elimination method) contains provisions on the elimination of double taxation of people living in Finland. In situations where no tax treaty exists, Finland will eliminate the double taxation as the country of residence in accordance with the provisions of the act on the elimination method. According to the act on the elimination method, double taxation is primarily eliminated by the use of the credit method. Tax treaties may include provisions both on the credit method and on the exemption-with-progression method. Income earned from an artist’s personal activity is subject to the article on artists, and double taxation is then usually eliminated by means of the credit method.

In the credit method, tax paid abroad is credited from the tax imposed on the same income in Finland. As a rule, the tax must have been imposed on the same taxpayer who is claiming the credit. In taxation practice, the only exception to this is when the taxpayer is a partner in a Finnish partnership or the like, which has been taxed as a separate taxpayer abroad. In such a case, the tax paid abroad by the partnership may have been credited in the partners’ taxation.

Sometimes the tax paid to another country cannot be credited in full, for example because the amount of the foreign tax is higher than the maximum credit for the tax year. Under § 5 of the act on the elimination method, the uncredited amount can be credited, at the taxpayer’s request, during the next five tax years from tax imposed on income derived from the same income source and falling in the same income category.

If the unused credit has been confirmed in taxation, the Tax Administration will deduct it automatically during the next five years. Unused credits related to foreign tax are deducted in chronological order. After the unused credits related to foreign tax have been deducted, the Tax Administration will deduct the foreign tax creditable for the current tax year. Taxpayers cannot deduct their foreign taxes as expenses (the Supreme Administrative Court’s decision KHO 2004:12).

Crediting of tax must be requested on the tax return before the Tax Administration completes the tax assessment. A natural person reports the income earned and tax paid abroad either in MyTax or on paper using Form 16A.  If the originally imposed foreign tax is later adjusted because of an appeal, for example, or because the tax withheld does not match with the final amount of tax, § 9 of the act on the elimination method requires that the taxpayer must report the changes to the Finnish Tax Administration for purposes of adjustment.

Companies can claim crediting of taxes paid abroad by completing Form 70 either in MyTax or in the Ilmoitin.fi service.

Another alternative is to submit a claim for adjustment after the tax assessment has ended.

Read more about the elimination of double taxation in the Tax Administration’s guidance Relief for international double taxation.

5.2 Different forms of activity

An artist can agree on a performance directly with the client. In practice, agreements on artists’ performances are also made by agents acting for the artists and by event agencies acting on their own account. Artists have various forms of activity, and there are multiple types of contracts in use. Choosing the form of activity may have an impact on taxation. Different types of situations are described below by way of example.

The examples are for situations where the country of source withholds tax at source. The presumed tax of the country of source is used in the examples. The Finnish Tax Administration does not take a stand on how the tax is actually withheld or how the tax treaty is applied in the other country.

5.2.1 Artist receives remuneration for their performance directly to themselves

The tax treaties grant the country of source the right to tax the income that artists earn from personal activities conducted in the country of source. Double taxation is eliminated in the income earner’s country of residence in accordance with the provisions of the tax treaty and the act on the elimination method.

5.2.2 Agent acting for the artist

An agent or similar can act for the artist. The artist and the agent may have a mutual agreement that the agent can make contracts on performances with a foreign client, for example, on the artist’s behalf.

The whole remuneration paid to the artist for their performance is treated as the artist’s income, even if the agent acts for the artist and the tax collected by the country of source is credited in the artist’s taxation. In addition, the remuneration that the artist earns from the performance may include a fee payable to the agent. In that case, the agent’s fee is regarded as the artist’s deductible expense for the production of income, associated with the performance.

5.2.3 Event agency has signed a contract on the artist’s performance in its own name

The provisions of article 17 of the OECD Model Tax Convention are applied to income earned from the artist’s personal activity, usually notwithstanding the provisions of the tax convention’s other income type articles, such as the articles on business income or on wage income. By virtue of article 17, paragraph 2 of the Model Tax Convention, the income recipient can be taxed even if the payment is not made to the artist themselves but to the artist’s own company or another legal person, for example.

Remuneration paid to a company may also include expenses associated with producing the performance. Such expenses are included in the remuneration paid for the artist’s performance. The tax on the artist’s performance withheld under article 17 and paid by the company to the country of source is credited to the company from the tax imposed on the same income in Finland.

If the event agency has signed a contract with a foreign client on the artist’s performance in its own name, the payment is considered to be received by the event agency. In that case, the income under article 17 of the tax treaty on the artist’s performance is treated as the event agency’s income, and the tax withheld at source is credited to the event agency in accordance with the act on the elimination method. The credited amount cannot be greater than the amount of tax imposed in Finland on the income earned from the foreign country. Expenses for the production of income are deducted from the income.

An event agency that has signed a contract with a client on an artist’s performance in its own name can pay wages to the artist in its employ for the performance. Because the remuneration for the performance is paid by the client to the event agency and taxed as the event agency’s income, the tax at source withheld abroad cannot be credited from the tax collected on the wage income of the artist residing in Finland. Alternatively, the event agency can pay the artist trade income. Such trade income paid by a Finnish event agency to an artist residing in Finland does not qualify for the crediting of tax withheld at source in another country.

5.2.4 An artist and an event agency together have made a contract with a client

If both an event agency and an artist have made a contract with a foreign client, agreeing that the remuneration is partly the event agency’s income and partly the artist’s income, the tax withheld at source on the amount paid to the artist can be credited in the artist’s or their company’s taxation.

In such a case, the event agency’s part of the income is not regarded as remuneration for the artist’s performance, and the country of source does not have the taxing right according to article 17 of the OECD Model Tax Convention concerning artists. The income is the event agency’s business income. If tax has been withheld at source on the event agency’s part of the income, it cannot be credited to the agency in Finland (unless the event agency has a permanent establishment in the country of source). On account of this, it is important that the contract and the invoice specify what the payer is invoiced for, and what part of the invoiced amount relates to the artist’s personal performance and what part is the event agency’s business income.

If the country of source has withheld tax contrary to the tax treaty, you must request a refund of the tax at source from the country in question. Refunding of an excess amount of tax at source is discussed in greater detail in the Tax Administration’s guidance “Taxation abroad contrary to tax treaty”.

Read more about the elimination of double taxation in the Tax Administration’s guidance Relief for international double taxation in the taxation of corporations (available in Finnish and Swedish, link to Finnish).

5.3 Travel expenses

5.3.1 Reimbursement of work-related travel expenses

In accordance with § 71 of the income tax act, taxable income does not include reimbursement of work-related travel expenses, a daily allowance, a meal allowance or an accommodation allowance that an artist receives from their employer. Work-related travel refers to a trip made by the taxpayer to a specific place of work to perform work-related tasks.

Under the income tax act, reimbursement of travel expenses is exempt from tax only if received from the employer. Travel expenses reimbursed to a recipient of trade income or roalties are therefore not exempted from tax.

In § 71, subsection 3 of the income tax act, the tax exemption of expense allowances is extended to apply to the partly tax-exempt daily allowance, accomodation allowance and reimbursement of travel expenses received from a non-profit organisation for trips made by the assignment of the said organisation, with certain limitations in situations where the recipient of the allowance is not employed by the payer or otherwise receive wages from the payer. This provision also applies to artists. 

The taxation of the travel expenses reimbursed to an employee by their employer and, for example, the terms “primary place of work” and “special place of work” are discussed in the Tax Administration's detailed guidance on the reimbursement of travel expenses in taxation (available in Finnish and Swedish, link to Finnish).

The Tax Administration issues a decision on tax-exempt reimbursement of travel expenses annually, specifying the reasons for tax-exempt reimbursement and the amounts. See, for example, Decision of the Tax Administration on tax-exempt allowances for travel expenses.

An artist who conducts business in the form of a company may receive tax-exempt reimbursement of travel expenses from their company (e.g. daily allowances or kilometre allowances), as long as the conditions for tax-exempt reimbursement are met.

Issues pertaining to reimbursement of travel expenses are discussed in the Finnish Tax Administration’s guidance on the reimbursement of travel expenses in taxation (in Finnish and Swedish, link to Finnish) and the tax prepayment issues related to voluntary activities of non-profit organisations and public sector entities (in Finnish and Swedish, link to Finnish), and in the Decision of the Tax Administration on tax-exempt allowances for travel expenses.

5.3.2 Deducting travel expenses in taxation

If the payer has not reimbursed the artist’s travel expenses, the artist can deduct the expenses on their tax return as expenses for the production of income. The actual expenses can also be deducted as expenses for the production of income if they have been reimbursed but the reimbursement is regarded as the artist's taxable income.

Travel and accommodation expenses related to work trips are deducted according to the actual amounts, without a personal liability threshold, a maximum amount or a requirement of using the least expensive means of transport. However, the taxpayer is entitled to the deduction only if the expenses are higher than the deduction for the production of income automatically made by the Tax Administration. If the wage earner has made a business trip using non-public transport and does not give an account of the actual travel expenses, they can deduct an expense amount specified in the Tax Administration's decision on travel expenses (available in Finnish and Swedish, link to Finnish).

In addition, the artist can deduct their increased living expenses due to the business trip. The increased living expenses include, for instance, reasonable additional meal expenses, additional expenses for keeping in touch with the family and other similar expenses due to the business trip. The increased living expenses can be deducted according to the actual amounts. If the artist shows that expenses have incurred but is unable to determine the actual amount of the increased living expenses, the deduction is made in accordance with the Tax Administration guidelines for harmonisation of taxation (available in Finnish and Swedish, link to Finnish).

Deducting the expenses for the production of income is discussed in the Tax Administration’s guidance on deducting travel expenses in wage earner’s taxation (available in Finnish and Swedish, link to Finnish) and on the taxation of freelancers (available in Finnish and Swedish, link to Finnish).

5.3.3 Tax withholding on remuneration paid to a recipient of trade income

Although travel expenses reimbursed to recipients of trade income or royalties are not exempt from tax, no tax is withheld on them when the recipient is a natural person. See the Tax Administration decision’s on the relief from the obligation to withhold taxes (available in Finnish and Swedish, link to Finnish). However, if tax is withheld on trade income because the recipient is not in the prepayment register, travel expenses can be reimbursed to a natural person without withholding tax.

During the tax assessment process, any reimbursed expenses on which no tax has been withheld will be added to the trade-income recipient’s income, and the recipients can deduct the expenses based on an account they give. Under § 55 of the act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968), self-employed individuals can make an additional deduction from work-related travel outside their usual area of operation. Read more about the additional deduction in the Tax Administration’s detailed guidance on deducting self-employed individuals’ and agricultural operators’ travel expenses (available in Finnish and Swedish, link to Finnish).

6 Taxation of nonresident artist

6.1 General

Nonresident individuals are liable to pay tax to Finland only on their Finnish-sourced income. According to § 10, subsection 4 b of the income tax act, Finnish-sourced income refers to income from an artist’s personal activity in Finland or on board a Finnish vessel. § 10, subsection 4 b of the income tax act does not contain a specific provision according to which the activity should be performed for an employer or principal in Finland. If the income is earned from the artist’s activity in Finland, it is treated as Finnish-sourced income whether it is paid in Finland or abroad (the Supreme Administrative Court’s decision KHO 2005:31).

Nonresident artists are taxed according to the tax-at-source act. They pay tax to Finland only on Finnish-sourced income. According to § 3, subsection 1 of the tax-at-source act, tax at source must be paid on remuneration for the artist’s personal activity, regardless of whether it is paid directly to the artist or to another party. The party to whom the payment is made is liable for the tax (§ 3, subsection 8 of the tax-at-source act). 

If Finland has a tax treaty with the taxpayer’s country of residence, the provisions of the tax treaty may limit Finland’s taxation right. The final tax at source may be withheld on the payment received by the artist, or the income may be taxed progressively in the order of the act on assessment procedure (Verotusmenettelylaki 1558/1995). The tax treatment of the income and the tax rate applied depend, for example, on whether the taxpayer is a natural person or a corporation. For this reason, the Finnish tax treatment of payments made to individual taxpayers and to corporate taxpayers will be discussed separately below.

For details on how to report income paid to nonresidents to the Incomes Register, see Reporting data to the Incomes Register: international situations.

6.2 Individual taxpayers

6.2.1 Taxation at source, progressive taxation at source or progressive assessment procedure

Income earned by a nonresident artist from personal activity performed in Finland can be taxed in three different ways: by withholding tax at source or progressive tax at source or by applying the progressive assessment procedure.

1. Tax at source: applies to all income earners and to taxpayers living in all countries.

The OECD Model Tax Convention grants the country of source the right to tax the income that an artist earns from their personal activity in the country of source. However, provisions of an individual tax treaty may limit Finland's right to withhold tax.

According to § 7, paragraph 5 of the tax-at-source act, tax withheld at source on payments made on the basis of an artist's personal activity is usually 15%. The tax is withheld regardless of whether the remuneration is paid directly to the artist or to another party. No tax-at-source deduction or other deductions are made.

As a rule, tax at source is withheld on the whole payment. For example, if a Finnish client has signed a contract with a foreign event agency for the performance of a foreign artist in Finland, the event agency is considered to receive the whole payment.

If the Finnish client has signed separate contracts with the foreign event agency and the artist, the amount paid to the event agency will not be taxed at source because it is not part of the remuneration paid for the artist's personal activity but the event agency’s business income. Tax at source is withheld on the amount paid to the artist.

2. Progressive tax at source: applies to natural persons residing in a country within the European Economic Area (EEA).

15% is usually withheld at source on payments made on the basis of an artist’s personal activity, and no deductions are made before the withholding. According to § 7 a of the tax-at-source act, however, expenses with a direct financial link to the remuneration can be deducted on the tax-at-source card for an artist residing in an EEA country. The artist must claim the deduction of the expenses.

Under § 15, subsection 2 of the tax-at-source act, when tax at source is determined, State tax is calculated according to the progressive income tax schedule. When determining municipal tax, the average income tax rate of municipalities is applied.

On tax.fi, you can find a tax-at-source calculator, where you can calculate whether it is more beneficial to withhold 15% at source from the gross income or to apply a progressive tax rate after deductions. If progressive taxation is more beneficial to the artist, they can submit a request that § 7 a of the tax-at-source act should be applied, giving an account of their direct expenses on the application for a tax-at-source card. The artist can also provide an account of the direct expenses afterwards and apply for a refund of tax at source on this basis. 

If the artist has applied for progressive taxation at source, it will be applied to all remuneration they receive on the basis of their personal activities during the same calendar year. The amount of progressive tax at source is calculated on the basis of the total amount of income earned during the calendar year.

3. Progressive taxation under the act on assessment procedure (Verotusmenettelylaki 1558/1995): applies to natural persons residing in a country within the EEA or in a country with which Finland has signed a tax treaty.

An artist residing in an EEA country or a tax treaty country can request that progressive taxation should be applied instead of taxation at source (§ 13, subsection 1, paragraph 6 of the tax-at-source act). In this case, taxation is similar to that of resident taxpayers. When the tax rate for earned income is calculated, income earned from countries other than Finland is also taken into account (§ 13 a and § 14 of the tax-at-source act). You can read more about nonresident taxpayers’ progressive taxation in Taxation of employees from other countries.

6.2.2 Reimbursement of travel expenses

According to § 4 of the tax-at-source act, reimbursement of a nonresident artist’s travel expenses is exempt from tax on the same conditions as a resident artist’s travel expenses reimbursed by the employer. Reimbursement of a resident artist’s travel expenses is discussed in chapter 5.2 Travel expenses.

Under § 10, subsection 1, paragraph 4 b of the income tax act; § 3, subsection 1 and § 7, subsection 1, paragraph 5 of the tax-at-source act; and article 17 of the OECD Model Tax Convention, travel expenses reimbursed to artists are treated as a payment that is based on the artists’ personal activities. Taxable reimbursement of expenses is usually subject to 15% withholding at source, in the same way as other payments made on the basis of the artists’ personal activities.

6.3 Corporate taxpayers

6.3.1 Taxation at source, and taxation of net income at source

Income earned by a nonresident artist from their personal activity in Finland can be taxed from a corporation in two different ways:

1. Tax at source: applies to all income earners and to taxpayers living in all countries.

When remuneration for an artist's personal activity is paid to a corporation, 15% is usually withheld at source in accordance with § 7, paragraph 5 of the tax-at-source act. According to § 9 of the said act, the tax is withheld when the payment is made. No deductions can be made before the withholding. Tax at source is withheld on income earned from the artist’s activities even if the corporation is in the prepayment register.

When tax is withheld, the provisions of the tax treaty apply if the income recipient gives the payer an account of their place of residence and of any other preconditions for the application of the tax treaty before the payment is made. For example, the recipient can present their tax-at-source card, or give their name, date of birth and any other official identifying information and address in the country of residence. If the corporation does not present a tax-at-source card or give the account described above, the payer withholds 15% at source on the income in accordance with § 7, subsection 1, paragraph 5 of the tax-at-source act.

2. Tax at source on net income: applies to taxpayers residing in an EEA country.

According to § 7 a of the tax-at-source act, expenses with a direct financial link to remuneration received on the basis of an artist’s personal activity can be deducted when a tax-at-source card is issued, if a nonresident taxpayer living in an EEA country so requests. This provision applies only to corporations registered in the EEA. If the corporation requests deduction of expenses, the deduction is made and then 20% of the remaining amount is withheld at source in accordance with § 15, subsection 3 of the tax-at-source act. This corresponds to the corporate income tax rate.

On tax.fi, you can find a tax-at-source calculator, where you can calculate whether it is more beneficial to withhold 15% at source on gross income or 20% after deductions. If withholding tax on gross income is more beneficial, the corporation can request that § 7 a of the tax-at-source act should be applied and give an account of its expenses on the application for a tax-at-source card. If the corporation has requested taxation at source based on net income, it will be applied to all remuneration received by the corporation based on the artist’s personal activities during the same calendar year.

If 15% has been withheld at source on the corporation’s gross income, the corporation can also give an account of its direct expenses afterwards and apply for a refund of the tax withheld at source.

6.3.2 Scope of the right to withhold tax at source (the Supreme Administrative Court’s decision KHO 2001:139)

The OECD Model Tax Convention grants the country of source the right to tax the income that an artist earns from their personal activity in the country of source.

The Supreme Administrative Court has taken a stand on Finland's right to withhold tax in its decision KHO 2001:139. In the case concerned, the Supreme Administrative Court ruled that the limited taxation right according to article 17, paragraph 2 of the tax convention should be applied and that Finland had the right to tax only that part of the amount paid to the company that was attributed to the remuneration paid to artists.

The above decision concerned an agreement made between a Dutch company and a Finnish company on a large-scale opera production in Helsinki. The foreign company was in charge of the whole production: the performers, sound, lights, costumes, transport, hotel accommodation, etc. The company was not founded or owned by the artists. Instead, it hired artists and other staff for a particular production. The opera production had an organisation of its own, and the artists were only part of the production. The Supreme Administrative Court held that, in these circumstances, tax at source should be withheld only on that part of the remuneration received by the company that was paid as remuneration to the artists.

As a rule, tax at source is withheld on the whole payment. If, however, in a situation described in the Supreme Administrative Court’s decision 2001:139, remuneration is paid to a party other than the artist or the artist’s company, the part of the remuneration corresponding to the amount paid to the artists can be regarded as income earned from an artist’s personal activity as referred to in the tax-at-source act and the tax convention.

If remuneration for an artist’s performance is paid to the artist based on a contract made with them and remuneration for supplementary activities is paid to a service provider based on a separate contract, then no tax it withheld at source on the amount paid for the supplementary activities because the amount is not remuneration for an artist’s personal performance but business income.

6.4 Advance payment

The tax-at-source act provides for the tax to be withheld at source. According to the act, tax must be withheld when an amount subject to tax at source is paid to a party concerned or entered into an account for their benefit (§ 9 of the tax-at-source act).

If an advance payment is made for an artist's personal performance that is subject to tax at source, tax must be withheld on the advance payment in accordance with the tax-at-source act in the same way as on the actual payment. If a payment is not subject to tax at source, no tax is withheld at source on an advance payment, either. An example for a payment that is not subject to tax at source is tax-exempt reimbursement of travel expenses under the income tax act.

If later in the same calendar year it is detected that too much or too little has been withheld on the advance payment, the payer may increase or reduce the tax withheld at source on a later payment in the same calendar year in accordance with § 19 of the act on tax prepayments (Ennakkoperintälaki 1118/1996). However, the tax at source may not be increased by more than 10% of the amount to be paid without the payment recipient’s consent.

6.5 Tax at source

6.5.1 Withholding tax at source, and income earner’s receipt

A Finnish payer making a payment withholds tax at source. The tax at source is final tax, and it is 15% of the remuneration paid on the basis of an artist’s personal activity (§ 7, subsection 1, paragraph 5 of the tax-at-source act).

The tax-at-source card is an official document instructing the payer how much tax should be withheld at source. A Finnish payer can withhold tax on remuneration based on an artist’s personal activity even without a tax-at-source card if the income recipient gives the payer an account of their place of residence and of any other preconditions for the application of the tax treaty before the payment is made. If the income earner does not present a tax-at-source card, the payer must in some other way obtain the payer’s personal details – such as name, date of birth, address in a foreign country, and personal ID or Tax Identification Number issued in the country of residence. These details are needed when the payment is reported to the Incomes Register.

The payer gives the nonresident taxpayer a receipt of the payment made and of the tax withheld at source (§ 5 of the tax-at-source act). The receipt should preferably be prepared in English so that it could be used for purposes of eliminating double taxation, for example, in the income earner’s country of residence.

If no tax has been withheld at source, the tax is imposed on the party who was obliged to withhold it (§ 8, subsection 1 of the tax-at-source act; and § 40, subsection 1 of the act on assessment procedure for self-assessed taxes (Laki oma-aloitteisten veron verotusmenettelystä 768/2016). 

6.5.2 Remitting the tax withheld at source

A party obliged to withhold tax at source must remit the tax by the 12th day of the calendar month following the month of withholding. The tax withheld at source is rounded up or down to full cents. If the tax at source on income paid to the income earner by the same payer during the same calendar month does not exceed €10, the tax is not withheld (§ 9, subsection 3 of the tax-at-source act).

The instructions on the payment of self-assessed taxes also apply to the payment of tax at source. Read more about the payment of tax at source in Filing and paying self-assessed taxes.

6.5.3 Tax-at-source refund

If more tax has been withheld at source than required by an intenational treaty or if the withholding is otherwise inaccurate and the party obliged to withhold tax has not adjusted it, the taxpayer can submit an application for refund of tax withheld at source to the Tax Administration (§ 11 of the tax-at-source act). The refund application must be made within 3 years of the end of the calendar year during which the tax was withheld.

A natural person’s application for refund of tax withheld at source can be found on the Tax Administration’s website. More information about refunding tax at source to a foreign company is available in the Tax Administration’s instructions.