Dividend from an unlisted company

An unlisted company is a company, the shares of which are not traded on the stock market. Small companies are usually unlisted.

The dividend you receive from an unlisted company is taxed as capital income and/or earned income. A part of the dividend is tax-exempt.

Dividends are taxable income for the tax year when the decision made at the company’s general meeting determines that dividends become available for withdrawal. If no withdrawal date was agreed upon, the dividends can be withdrawn as of the day when the general meeting was held.

Example 1: A company distributes dividends related to the accounting year ending 31 December 2022. The company’s shareholders decide on the distribution at their general meeting on 15 June 2023. They also decide that the dividends will first be available for withdrawal on 31 January 2024. For shareholders who are individual taxpayers, the company’s dividends are treated as income for tax year 2024.

Example 2: A company distributes dividends related to the accounting year ending 31 December 2022. The company’s shareholders decide on the distribution at their general meeting on 30 April 2023. However, the general meeting made no decision on the date when the dividends become available for withdrawal. For shareholders who are individual taxpayers, the company’s dividends are treated as income for tax year 2023.

The party that pays the dividend withholds the tax

If you receive a maximum of EUR 150,000 as a dividend from an unlisted company, the company that pays the dividend withholds 7.5% of tax.

If the amount of the dividend is over EUR 150,000, the company that pays the dividend withholds 28% of tax from the part over that amount.

Read more about withholding tax from dividends in the detailed tax instructions ‘Ennakonpidätys osingosta ja Verohallinnolle annettavat ilmoitukset’, section 1.2 ‘Ennakonpidätys’ (in Finnish).

The percentage of the dividend out of the mathematical value of a share affects taxation

When you receive a dividend from an unlisted company, the amount of the dividend is split into:

• Taxable capital income and/or taxable earned income
• Tax-exempt income.

The size of these shares depends on the mathematical value of a share.

The Tax Administration calculates the mathematical value of a share based on the company’s balance sheet for the financial year that ended the previous year. The mathematical value is derived by deducting the company’s liabilities from its assets and dividing the resulting difference with the number of the company’s shares.

Read more about the mathematical value of shares in the detailed tax instructions ‘Osinkotulojen verotus’, section 2.3 ‘Listaamattomasta yhtiöstä saatu osinko’ (in Finnish.

The dividend is 8% of the mathematical value of the shares at maximum – dividend treated as capital income

If the amount of the dividend you received is 8% of the mathematical value of the shares at maximum, the dividend is treated as capital income.

If the part of dividend treated as capital income is EUR 150,000 at maximum,

• 25% is taxable capital income
• 75% is tax-exempt income.

Of the part of the dividend over EUR 150,000

• 85% is taxable capital income
• 15% is tax-exempt income.

This limit of EUR 150,000 is shareholder-specific, not company-specific. In other words, all dividends from unlisted companies you receive in the same year are added together, and you pay taxes based on the sum total.

Example of a case, in which the dividend is EUR 150,000 at maximum

Example 3: Aino owns all shares of the company Yhtiö A Oy. Their total mathematical value is EUR 1,500,000. In 2023, she received a dividend of EUR 80,000 from the company. The dividend is less than 8% of the mathematical value of the shares (EUR 1,500,000 × 8% = EUR 120,000) and it is also under EUR 150,000. Therefore, 25% of the dividend or EUR 20,000 (EUR 80,000 × 25%) is taxable capital income.
Because the portion of Aino’s dividend that is taxed as capital income is less than EUR 30,000, she pays 30% of tax on the dividend. This means that Aino pays a total of EUR 6,000 of tax on the dividend she receives (EUR 20,000 × 30%).

Example of a case, in which the dividend is over EUR 150,000

Example 4: Sanni receives a dividend of EUR 170,000 from the company Yhtiö S Oy. The total mathematical value of the shares she owns is EUR 2,500,000. The dividend is less than 8% of the mathematical value of the shares (EUR 2,500,000 × 8% = EUR 200,000). The dividend is over EUR 150,000, however. The part over that amount is EUR 20,000 (EUR 170,000 − EUR 150,000).

The parts above and below the limit of EUR 150,000 are calculated next:
• up to EUR 150,000: 25% of the dividend or EUR 37,500 is taxable capital income (EUR 150,000 × 25%)
• over EUR 150,000: 85% of the dividend or EUR 17,000 is taxable capital income (EUR 20,000 × 85%).
Sanni’s taxable capital income is determined by adding these parts together. It is EUR 54,500 (EUR 37,500 + EUR 17,000).

The tax rate for capital income is 30% up to EUR 30,000, and 34% for the part over that amount. In Sanni’s case, the part over the limit is EUR 24,500 (EUR 54,500 – EUR 30,000). In order to determine the amount of Sanni's tax, the parts above and below the limit of EUR 30,000 must be calculated first:
• up to EUR 30,000: 30% of tax or EUR 9,000 (EUR 30,000 × 30%) is levied on the dividend
• over EUR 30,000: 34% of tax or EUR 8,330 (EUR 24,500 × 34%) is levied on the dividend.
By adding these parts together, it is determined that Sanni pays EUR 17,330 of tax on her dividend.

The dividend is over 8% of the mathematical value of the shares – dividend treated as earned income

If the dividend you receive is over 8% of the mathematical value of the shares, the part over the limit is treated as earned income. Out of the dividend treated as earned income

• 75% is taxable earned income
• 25% is tax-exempt income.

A fixed tax rate is not used in the taxation of earned income. It is taxed progressively: when your earned income increases, your tax rate also increases.

In addition, the part of dividend under the limit of 8% is taxed as capital income.

Example 5: In 2023, Matti received EUR 25,000 as a dividend from the company Osake Oy. The mathematical value of the shares he owns is EUR 50,000. The dividend is over 8% of the mathematical value of the shares (EUR 50,000 × 8% = EUR 4,000).
The part of the dividend over the limit of 8%, or EUR 21,000 (EUR 25,000 − EUR 4,000), is treated as earned income. It is divided into taxable earned income and tax-exempt income:
• 75% or EUR 15,750 is taxable earned income (EUR 21,000 × 75%)
• 25% or EUR 5,250 is tax-exempt income (EUR 21,000 × 25%).
The part of the dividend under the limit of 8%, or EUR 4,000 (EUR 25,000 − EUR 21,000), is treated as capital income. Because it is less than EUR 150,000, Matti only pays capital income tax for 25% of the amount. Therefore, Matti’s taxable capital income is EUR 1,000 (EUR 4,000 × 25%). Because the capital income is less than EUR 30,000, Matti pays 30% of tax on the amount.
This means that Matti must pay a total of EUR 6,127.50 of tax on the dividend he receives:
• tax on the earned income (when Matti’s own tax rate is 37%): EUR 15,750 × 37% = EUR 5,827.50
• tax on the capital income: EUR 1,000 × 30% = EUR 300.

Check your pre-completed tax return

The pre-completed dividend information relating to companies not listed on the stock exchange comes from the information returns that the Tax Administration has received after the end of the year from the payers of dividends.

Check that your dividend income and the tax withheld are shown in the pre-completed tax return you received in the spring and that they are correct. Report missing information and correct wrong information.

How to report your dividend income to the Tax Administration