Foreign estate of a deceased person – how to report Finnish-source income

A foreign estate is formed if the deceased person lived abroad at the time of death but had income that is taxable in Finland.

Foreign estates are non-resident taxpayers. This means that the estate must pay tax on its income from Finnish sources only. The most common type of Finnish-sourced income received by a foreign estate is income from property located in Finland. Examples of this type of income include

• rental income, capital gain, and other profits derived from immovable property, including apartments
• income from sales of timber.

For the duration of the year in which the person died, the foreign estate is taxed in the same way as the deceased person would be taxed if they were alive. Starting from the year following the year of death, the estate is taxed as a corporate entity. Foreign estates taxed as corporate entities are subject to an income tax rate of 20%.

File the tax return on paper

Foreign estates do not receive pre-completed tax returns like Finnish estates do. If a foreign estate receives income from Finland, it must file a tax return on its own initiative. The estate must file Form 6 and report on that form all the income received from Finnish sources. Foreign estates must file their tax returns on paper. The tax return must be filed by the end of April in the year following the tax year in question.

In addition to Form 6, the estate must submit a free-form account of what Finnish sources the estate has received income from, for example whether the income is from property rental or timber sales.

Instructions for filing a tax return on Form 6 (in Finnish and Swedish, link to Finnish)

Capital gain from the sale of immovable property

If the foreign estate receives capital gain from selling immovable property, such as an apartment or a holiday home, file the tax return on Form 6 and enclose a free-form account of the following information:

• what has been sold
• date of sale
• selling price
• value confirmed in inheritance taxation
• other deductible expenses, if any.

Note: Foreign estates taxed as corporate entities cannot use the deemed acquisition cost in the calculation of capital gain. When the amount of capital gain or loss is being calculated for an undistributed estate, the property’s acquisition cost is considered to be the property value confirmed in inheritance taxation. Any expenses incurred in making the capital gain, such as selling expenses or improvement costs, are deducted from the selling price.

Rental income from real estate and apartments

If the foreign estate receives rental income from a real estate unit or apartment located in Finland, file the tax return on Form 6 and enclose a free-form account of the following information:

• what has been rented out
• rental income
• deductible expenses.

Income relating to agriculture or forestry

If the foreign estate receives rental income from a field located in Finland or other income related to agricultural or forestry operations (such as timber sales) in Finland, file the tax return on Form 6 and enclose a free-form account of the following information:

• type of income in question
• calculation of income and deductible expenses.

Note: Agricultural income is reported on Form 6 as profit or loss for an agricultural source of income, and forestry income is reported as profit or loss for a personal source of income.

More information on the taxation of foreign inheritance

• Inheritance taxation in international situations 
• Inheritance and gift taxation in international situations (in Finnish and Swedish, link to Finnish)
• Inheritance tax return – the decedent lived abroad (3620e)