Filing and paying tax on rental income from property abroad
Taxpayers can also have rental income from a country other than their country of residence. See instructions for the following situations:
Rental income from Finland while living abroad
For most taxpayers, rental income from a Finnish source is taxed in Finland. Rental income from property you rent out in Finland is taxed in Finland even if you live in a foreign country.
Tax on rental income is always assessed at the tax rate for capital income. The taxpayer's country of residence does not affect the rate.
REQUEST PREPAYMENTS
We recommend that you ask the Tax Administration to set up prepayments for you as soon as you start renting out a house, apartment or flat located in Finland. You should do this so as to avoid back taxes.
If needed, request a change of the prepayment
If there are changes in your rental income, you must ask the Tax Administration to revise prepayments (to lower them or to raise them). If the rental contract is terminated and you no longer receive income, ask for your prepayments to be cancelled. Log in to MyTax to change prepayments, or call our telephone service.
You can ask for your prepayments to be changed up to the date when the Tax Administration has completed your tax assessment for the year.
CHECK RENTAL INCOME IN TAX RETURNS
All rental income and the expenses that relate to your rental operation must be included in your tax return. If no information on your rental income is included or if corrections must be made, log in to MyTax and make the corrections. You must do this by the deadline date indicated on your return. You must include this information even if no taxable rental income remains after you have deducted your expenses.
Report the rental income in MyTax
If you don't use MyTax electronic filing, you must fill in paper-printed forms to report the income
Example: A person, who is a citizen of Sweden and lives in Sweden, buys a vacation home (an apartment in a housing company) in Finland and rents it out for the major part of the year when she is not having a vacation in Finland herself.
Her rental income from the flat is taxed in Finland, and she needs to file Form 7H every year due to her rental income and expenses. She can make the same deductions from her rental income as a Finnish landlord would be able to. As she also occasionally uses the vacation home herself, she can only deduct the expenses that were paid during the months when it is rented to tenants.
Rental income from property abroad while living in Finland
If you receive rental income from a foreign source, you are under obligation to pay income tax to Finland on the income. The taxable amount of the foreign-source rental income is calculated the same way as taxable rental income sourced to Finland is calculated. This means that you can deduct all the expenses that have to do with your renting out the apartment or house, etc. In addition, any interest is tax-deductible that you have paid on the loans you may have taken when you bought the apartment, house, etc. that you are renting out.
If you receive rental income for a dwelling treated as being ‘real estate’ under the national laws of the country where it is located, your Finnish taxable income is calculated the same way as taxable income from rental real estate located in Finland is calculated. For example, you can claim tax-deductible depreciation for a building if it is part of the real estate. In the same way, after you have paid a foreign real estate tax, you can claim a deduction for it in Finland.
If you have rental income from foreign countries, you must:
- Log in to MyTax to file your tax return on rental income, or
- Fill out Form 16B, Statement on foreign income (capital income).
Further guidance for those who file on paper.
Credit method
The credit method refers to Finland taxing income generated abroad but subtracting any tax paid abroad from the amount of tax payable in Finland. Finland has signed tax treaties for eliminating double taxation by means of the credit method with certain countries, such as the other Nordic countries.
If a taxpayer receives rental income from such a country, the Tax Administration
- taxes the rental income at 30% (or at 34% if the capital gains exceed EUR 30,000)
- subtracts the amount of tax that the taxpayer has paid abroad.
Exemption method
According to tax treaties, the exemption method applies to rental properties located in
- France
- Egypt.
In these cases, rental income is not taxed in Finland, but it may increase the amount of tax payable on other capital gains. This is why income from these countries also needs to be declared in Finland.
If the exemption method is applied, deductions for expenses incurred from earning an income and interest on income generation loans cannot exceed the amount of taxable rental income.