Released on 7 August 2026, this comprehensive guidance from the Finnish Tax Administration addresses the taxation of individuals who have limited tax liability (rajoitettu verovelvollisuus) in Finland. Under the Finnish Income Tax Act, non-resident individuals are taxed only on Finnish-source income, such as employment income for work performed in Finland, directors’ fees from Finnish companies, rental income from Finnish real estate, and capital gains on Finnish real property or shares in real estate companies. The guidance details the applicable tax rates (progressive for earned income, flat 30%/34% for capital income), the availability of deductions (limited to expenses directly connected to the Finnish-source income), and the application of double tax treaties to reduce or eliminate Finnish taxation.
Key Takeaways
- Progressive vs. Flat Rate Election: Non-residents receiving Finnish employment income may elect to be taxed at the progressive resident tax rates (with full deductions) instead of the flat 35% non-resident tax rate (lähdeveroprosentti). The election is binding for the tax year and requires filing a Finnish tax return by the deadline.
- Treaty Benefits Require Certificate of Residence: To claim reduced withholding tax rates under tax treaties (e.g., 0% on dividends, 10% on interest), the non-resident must provide a valid Certificate of Residence (asumisvakuutus) from their home country tax authority to the Finnish payer before payment. Without it, domestic withholding rates apply.
- Real Estate Capital Gains Always Taxable in Finland: Gains from the sale of Finnish real estate or shares in Finnish real estate companies (kiinteistöosakeyhtiö) are always taxable in Finland regardless of treaty residence, under the “real property article” of OECD Model treaties. The guidance clarifies the computation of the gain (sales price minus acquisition cost and improvement expenses) and the filing deadline (within two months of sale).
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement