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Measures List
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Measure Name
Date when measure came into force
Lowering of the corporate income tax rate 2012/01/01
R&D deduction and Double depreciation 2013-2015 2013/01/01
Lowering of the CIT rate 2014/01/01
Results 1 - 3 of 3.

Generic Tax Name Corporate income tax
Tax name in the national language Yhteisöjen tulovero/Samfunds inkomstskatt
Tax name in English Corporate income tax
Member State FI-Finland
Tax in force since 1968/06/24
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/06/25
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Income Tax Act of 30 December 1992 (1535/1992). Act on the Taxation of Business Profits and Income from Professional Activities of 24 June 1968 (360/1968). Act on the Taxation of Agricultural Income of 15 December 1967 (543/1967).

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

In 2014 the state 61.63%, the municipalities 35.56 %) and the local communities of Evangelical Lutheran and the Orthodox Church 2.81 %.

 
Geographical Scope

Finnish territory.

 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

Dividends are, as a rule, tax exempt with some exceptions. On capital gains participation exemption is applied.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments
 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Maximum depreciation rate is 4% or 7%. Double depreciation of 14 % is applied during tax years 2009-2010 and 2013-2014 according to the explicit law on write-offs of production investments.

Average depreciation period
Average depreciation rate
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Machinery and equipment is depreciated as a single item using the declining balance method. Maximum depreciation rate is 25 %. Double depreciation rate of 50 % is applied during tax years 2009-2010 and 2013-2014 according to the explicit law on write-offs of production investments.

Average depreciation period
Average depreciation rate
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Machinery and equipment is depreciated in one asset pool by using a declining balance method. Maximum depreciation rate is 25 %. Double depreciation rate of 50 %  is applied during tax years 2009-2010 and 2013-2014 according to the explicit law on write-offs of production investments.

Average depreciation period
Average depreciation rate
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Average depreciation period is 10 years or shorter in case of a shorter economic lifetime.

Average depreciation period 10  Years
Average depreciation rate
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Expenses which generate or maintain income over a period of at least 3 years are allocated equally to the years in question up to maximum 10 years.


Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

Deductibility of interest on intra-group loans is restricted to 25 % of fiscal EBITD subject to certain safe harbors from 2014 onwards. Exceptions are available:

  • Net interest expense up to EUR 500,000 is fully deductible
  • The limit does not apply to interest expense not exceeding the interest income derived by the company paying the interest
  • The limit does not apply if the company can demonstrate that its equity balance sheet ration is equal to or greater than that of the group

Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
10  Years  
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments

Losses are carried forward and set off against income from the same source in the subsequent 10 tax years. (A corporate body may also have other than business source of income, and against such an income the losses from business source of income cannot be utilized.) Losses are deducted in the order in which the are incurred. In cases where more than 50% of the shares of a company has changed owner during the year in which a loss is recorded, or thereafter, the utilization of losses is subject to tax office's permission. In certain cases also the transfer of shares in a company which owns shares in the company having losses is taken into account. There are also limitations as regards the possibilities to utilize the losses in case of a merger.



Comments

Deductions:

In general, expenses incurred for acquiring or maintaining income. The fact that it was the taxpayer's intention to incur a particular expense for this purpose is usually the decisive test for deductibility.

The following expenses are not deductible: corporate income taxes; temporary bank tax (2013-2015); entertainment expenses, bribes, fines, parking tickets and similar penalty payments; connection charges collected by companies which maintain electricity, telephone, water, sewage or district heating systems provided that the charges are refundable to the payer; expenses incurred for the purpose of acquiring or maintaining tax exempt income (the part which exceeds the tax exempt income is deductible); expenses incurred for the purpose of acquiring or maintaining income which is exempt in Finland under a double taxation agreement; Acquisition costs of shares where the capital gains derived by companies from transfer of those shares are tax-exempt under participation exemption for capital gains; Substitute dividend to the extent that the ordinary dividend which it replaces would be tax exempt for the payer of the substitute dividend; Loss or depreciation of receivables other than sales receivables if the debtor corporation is a limited liability company and the creditor is a limited liability company, a cooperative, a savings bank or a mutual insurance company not engaged in investment activity, which alone or together with other group companies owns at least 10 per cent of the share capital of the debtor. Group subsidies and other similar expenses without counter-performance to improve the financial position of such a limited liability (group) company are also non-deductible; Acquisition costs of company's own shares (except amounts paid by companies for own shares which have been alienated on the basis of employment relationship if purchased in public trading, in such a case there are some limitations to the deductible amount.)

Exemptions:

  • Capital paid up by shareholders
  • Refunds of income taxes
  • Connection charges collected by companies that maintain electricity, telephone, water, sewage or district heating systems, provided that the charges are refundable
  • Distributions from partnerships (partnerships are not treated as separate entities for tax purposes, but the taxable income of the partnership is taxed in the hands of the partners. Consequently, the actual profit distributions made by the partnership do not constitute taxable income)
  • Capital gains from fixed asset shares received by corporations not engaged in investment activity are tax exempt under certain conditions. The capital losses from transfer of such shares are non-deductible
  • Payments received from disposal of company's own shares.

Special features:

R&D deduction:  A special deduction of 100 % is granted on the basis of the salaries of R&D-personnel is applied during tax years 2013-2014.

A tonnage tax is applied to the shipping industry.

 
Rate(s) Structure
Nominal corporate income tax rate Rate: 20.00 %

Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 20.00 %


Comments

Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate:


Comments
 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received 20.00 % 20.00 %
Outgoing dividends withholding tax 30.00 % 20.00 %
Outgoing interest payments withholding tax 30.00 % 20.00 %
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company 50.00 % 50.00 %
CFC-rules apply if foreign tax rate is lower than 15.00 % 12.00 %
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Outgoing dividends withholding tax depends on DTA: 0.00 – 30.00  %

Outgoing interest payments withholding tax: 0.00 – 30.00  %

CFC: in addition, the effective tax rate of 12 % is considered in certain situations.


Comments   Non-treaty countries

In a non-treaty situation, the amount of withholding tax is 20 % when dividend is paid to a corporation.

 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio:
Definition numerator
Definition denominator
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

The collection of taxes takes place by means of advance payments and back tax payments. In case the amount of advance taxes is not sufficient, the company can make a complementary advance payment within four months after the accounting period without interest consequences.

 
Tax collector

The annual assessments are conducted and the taxes collected by the Tax Administration.

 
Special features

The State and its departments pay taxes to the municipalities and religious communities on certain income from real estate and business income. The municipalities pay taxes to other municipalities and religious communities on the income that they receive from the area of the other municipality. Religious communities pay taxes to the municipalities on business income and certain income from real estate. The municipalities and religious communities do not pay taxes to the State.

Special features:

Group contribution system

There is no group company loss relief or group consolidation regime. A group contribution system is applied, in which a profit of an affiliated Finnish company can be transferred to another Finnish company of the same group, which leads to the balancing of the profits and losses within the group. A group contribution system requires 90% ownership and also some other requirements need to be fulfilled.

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51o (d51b + d51c2)

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 4,213.00 EUR 2.11
2011 5,153.00 EUR 2.62
2010 4,559.00 EUR 2.44
2009 3,494.00 EUR 1.93
2008 6,471.00 EUR 3.34
2007 6,962.00 EUR 3.73
2006 5,615.00 EUR 3.25
2005 5,248.00 EUR 3.19
2004 5,357.00 EUR 3.38
2003 4,952.00 EUR 3.27
2002 5,988.00 EUR 4.04
2001 5,835.20 EUR 4.04
2000 7,792.30 EUR 5.72

Comments