Heirs (and other beneficiaries).

Inheritance tax is levied on the individual share of each beneficiary, not on the estate of the deceased as a whole.

Inheritance tax is levied on the following property received as an inheritance or a bequest:

• any property, if the deceased or the person who receives the property as an inheritance or a bequest was resident in Finland at the time of death;
• real property situated in Finland and shares or other rights in a corporate body where more than 50 % of the total gross assets of the company consist of real property situated in Finland.

Insurance benefits which are paid under a personal insurance schemes in case of death of the benefactor to a beneficiary or death estate and similar economic subsidy paid by the Government, a municipality or any other statutory body or a pension institute are, with certain exceptions, subject to inheritance tax only if they are not subject to income tax and the benefit or subsidy of a beneficiary or heir for a single case of death exceeds € 35,000. Half of the aggregate amount of such benefits or economic subsidies and always at least € 35,000 is tax exempt for widowers and widows.

The tax is levied on the market value of the individual share of each heir (beneficiary). The value of the inheritance or bequest is computed at current prices.

The value of any inheritance advancement or any gift received during the last three years before the death of the benefactor is included in the value subject to inheritance tax. Gift tax paid on inheritance advancements, or gifts falling into this category, is credited against inheritance tax.

Exemptions:

The following persons are exempt from inheritance tax when they receive an inheritance or a bequest:

1.the State and its institutions, municipalities, joint municipal authorities, religious communities and non‑profit‑making organisations;

2.persons serving in Finland at foreign diplomatic missions, other similar representations or consular posts headed by career consular officers and persons serving in Finland as employee by the United Nations, its special organisations and the International Atomic Energy Association as well as members of their families and their private servants who are not Finnish nationals; however these persons are liable to pay inheritance tax on real property situated in Finland and shares or other rights in a corporate body where more than 50 % of the total gross assets of the company consist of real property situated in Finland.

No inheritance tax is payable when a widower or widow is entitled by law to retain the estate of the deceased spouse undistributed in his or her possession.

No inheritance tax is levied on the value of a right to annual income or on the value of a usufruct. Instead, the annual value of such rights is included in computing the beneficiary's income for income tax purposes during all the tax years in which he is entitled to such income.

No inheritance tax is payable when, on being dissolved, the property of an association is transferred in accordance with its articles of association.

If the inheritance tax should be levied on the same property on the basis of two or more cases of death which have taken place within two years, the inheritance tax is levied only once and on the basis of the most remote relationship.

Deductions:

Deductions are allowed for all debts, including, inter alia, taxes relating to the lifetime of the deceased (but excluding inheritance tax) as well as funeral and tombstone costs and expenses incurred on estate inventory proceedings, up to reasonable amounts. Expenses incurred on estate distribution are not allowed as deductions.

The spouse or a person to whom the provisions of the Income Tax Act concerning spouses are applicable for the year of death is allowed to deduct € 60,000 from the chargeable share of the inheritance. Minors under 18 years of age are allowed to deduct € 40,000.

Inheritance tax is not levied on the personal belongings of the deceased or his family for the part that does not exceed € 4,000.

These are the rates for tax class I. Such tax class implies the following relationship between the beneficiary and or the deceased: spouse, child (also the child of the surviving spouse), adopted child, father, mother, adoptive parents and direct heir of a child or an adopted child and in some cases also the fiancé(e). Class I rates are also applied if the regulations of the Income Tax Act concerning spouses are applicable for the year of death to the deceased and an individual who has lived with the deceased in free union, i.e. class I rates are applied to spouses who have been married to each other previously and who have had or are having a child together.

Tax class II applies to other relatives and all non‑related persons. The tax rates in tax class II are the following:

The liability to pay inheritance tax commences from the time of death. An inheritance tax return must be filed within three months from the time of death.

The tax is assessed by the provincial tax offices.

The tax paid by a person who is resident in Finland to a foreign State on property mentioned in item 1 under the heading ‘Basis of assessment' above is credited against the inheritance tax due in Finland on the same property. The maximum credit is the lesser of either the amount of the foreign inheritance tax or an amount equal to such a proportion of the total inheritance tax (as the value of the property derived from the foreign State bears to the value of the property which is situated in Finland and which forms the basis of the Finnish inheritance tax - ordinary credit).

A taxpayer may demand that part of the inheritance tax is not charged under the following conditions (change of generation rules):

• the chargeable inheritance contains a farm or a business or a part of them (including at least 10 % of shares or rights giving title to a farm or business)
• the descendant continues to run a farm or a business on such a farm or in such a business unit using the assets which he has received as an inheritance or gift
• that part of the tax corresponding to the abovementioned property is more than € 850.

In case of a transfer of an agricultural or other enterprise, if the consideration amounts to more than 50 % of the current value of the enterprise, no inheritance tax is charged.

In addition, an interest‑free extension of the period of payment may be granted.

That part of the tax not charged and an additional 20 % is imposed if the taxpayer disposes of the main part of the farm or enterprise before five years have elapsed from the date of the assessment.

Non-residents:

For the purposes of the Inheritance and Gift Tax Act, a person is deemed resident in Finland if he has his main abode in Finland.