6U Income tax return – Foreign corporate entity, Instructions for filling in the form 2018

Tax year 2018

  • When you complete the tax return and supplementary forms, you must fill in all the spaces that concern your company.
  • Enter the amounts in euros and cents.
  • If more than one accounting period ends in the 2018 calendar year, you must complete the necessary forms separately for each closing of an accounting period. The Tax Administration will combine the information into an aggregate whole for the tax year 2018.
  • See the list of supplement forms

 

Additional information provided by (name)

Give the name and telephone number of the person who is providing additional information to the Tax Administration, if necessary.

Changes in the line of business 

 

Tick the box if your line of business has changed.

Enter the new line of business according to Standard Industrial Classification TOL 2008.

Check the codes for lines of business on the Statistics Finland website (tilastokeskus.fi)

Has activity in Finland (mainland) and the Åland Islands

Tick this box if your company operates both in the Åland Islands and in Mainland Finland.

Also tick the box if your company only operates in Åland, but its registered domicile is in Mainland Finland, or vice versa, operates in Mainland Finland but is registered in Åland.

Enclose a document in which you explain in your own words how profits/losses should be divided into parts representing Åland and Mainland Finland.

An Åland-domiciled corporate entity must pay municipal tax to Åland on all its earned income. This rule is based on the provisions on municipal income tax (see Ålands författningssamling 119/2011).

Under the same provisions, also a corporate entity registered in Mainland Finland must pay municipal tax to Åland on the part of its income earned in Åland. Under Finnish Income Tax Act, however, all corporate entities must pay income tax at the 20-percent rate, the proceeds from which are distributed between the State, municipalities and Church. For this reason, corporate entities operating in Åland have double municipal tax. However, the double taxation is eliminated either by the Tax Administration or the Provincial Government depending on your registered domicile.

 

2 Permanent establishment for purposes of income tax

Tick the box for one, not both, of the following options:
  • The company believes that a PE (permanent establishment) for income tax purposes is formed, or the company owns immovable property in Finland.
  • The company believes that it should not be treated as having a PE for income tax purposes. Complete form 80.
Permanent establishment is formed for income tax purposes or company owns immovable property in Finland

Tick the box if a PE is formed for income tax purposes in Finland, the company owns immovable property in Finland, or the company receives a share of the income of a corporation in Finland.

  • As a rule, a foreign company must pay tax to Finland only for the income it earns in Finland. However, if a foreign company has PE in Finland, the company is liable to pay tax on all the income attributable to the permanent establishment. A permanent establishment is a place of business in which a company partly or fully carries out its operations. A PE can, for example be, the company's real seat, office or non-corporate representative, or its construction/assembly/installation activity the duration of which exceeds the time limit defined in the applicable tax treaty.

  • For example, if a foreign company owns a real estate unit located in Finland that represents a source of income for the company, it must pay tax on the income received. (§10, Business Tax Act)
  • When completing the tax return, the share of income received by a foreign corporate entity from a Finnish corporation in which it is a general partner must be reported. For example, if a Finnish limited partnership has business operations in Finland, the share of income of a non-resident foreign general partner is treated as part of the business source of income.
  • Further information on permanent establishments in income taxation
  • More detailed information on permanent establishments for income tax purposes in Finland, (Income taxation of foreign corporate entities in Finland).
Permanent establishment is not formed for income tax purposes Tick the box if the company believes that it should not be treated as having a PE for income tax purposes in Finland. If you ticked the box, you must also fill in Form 80 (Account of local operations – Foreign corporate entity).

3 Further details

Financial statements comply with international standards Tick the box if your company's financial statements have been prepared in accordance with international financial reporting standards (IAS/IFRS or GAAP) (as defined in Chapter 7a, Accounting Act).

Has to prepare Transfer Pricing Documentation (§14a, VML)

(complete Form 78)

Tick this box if the company is obliged to prepare transfer pricing documentation. If you ticked the box, you must also fill in Form 78 (Explanation of transfer prices)

Transfer pricing documentation must be prepared on related-party business transactions in which the other party is a foreign company or when the business transaction occurred between a foreign company and its PE in Finland (§14a, Act on Assessment Procedure).

In a related-party transaction, one party can exercise control over the operating policies of the other party, or a third party – by itself or with close associates – can exercise control over both parties (§31.2.2, Act on Assessment Procedure).

The documentation obligation applies to companies that fulfil at least one of the following conditions:

  • The company has a minimum of 250 employees.
  • The company's net sales exceed EUR 50 million, and its balance sheet total is more than EUR 43 million. 
  • The definition of small and medium-sized enterprises (SMEs) of Commission Recommendation 2003/361/EC does not apply to the company.
  • When considering this condition, it must be taken into account that being associated with an international group usually means that the SME operating in Finland is also obliged to prepare transfer pricing documentation. In practice, the consolidated information of a group is taken into account in the calculation of the limits for the headcount of staff, net sales and balance sheet total on the basis of the relationship that exists through ownership.

Read more about Transfer Pricing Documentation (register number 1471/37/2007).

Has a branch office or a PE been incorporated as provided in §52d of act on business tax?

Tick the box if the foreign corporate entity has transferred assets attributable to a business unit and liabilities attributable to those assets through a business transfer to a limited liability company taking over the entity’s operations in exchange for shares in the recipient company.

Or has the company transferred the business unit formed by a branch/PE as provided in §52d, Business Tax Act?

Read more about business transfer in “Mergers and acquisitions – Business transfer” (register number A163/200/2017, in Finnish)

Calculation of taxable income (Business Tax Act)

Enter the amounts of taxable income and tax-deductible expenses from business activities in the Tax accounting column of the ‘Calculation of taxable income’ section.

The ‘Calculation of taxable income’ section has a separate Accounting column for any income and expense items in which the amount recorded in the accounts may be different from the amount to be taken into account in the tax assessment.

Both columns must be completed even though the amounts might be the same.

To calculate the net taxable income for the tax year, the deductible expenses in section 5 “Business expenses” are deducted from the revenues subject to tax in section 4 “Business income”.

The “Calculation of taxable income” section is only for reporting business revenues and expenses, not those that relate to other sources of income.

Corporate entity's personal source of income

Complete Form 7A to report profit and capital gains attributable to a personal source of income.

Examples of activities attributable to a personal source of income:

  • Renting out non-business real estate. The business source of income can only include real estate (under §53, Business Tax Act) if the property or building is used exclusively or almost exclusively for business purposes
  • Operating a forestry activity without a connection to the business
  • Owning securities and stocks in a passive manner
  • Renting out non-business residential apartments, and this activity is not the corporate entity’s business
  • Lending money to shareholders. If the company has charged interest on the loans it has granted to shareholders, or if the Tax Administration has added an amount to the taxable corporate income because no interest was collected (under §29, Act on Assessment Procedure), the interest income is treated as part of the personal source of income.

Credit institutions, investment service companies and insurance companies

Credit institutions, investment service companies and insurance companies are not expected to complete the “Calculation of taxable income” section (Taxable profits/tax-deductible losses).

Instead, they must complete Form 77 in which, in addition to business income, they must also report any profits or losses attributable to agricultural source of income and personal source of income, as well as the amounts not taken into account for purposes of calculating allowable loss.

Form 77 and the instructions for filling in the form (tax.fi/forms)

How to enter amounts

Enter the amounts in euros and cents without using a plus or minus sign.

The default rule is that any revenue will increase profits and any expense will reduce them. For this reason, plus and minus signs are not necessary. However, if you enter an amount that does not follow the logic of the above default rule, you must enter a minus sign before the amount.

Example: Company reports a net sales amount which is negative. Enter a minus sign before the amount reported in 1 “Net sales” (under 4 Business income).

4 Business income

1 Net sales
 

Enter the amount of net sales, as shown by accounting.

Net sales comprise the sales income from the partnership's primary operating activity minus the discounts granted, VAT, and other direct taxes based on sales volumes (Chapter 4, §1, Accounting Act).

If the company’s net sales include dividends, report them under “Receipts of dividends and profit surplus” in section 3 (Financial income). Subtract the amount of dividend from the amount of net sales before reporting net sales here.

Sales on goods and services, external 

  

Sales on goods and services relating to the PE's operations to external parties, i.e. not associated with the group.

In a related-party transaction, one party can exercise control over the operating policies of the other party, or a third party – by itself or with close associates – can exercise control over both parties (§31.2, Act on Assessment Procedure).

Sales on goods and services to the parent/principal 

Sales of goods and services relating to the PE's operations to the group's other units.

Other units of the company may refer to the principal company, the company’s other PEs in other countries, or branch offices.

Sales on goods and services to intra-group companies 

Sales on goods and services relating to the PE's operations to group companies.

“Group companies” refers to the parent company and subsidiaries, in accordance with the Accounting Act (Chapter 1, §6).

2 Other operating income

Capital gains for selling shares included in fixed assets  

Accounting column:

Enter the book value of the total gains received from the selling of shares, booked as fixed assets, and of the gains received from liquidations.

Specify the gains on Form 71A and Form 71B as follows:

  • Form 71A is for reporting tax-exempt capital gains from selling and liquidations of assets and for reporting non-deductible losses
  • Form 71B is for reporting tax-exempt capital gains from selling and liquidations of assets, and deductible losses. Similarly, Form 71B is also for capital and liquidation gains and corresponding losses from shares in partnerships or consortia

Tax accounting column

Enter the total amount of gains from the selling of shares in companies, partnerships and consortia included in fixed assets, which you have calculated on Form 71B. Note: the total is arrived at after deducting the losses (capital and liquidation losses) from the selling of shares in companies, partnerships and consortia because these losses can only be deducted from capital gains.

Normally, gains received from the selling of shares booked as fixed assets are exempted from taxes (however, they are taxable if housing-company and real-estate-company shares were sold) if the company had held, for more than one year, at least 10% of the company the shares of which were sold, or at least 10% of the company that was liquidated (§6b and §51d, Business Tax Act).

From this follows that gains from the selling of shares in housing companies and real-estate companies, the selling of shares held for a shorter time than one year are taxable, and the selling of shares in companies where the ownership interest had been less than 10% are taxable. If your corporate entity is a capital investment firm, its receipts of capital gains are always treated as taxable income.

In addition, include the amounts you have entered on lines 8 and 9 of Form 71A that reduce the tax-exempted selling price.  The selling price is taxable income if shares were sold that are basically tax-exempt but a gain (the difference between selling price and undepreciated acquisition cost) is created for one of the following reasons:

  • A depreciation entry, allowed by the tax authority in a previous assessment (under §42, Business Tax Act)
  • A balance-sheet reserve or a subsidy amount that has been deducted from the acquisition cost
  • A capital loss derived from intra-company selling of shares within a multinational enterprise group

Read more about the taxation of selling of shares included in fixed assets (Tax Administration guidance “Taxes on the gains derived from selling securities booked as fixed assets in the balance sheet”, in Finnish).

Other revenues from sideline business

Taxable revenues (other than the above) included in the P/L.

Examples of these taxable revenues:

  • Gains received from a sale of a line of business
  • Received refunds of leasing fees
  • Received insurance indemnities
  • Rental income from real estate units rented out
  • Rental income from space used for employee recreation
  • Received income from office services supplied.

3 Financial income

Receipts of dividends and profit surplus

Accounting column:

Enter the total amount of dividends, surplus and other distributions of profit received, as recorded in accounting. Also report the refunds of profit surplus received from a co-operative that can treat them as a deductible cost (§18.4, Business Tax Act).

The following are distributions of profit under §6d, 7, Business Tax Act

  • Profit shares and interest paid by a savings bank
  • Interest on the guarantee capital of a mutual insurance company and an insurance association.

Specify the dividends and profit surplus received on Form 73. However, it is not necessary to fill in the supplementary form if the corporate entity's dividends or surplus are fully exempt from tax and sourced in Finland.
Read more about the tax treatment of dividends in the instructions for filling in Form 73 (in Finnish)

Detailed guidance on the tax treatment of dividends (Tax treatment of dividends, register number A148/200/2017 (in Finnish).

Tax accounting column

Enter the taxable portion of your dividends and profit surplus received, as calculated on Form 73.

If you are a non-listed company receiving dividends from a listed company of which you own less than 10%, the entire amount is taxable income for you. It is also fully taxable for you if the distributing company can treat the dividend payments as a deductible cost. Similarly, refunds of profit surplus received from a co-operative (§18.4, Business Tax Act) are fully taxable income.

Similarly, report any REIT company dividends, because the entire amount is taxable income for you.

If you have a Controlled Foreign Company and have received dividends from it, enter here the taxable portion of the dividends that you have reported on Form 74.

Shares of profits for consortia

Accounting column:

Enter the amounts are recorded in accounting.

The shares of profits received from a partnership/consortium are tax-exempt income.

Such profits, calculated under the provisions of §16 and §16a, Income Tax Act, are taxable income in the hands of the shareholders of the consortium.

Tax accounting column: Taxable portions of profit shares

Enter the profit shares of domestic consortia, which are taxable under §16, Income Tax Act, and also enter the foreign and European profit shares (European Economic Interest Grouping (EEIG)) referred to in §16a, Income Tax Act.

If you are not yet aware of any profit shares, leave this space blank. Correct the information on the tax return later if the actual size of the shared profit is determined only after you have filed the tax return.

Other financial revenues and interest income 

Other financial income, such as foreign exchange gains.

4  Revaluation gains 

 

Accounting column:

Book value of revaluation gains for financial assets (§5a, line 1, Business Tax Act).
Book value of revaluation gains for current assets (§5a, line 3, Business Tax Act)
Book value of revaluation gains for fixed assets (§5a, line 5, Business Tax Act)

Tax accounting column

Normally, gains received due to revaluations are taxable income and the amount should be entered here. However, revaluation gains are tax-exempt income when the depreciation of fixed assets is done on the basis of the matching principle has not been allowed in the tax assessment for that year (e.g. under §42, Business Tax Act).

5 Group subsidy received 

 

Enter any received payment of intra-group subsidy. Enclose Form 65 to specify.

6 Income from decreases of reserves

 

Accounting column:

Enter the decreases to statutory and tax-related reserves, as recorded in accounting.

Tax accounting column:

Enter the taxable portion of the income in the form of decreases of reserves. Examples of such income are:

  • A repurchase reserve that has not been deducted (§43, Business Tax Act)
  • A warranty reserve of a company operating a construction, shipbuilding or metal industry business for the part that exceeds the expenses arising from warranty repairs (§47, Business Tax Act).

Enclose Form 62 to specify the reserves recorded in accounting.

7 Other taxable revenues (not included in P/L)

 

Taxable income that is not included in the profit-and-loss account (P/L) for the year.

Examples of revenues outside the P/L are the amounts of difference caused by varying periodisation rules governing tax accounting and book accounting. Builder-developer companies are an example of lines of business influenced by these differences. For more information, (see "Builder-developer business and taxes" (in Finnish).

Note: the profit from the selling of own corporate stock is not treated as taxable income, and you should not enter it on this line.

8 Total taxable business income

  The aggregate amount of lines 1–7 of the Tax accounting column, i.e. total taxable income from business activities.

9 Refunds of taxes

 

Enter any tax refunds entered in the books (P/L) that must be treated as taxable income.

Include any interest paid on refunds. Corporate interest is tax-exempt income.

10 Other tax-exempt revenues of the P/L

 

Enter the total amount of other tax-exempt income recorded in the P/L.

Examples: gains from a merger (§52b, Business Tax Act) and public support for cinematic arts (see §6.1.5, Business Tax Act).

If a corporate entity maintains a utility grid such as electric power, telecommunications, water, sewage, heating, and receives payments from their customers who sign a utility contract, the revenues of these payments are tax-exempt if they are intended to be refunded to the customers later. However, similar payments for signing may also be transferable. If that is case, they are treated as taxable income and you should not include them on this line (under §6.1.3, Business Tax Act after amendments).

In addition, this line is for the capital gains received from the selling of assets subject to wear and tear, if the income derived from this is included in the P/L indirectly (§30, Business Tax Act). 

5 Business costs

1 Raw materials and services

Purchases, variation in stocks and inventory

Enter the following amounts:

  • Acquisition costs of any goods that were retired from the business during the year
  • Purchases during the year
  • The change in the inventory of finished goods and work-in-progress (including both added and diminished inventory balance).
Services ‒ from parent/ principal and associated companies 

Enter the total amount of services you bought from the parent company and other group companies.

Services ‒ from external providers

Enter the total amount of services you bought from others, not the parent company and other group companies. Enter the aggregate amounts.

2 Staff expenses

Wages and salaries, work done in Finland

Total of wages and fees as recorded in your payroll accounting books.

Pension expenses, work done in Finland   Total of pension expenses as recorded in your payroll accounting books.
Other payroll expenses, work done in Finland    Total of additional payroll expenses as recorded in your payroll accounting books.
Staff expenses related to PE in Finland, and work done in other countries  Total of wages and indirect employee costs, as recorded in your payroll accounting books, paid for work done in Finland and attributable to a PE in Finland.

3 Depreciation and revaluation of fixed assets

Depreciation

First, complete Form 62.

Accounting column:

Enter the planned depreciation and depreciation differences burdening operating income on the accounts.

Transfer the total amount of depreciation and depreciation differences here from Form 62.

Tax accounting column: Deductible portion

Transfer the depreciation permitted by Business Tax Act, including additional amounts and specific tax-relief depreciation expenses, here from Form 62.

  • Reference to Business Tax Act: deductible depreciation expenses permitted under §24, 30–34 and 36–41.
  • The amount entered here must correspond with the total depreciation under Business Tax Act that you reported on Form 62 (items 5 and 6 on Form 62).

Also include any depreciation from previous years which has not been claimed for tax purposes (“reserved depreciation”) that the corporate entity plans to deduct this current year.

  • Fill in the details on your depreciation that was not allowed or deducted in previous years on Form 12A.
  • If during the current year, your company accumulates more reserved depreciation, you must complete Form 12A to report it.

Although it may be permitted under international financial reporting standards, assets you have under a leasing contract are not eligible for depreciation for tax purposes. For this reason, do not enter this type of depreciation in the Tax accounting column.

For further information, see instructions for filling in form 62 (in Finnish). 

Reduction in value of fixed assets

Accounting column:

Enter the written-off amount not included in the depreciation expense, as recorded in accounting.

Tax accounting column: Deductible portion

Enter the portion of the reduced value or write-off of fixed assets not subject to wear and tear that is tax-deductible under §42, Business Tax Act.

Only the following are deductible:

  • Reduced value of other securities than corporate stock
  • Reduced value of other fixed assets (not subject to wear and tear) than land if the fair market value at the end of the tax year is significantly lower than the residual acquisition cost remaining undepreciated.

4 Other operating costs

Entertainment expenses

Accounting column:

Enter all the entertainment expenses recorded in accounting.
Read more about entertainment expenses (in guidance “Treatment of entertainment expenses for income tax purposes, in Finnish).

Tax accounting column: Deductible portion

  • Half (50%) of the entertainment expenses (§8.1.8, Business Tax Act).
Donations granted

Accounting column:

Enter all the donations you have given, as recorded in accounting.

Tax accounting column: Deductible portion

Enter the deductible portion of donations.

Only reasonable amounts of donations paid to non-profit organizations are deductible. Normally, it is also required that the organization is active locally or its activities are close to your line of business.

Subject to certain restrictions, corporate entities may also deduct donations paid for the benefit of cultural heritage, scientific purpose or artistic purpose, and of which the amount is at least €850 (under §57, Income Tax Act).

Capital losses for selling securities/fixed assets

Accounting column:

Enter the losses due to selling and liquidations of shares and partnership shares included in fixed assets as they are recorded in your accounting.

Specify the losses on Form 71A and Form 71B as follows:

  • Form 71A is for reporting tax-exempt capital gains from the sale and liquidation of assets, and for reporting non-deductible losses.
  • Form 71B is for reporting tax-exempt capital gains from selling and liquidations of assets, and deductible losses. The deductible losses may either have unlimited deductibility or a restriction that limits it only to the current tax year and five subsequent years.
  • Similarly, Form 71B is also for capital and liquidation gains and corresponding losses from shares in partnerships or consortia.

Tax accounting column: Deductible portion

Enter the capital and liquidation losses that are subject to unlimited deductibility. Examples of these include:

  • Capital losses for the sale of fixed assets belonging to a corporate entity engaging in investment activities
  • Losses derived from the selling of the corporate entity's business assets, such as housing-company shares and other comparable shares.

Note: normally, capital losses are non-deductible (and the corresponding capital gains are exempted) and must not be entered here.

Capital losses may additionally be available for deduction only in respect of taxable capital gains of the fixed-asset shareholding, either during the tax year or during five subsequent years.

  • This type of deduction from gains is already made at the stage when calculations are drawn up to arrive at the taxable value of the capital gain, which is reported in section 4 (Business income), line 2 ”Other operating income”. For this reason, you must not enter the capital losses here.

Read more about the deductibility of capital losses (in guidance “Taxes on the gains derived from selling securities booked as fixed assets in the balance sheet”, in Finnish).

Write-offs within Accounts Receivable Enter the amount of writer-offs within Accounts Receivables (§17.2, Business Tax Act).
PE-related management costs of the parent/principal 

Part of the management costs paid by the parent/principal but attributable to the permanent establishment in Finland. Examples of such costs include:

  • Expenses for staff on-the-job training, recreation expenses
  • IT expenses and other telecommunications expenses
  • Marketing expenses.
Other deductible business costs

Enter any deductible business costs, directly relating to the permanent establishment in Finland, and not entered in the lines of the Tax Accounting column as other operating costs. Examples of such costs include

  • Additional personnel expenses paid on a voluntary basis
  • Office expenses
  • Motor vehicle expenses
  • IT system hardware and software costs
  • Other machinery and equipment
  • Travel expenses
  • Selling costs
  • Marketing expenses
  • Research and development
  • Administrative services
  • Other administrative costs
  • Other business costs.
Also enter the tax-deductible public broadcasting tax and real estate tax paid.

Non-deductible costs

These lines are for information on non-tax-deductible cost items that are recorded as expenses in accounting (P/L) but are not filed elsewhere in the tax return.

Enter the amounts in the lines without including them in the “Calculation of taxable income”.

Direct taxes

Enter any income-tax costs with P/L effect. This means that you should enter the taxes that relate to the accounting period on an accrual basis, not only the payments of taxes in advance that were made during it.

Do not enter real estate tax on this line because it is treated as a tax-deductible expense.

Punitive tax increases and late-filing penalties

All tax increases are non-deductible regardless of what tax is their base.

Enter additionally tax-like charges such as late-payment fees, surtax relief, surtax and negligence penalties – also these payments are non-deductible.

Fines and other penalties  

Enter any payments of fines, sanctioned penalties and similar (under §16.5, Business Tax Act).

Reduction in value of shares included in fixed assets

Enter any amounts of write-offs of the value of corporate stock booked among the fixed assets of the balance sheet.

If a depreciation entry is made due to such write-offs, it is not deductible.

Statutory reserves  

Enter the balance-sheet reserves, as recorded in accounting. Statutory reserves are not normally deductible.

What is meant by 'statutory reserves' is the amount of estimated future expenses and losses arising from the obligations referred to in Chapter 5, §14, Accounting Act for which no exact amount or precise date of payment is known yet.

These future expenses may be caused by a renovation of a production line or plant, the termination of such a plant, guarantee clauses affecting repair costs of sold goods, customer grievance claims and payments for damages.

The balance-sheet reserve for purposes of guarantee expenses is a deductible reserve: companies in the construction, shipbuilding, and metal industry sectors may create it if they carry responsibility for the delivery of a building, bridge, aircraft, a unit of machinery (§47, Business Tax Act). It must be entered in the Tax Accounting column in section 7 “Increases of reserves”.

Other non-deductible costs

Enter any other non-deductible expenses that cannot be entered elsewhere.

Examples:

  • Expenses incurred in acquiring or maintaining tax-exempt income. However, if the amount of the expense is higher than the tax-exempt income, the excess is deductible (§16.2, Business Tax Act).
  • Payments for creating a connection with a utility grid such as electric power, telecommunications, water, sewage, heating were made, which are to be refunded to the corporate entity later if the utility contract is terminated, are non-deductible expenses (§16.3, Business Tax Act).
  • Bribe money paid to someone in any form.
  • The amount paid by the corporate entity to buy back its own shares is a non-deductible expense unless the shares had been given to the seller due to an employment contract (§16.9 and §18.3, Business Tax Act).

5 Financial expenses

Interest paid to companies within the same group

Deductible portion (§18a, Business Tax Act)

 

Enter the interest expense resulting from your payments of interest on debt received from associated companies, Finnish or foreign.

  • Example: interest payments to companies of the same group (under Chapter 1, §6, Accounting Act).

Debt between associated parties may be direct or indirect. It is direct when an associated relationship exists between the parties as referred to in §31, Act on Assessment Procedure (under §18a, subsection 5, Business Tax Act). What is regarded as the indirect form of debt between associated parties is the following:

  • The associated party has a receivable from an unassociated party, and this receivable is connected to the debt
  • The debt collateral is a receivable from an unassociated party (§18a, subsection 6).

Interest payments relating to associated debt may additionally include amounts relating to indirect debt under §18a, subsection 1, Business Tax Act, if they are not entered in the books as interest payments made to companies belonging to the same group (Chapter 1, §6, Accounting Act). For this reason, the total interest expense entered on this line may be higher than that recorded in accounting.

Tax accounting column: Deductible portion (§18a, Business Tax Act)

Enter all the deductible interest expenses on this line, maximum deduction being the amount of your interest income. You may deduct all your interest expenses if the net interest expense (the amount by which the expense exceeds the income) does not exceed EUR 500,000.

Complete Form 81 (Account of interest expenses) if the net expense is more than €500,000. You may deduct the part exceeding €500,000 up to a limit corresponding to max. 25% of your adjusted business profits. The amount of non-deductible net interest income is at most equal to the net interest expenses between associated companies.

  • Transfer the net interest expense (on associated debt) from Form 81 into this field. Also include any previous years' net interest expense (associated debt) that your company wants to have deducted during the tax year (by claiming it on Form 81).
Interest paid to associated and affiliated companies Interest income paid to companies where there is a participating interest (Chapter 1, §7, Accounting Act).
Interest paid to parent/principal 

Accounting column

Enter the amount that the PE or branch has entered in the books as payments of interest to the parent company or the principal.

Tax accounting column

Enter the deductible portion.
Other interest paid

Other interest expenses, e.g. relating to

  • Accounts payable
  • Bonds
  • Convertible bonds
  • Bank loans
  • Finance company loans
  • Pension company loans
  • Bills of exchange.
Group support and write-offs of Accounts Receivable

Group support payment going to a member of the group of which you hold 10% either alone or jointly with other group companies (under §6b, subsection 7, Business Tax Act).

Enter the other similar expenses paid for the purpose of improving the financial standing of another company without reciprocal compensation from that company. Indicate any write-offs and decreases in value of the receivables you may have (excluding Accounts Receivable) from such a company.

These amounts are not deductible (§16.7, Business Tax Act).
Losses of other financial assets and final reductions in value

Accounting column:

Enter losses of other financial assets and final reductions in value, as recorded in accounting. An example is a loss of money due to embezzlement, theft or other offences.

Tax accounting column: Deductible portion

Enter the deductible portion of the value of lost assets.

  • Lost financial assets are treated as deductible expenses (§17.1, Business Tax Act).
  • Similarly, under §17.2, Business Tax Act, final reductions in value are treated as deductible expenses unless a receivable from another group company is in question (see “Group support and write-offs of Accounts Receivable” above).
Capital losses from the selling of financial assets Enter the capital losses as they are recorded in your accounting, e.g. sale of a corporate share or sale of a receivable at a low selling price.
Other financial expenses

Enter the expenses as they are recorded in accounting, including:

  • Loan management costs
  • Bank overdraft facility fees
  • Bank guarantee commissions
  • Credit insurances
  • Mortgage costs
  • Recovery costs
  • Foreign exchange losses
  • Factoring expenses
  • Forwarding expenses.

6 Group subsidy paid out 

  Enter the amount of group subsidy paid out. Enclose Form 65 to specify.

7 Increases to reserves 

 

Accounting column:

Increases to tax-based reserves, as shown by accounting. Specify the reserves on Form 62.

Tax accounting column: Deductible portion

Enter the portion that can be deducted.

8 Other deductible costs  (not included in P/L)

 

Taxable income that is not included in the P/L for the year.

Work-related dividends, for example, must be reported here. Dividends paid by a non-listed company are earned income if they are distributed on the basis of the work effort of the beneficiary or their sphere of interest (Under §33b, subsection 3, Income Tax Act. For more information (in Finnish and Swedish), see "Taxes and dividend payments that reflect the work effort of the shareholder-beneficiary” – Työpanokseen perustuvan osingon verotus, dnro A263/200/2017).

Enter the deduction for training claimed by the corporate entity. Enclose Form 79 to specify.

Total tax-deductible business costs

  Enter the Tax Accounting column total.

6 Taxable profits/Tax-deductible losses

This section is for reporting profits or allowable losses, by source of income, for the 2018 tax year.

Do not enter the losses for previous years as the Tax Administration deducts them automatically unless significant changes – section 11 – have taken place in share ownership. Check the tax decision for exact amounts.

If the corporate entity has receipts of income from an agricultural source, specify the revenues and expenses on Form 7A.

If the corporate entity has receipts of income from a personal source, specify the revenues and expenses on Form 7M.

Profit from business activities

Enter a positive economic result in this line.

Subtract Tax-deductible business costs (section 5 of the form, line 9) from Taxable business income (section 4, line 8).

Loss from business activities

Enter the allowable loss in this line. This is normally the negative difference that results from subtracting Tax-deductible business costs (section 5, line 9) from Taxable business income (section 4, line 8).

However, if your expenses include donations or group subsidy payments that you have made (Amounts not taken into consideration), you must reduce the loss in this field by their amount.

Amounts not taken into consideration

Payments of intra-group subsidy, reserves on the balance sheet for residential dwellings (asuintalovaraus), and donations are amounts that are not taken into consideration (§57, Income Tax Act).

The deduction based on the giving of a donation is not taken into consideration when the corporate taxpayer's allowable loss is calculated (§ 57, Income Tax Act) because it is based on special tax rules. However, it is taken into consideration if the calculation concerns a personal source of income for which a loss is made. 

Taxes at source withheld in Finland on income 

  Enter the amount of taxes at source withheld in Finland on the corporate entity’s income.

7 Key figures for the parent/principal 

Turnover of the parent/principal (entire operations) Enter the worldwide sales/turnover of the corporate entity, as recorded in accounting.
Total expenses  Enter the worldwide expenses the corporate entity, as recorded in accounting.
Profit or loss for the accounting period   Enter the worldwide profit or loss of the corporate entity, as recorded in accounting. 
Number of staff  Enter the number of employees of the corporate entity.

Calculation of net worth 

All corporate entities must complete the “Calculation of Net Worth” because the information is needed for statistical purposes, etc. However, listed corporate entities may fill in the assets and liabilities at book values because the taxes to be imposed on any dividends that they distribute are not affected by the corporate entity's Net Worth and the stock's mathematical value. Additionally, the comparison values of listed companies’ shares depend on market quotes, not on the book values on the balance sheet.

For purposes of this guidance, a 'listed' corporate entity means a company with all its stock, or a series of shares, being subject to stock-exchange trading in Finland (the basic listing or the 'Pre List' of NASDAQ OMX Helsinki Oy), elsewhere in the European Economic Area, or in a comparable market outside the European Economic Area.

If you are a credit institution, an insurance company or a provider of investment services (regardless of whether you are listed or non-listed), you do not have to complete the “Calculation of Net Worth” fully. You only have to fill in the totals of assets and liabilities.

If you are a corporate entity that does not operate a trade or business, fill in “Other long-term investments (Income Tax Act), total” at the bottom part of the column to specify your assets, and fill in "9 – Liabilities" to specify your liabilities.

8 Assets

Enter all assets as amounts equalling their undepreciated, residual acquisition cost unless the guidance instructs you to do otherwise. “Calculation of Net Worth” may contain asset values that deviate from those recorded in the balance sheet.

Fixed assets

The business assets intended for permanent use are fixed assets (§12, Business Tax Act).

In accounting, they are normally included in non-current assets.

Examples of fixed assets subject to wear and tear:

  • Buildings
  • Machinery
  • Equipment and other fixtures
  • Patents and other intangible rights that are transferable.

Specify the depreciation and depreciation differences relating to your fixed assets subject to wear and tear on Form 62.

Land areas, securities and similar fixed assets are regarded as not being subject to wear and tear.

Intangible assets

Enter the total value of intangible assets.

Examples include the following:

  • Patents
  • Copyrights
  • Trademark rights
  • License fees
  • Concession rights
  • License fees for computer software.

Other non-current investments

Enter the non-current investments that have retained their value and can be treated as assets (see the corresponding line 7 on Form 62 (§24 and §25, Business Tax Act), “Undepreciated acquisition cost at the end of the tax year”).

Enter the expenses that help generate income for longer than three years or contribute to maintaining income for three years or longer. They include amounts that you have transferred to the balance sheet from the P/L under the rules defined by the relevant provisions of Business Tax Act. The provisions of §24, Business Tax Act refer to leasehold improvement costs and the acquisition cost of business goodwill. In addition, courts of law have issued rulings about research & development expenses that can at least in part be treated as investments, i.e. assets with some value.

If you have an expected tax receivable according to your calculations, it is not treated as an asset. Similarly, the expenses for setting up and organising your corporate entity are not investments, and if any non-current investments have lost their value, they cannot be treated as assets.

If there has been an equity difference in the books caused by a merger, it may have a positive value and be considered an asset. In that case, it must be entered as part of the net worth of the receiving company (Rulings of the Supreme Adm. Court, 1994 B 545 and 1994 B 546).

Real estate, buildings and structures
(specified on Form 18)

Enter the total value of real estate, buildings and structures included in company fixed assets.

Enclose Form 18 to specify.

The value should either be the undepreciated residual acquisition cost (= line 7 on Form 62, undepreciated balance at end of year) or a comparison value (= tax value), whichever is higher.

The comparison must be made separately for each specific unit of real estate.

A real estate unit comprises a land area and the buildings located on it.

Under §6, Income Tax Act, real estate also refers to buildings, structures, etc. located on another owner's land, provided that they are transferable to a third party without consulting the landowner, so that the right of possession for the land is also transferred.

If the end date of the corporate entity's accounting period falls between 1 January – 30 September 2017, you must use the confirmed 2017 tax value of the real estate because the 2018 value would not yet be confirmed.

If the end date of the corporate entity's accounting period falls between 1 October – 31 December 2017, you must use the confirmed 2018 tax value of the real estate.

Other structures treated as being fixed assets are:

  • Fuel tanks, acid tanks and similar structures made of metal or other comparable materials and intended for storage and other purposes
  • Light structures made of wood or other comparable materials
  • Structures used only for research purposes with a view to furthering business objectives.

Comparison values of woodlands are calculated as: average annual returns × 10. 

Comparison value of farmlands: average annual returns × 7. An official decision of the Tax Administration is the source for determining the average annual returns.  

Comparison value is 0 for bodies of water and for land that cannot be used. 

Machinery and equipment

Enter the total undepreciated residual acquisition cost of machinery and equipment.

Examples include:

  • Machines and installations
  • Lorries and vans
  • Passenger vehicles
  • Commercial vehicles
  • Furniture
  • Machinery and equipment offered for rent.

Equipment held under a leasing contract is not regarded as being part of fixed assets for tax purposes. Do not enter its value here. 

Cash advances paid

Enter the advances included in fixed assets.

Securities included in fixed assets
(comparison on Form 8A)

Complete Form 8A to make a comparison between the undepreciated acquisition costs of securities that are booked as fixed assets in the balance sheet, in financial assets, and in other non-current investment (as defined in Income Tax Act).

Transfer the sum of securities, booked as fixed assets, from the column where the total value of securities is higher, to this line.

The value of stock-exchange-listed securities is 70% of the closing price on the end date of your accounting period. Share prices (www.nasdaqomxnordic.com). Site for historical market quotes.

The comparison value of a share in an investment fund or a UCITS is 70% of the fair market value at the end of the year.

The comparison value of an unlisted share is indicated in the tax decision of the company whose share it is.

If shares in a housing company were purchased before 1 January 2006, their comparison value is the 2005 comparison value.

There is no specific comparison value for housing-company shares purchased after 1 January 2006 similarly as there is no such value for unlisted bonds, call-option rights, and shares in co-operative societies. The undepreciated acquisition cost must therefore also be entered in the “Comparison value” column on Form 8A. 

Receivables from companies in the same group

Enter the receivables from group companies treated as fixed assets in accounting.
“Group companies” refer to the parent company and subsidiaries, as defined in the Accounting Act (Chapter 1, §6).

Receivables from associated/affiliated companies

Enter the receivables from associated/affiliated companies treated as fixed assets in accounting (Chapter 1, §7, Accounting Act).

Other non-current receivables

Enter other receivables treated as fixed assets in accounting.

Other fixed assets

Enter any other items included in your fixed assets.

Examples include animals and plants,, works of art and collectibles.

Total fixed and non-current assets

Add up all the entries under this sub-heading.

Current assets

Under the provisions of §10, Business Tax Act, current assets are merchandise, raw materials, semi-finished goods and other goods intended for handing over to a customer in the course of business, with or without further processing. Additionally, fuels, lubricants and other comparable supplies intended for consumption in the course of business are regarded as current assets.

Enter current assets as amounts equalling their acquisition cost adjusted by a reduction in value where necessary, as provided in § 28.1, Business Tax Act.

Real estate and buildings/current assets

Enter the values of real estate and buildings included in current assets.

Other current assets

Enter other assets included in current assets. Examples:

  • Materials and supplies
  • Work-in-progress
  • Finished products
  • Goods
  • Securities  treated as current assets
  • Advances paid for current assets
Total current assets Add up all the entries under this sub-heading.

Financial assets

Financial assets include cash and banks, receivables in the form of bank account balances, bills of exchange etc. (§9, Business Tax Act).

Additionally, accounts receivable and cash reserves in the form of securities are also regarded as financial assets.

Enter financial assets as amounts equalling their nominal values when a receivable is in question, and use acquisition cost values for other financial assets. Both types of assets must first be adjusted for reduction in value as provided in §17, Business Tax Act.

If the receivables are not denominated in euros, you must convert them into euros following the same rules as how you convert foreign currency amounts for accounting purposes, i.e. by the exchange rate of the balance-sheet date (Chapter 5, §3, Accounting Act). 

Accounts receivable Enter all long-term and short-term receivables, instalment account receivables, etc.
Receivables from companies within the same group

Enter the receivables from group companies, excluding accounts receivable balances.

“Group companies” refer to the parent company and subsidiaries, as defined in the Accounting Act (Chapter 1, §6, Accounting Act).

Receivables from associated/affiliated companies Enter the receivables from associated/affiliated companies (Chapter 1, §7, Accounting Act), excluding accounts receivable balances.
Loans receivable Enter the loans receivable not entered on the above lines, such as long-term and short-term receivables from employees and management.
Securities included in fixed assets
(specify on Form 8A)

Enter the securities included in fixed assets.

Complete Form 8A to specify the securities you have booked as fixed assets and financial assets including other non-current investment (assets within the meaning of Income Tax Act). Transfer the sum (Total financial assets) on this line from the column where the amount is higher at the bottom of Form 8A.

Other financial assets and other receivables

Enter all the financial assets not specified above. Examples:

  • Prepayments and accrued income
  • Cash equivalents
  • Cash
  • Other receivables (e.g. insurance indemnities).
Total financial assets Add up all the entries under this sub-heading.

Other long-term investments (Income Tax Act)

Assets that are outside your business and taxed under the Income Tax Act must not be included in the above lines for fixed assets, current assets and investments. Instead, enter them on lines below.

Enter all assets as amounts equalling their undepreciated, residual acquisition cost unless the guidance instructs you to do otherwise.

Securities
(specify on Form 8A)

Specify the corporate stock and other securities that you own which do not directly serve a business purpose.

Complete Form 8A to specify the securities you have booked as fixed assets and financial assets including other non-current investment (assets within the meaning of Income Tax Act). Transfer the sum “Other long-term investments” on this line from the column where the amount is higher at the bottom of Form 8A.

Real property and buildings

Enter any real estate that does not serve the business purposes of your company. For example, a real estate unit rented out to an external party.

The value should either be the undepreciated residual acquisition cost (used for income tax purposes) or a comparison value (= tax value), whichever is higher.

If the end date of the company’s accounting period falls between 1 January – 30 September 2018, you must use the confirmed 2017 tax value of the real estate.

Other assets enumerated by Income Tax Act 

Other assets not directly serving a business purpose.  

Total other long-term investments (Income Tax Act)

Enter the total value of other long-term investments (under Income Tax Act).   

Total assets  Enter the total value of fixed, current and financial assets and the value of other long-term investments (under Income Tax Act).

9 Liabilities

Loans from financial institutions  

Enter the following:

  • Long-term and short-term loans from banks and other financial institutions 
  • Loans from financing companies
  • Factoring balances
  • Other short-term loans from financial institutions.
Amounts owed to companies within the same group

Enter the amounts of long-term and short-term debts owed to other group companies, excluding accounts payable balances.

Examples of these debts:

  • Advance payments received from group companies
  • Debt from group in the form of bills of exchange
  • Other intra-group debt
  • Accrued items, when the counterparty is a group company.

“Group companies” refer to the parent company and subsidiaries, as defined in the Accounting Act (Chapter 1, §6, Accounting Act).

If the group of companies has applied a system of distributing dividends in advance, and your company distributes them, you must not include any unpaid dividends in your debts. Instead, they must be subtracted from the net worth of the company in the same way as any other dividends that are going to be paid out.

Read more about distributing dividends in advance in guidance “System of distributing dividends in advance” (Dnro A148/200/2017, in Finnish).

Amounts owed to associated/affiliated companies

Enter the amounts of long-term and short-term debts owed to associated/affiliated companies (Chapter 1, §7, Accounting Act), excluding accounts payable balances.

Include, for example, any advance payments received from associated/affiliated companies, bills of exchange, and other debts, as well as accrued liabilities to associated/affiliated companies.

Amounts owed to shareholders Enter the long-term and short-term debt owed to shareholders and their family.
Accruals and deferred income

Enter the amounts of long-term and short-term accrued expenses and deferred income, which include, among others:

  • Rental income received in advance
  • Interest income
  • Periodised investment grants
  • Other deferred income
  • Performance-based wage expenses for the accounting period
  • Holiday pay expenses.

Other liabilities  

Examples include the following:

  • Long-term borrowing from pension insurance companies
  • Advances received 
  • Bills of exchange, debts to be paid back to employees
  • Short-term bills of exchange
  • Debt consisting of payroll withholding money
  • Debt consisting of employer’s health insurance contributions
  • Accounts payable
  • Bond debt
  • Debenture debt

If you are an insurance company or a pension insurance company, you must enter outbound payments you are responsible for as debt; and a balance-sheet reserve must also be entered as debt (within the meaning of the act on the valuation of property and assets, §2.3).

Debt also includes the payments received from those who join a utility grid (electric power, telecommunications, etc.) if the amounts have to be refunded to the customers upon termination of the utility contract (within the meaning of the act on the valuation of property and assets).

For purposes of Calculation of Net Worth, tax debt estimates within the meaning of Chapter 5, §18, Accounting Act, are not debt, so they are not entered as a debt in the Calculation of Net Worth. However, any tax debt booked for the same accounting period (accrual basis accounting) is always entered as a debt.

Subordinated loans taken  

Enter the total amount of capital loans taken out by the company (Chapter 12, §1, Limited Liability Companies Act).

For tax purposes, this type of loan is normally treated as external-source capital, i.e. as borrowed (cf. §2.3, Act on the valuation of property and assets). For this reason, it must be entered as a debt in the Calculation of Net Worth. 

Total liabilities

Sum total of the entries that represent debt.

Please note that the amount entered here is not necessarily the sum of “Total current liabilities” and “Total non-current liabilities” because they are from the company's accounting books whereas the amount entered here is based on tax accounting rules. 

Total current liabilities

Enter the book balance of your short-term debt. 

Total non-current liabilities

Enter the book balance of your long-term debt.

10 Auditor's report

Have the auditors given their report?

If a corporate entity has the obligation to have its financial statements audited, the Auditor's report must be enclosed to the tax return.

  • Tick “Yes” if the auditor has finished their audit work before the tax return is filed.
  • Tick “No” if the audit is not completed yet, but is going to be completed later.

If the audit is not completed by the due date of your tax return and Auditor's report is not yet available, you must deliver it to the Tax Administration within one month after the date of completion of the audit.

If you e-file, you can log on again later to add any further information or documents.

If you opt for paper filing, you must staple Form 63 to the Auditor's report and send it to:

Tax Administration
OCR Service – Corporate taxpayers’ tax returns
P.O. Box 200
FI-00052 VERO
FINLAND

Tick “No, because no auditor has been appointed under Chapter 2, §2, Auditing Act” if the corporate entity refrained from appointing an auditor under the provisions of the amended Act (Auditing Act 1141/2015) that concern small businesses.

Corporate entities are allowed to not appoint an auditor if only one (maximally one) of the following preconditions is fulfilled in the latest and the preceding accounting period:

  • Balance Sheet assets/liabilities exceed €100,000.
  • Net sales exceed €200,000.
  • Average number of people on the payroll is more than 3.

Nevertheless, it is mandatory for the company/entity to appoint an auditor if its Charter, Articles of Association etc. contain provisions to that effect.

Some additional legal provisions are found in chapter 2 §2.4, Auditing Act restricting certain lines of business and spheres of influence. 

Are there any disapproving statements or remarks?

Tick “No” if the text of the Auditor’s report is free from any disapproving statements or remarks, as defined in the Auditing Act.

Tick “Yes” if the text of the Auditor’s report contains any corresponding disapproving statements or remarks.

11 Changes of shareholding, information on past losses 

Always complete this section if more than half of the shares have changed hands in the course of a single tax year, or gradually over the course of several years. Information on share transfers have an effect on the right to deduct past losses.

Losses of a corporate entity are deductible against its taxable profits, attributable to the same source of income as the losses were, over the ten tax years following the year of the loss.

Impact of shareholder changes (ownership changes)

A corporate entity loses its entitlement to tax deductions for losses in past-years if more than half of its shares, directly or indirectly, have changed hands and been transferred to a new owner during the year when the loss was made or during a later year, and the reason for the change was not an inheritance or a will (i.e. there was a sale transaction or an exchange transaction).

However, the entity may request the Tax Administration to give a special permission (under §122, Income Tax Act) for the deductions to stay in force despite the change in ownership. Further information on requests for special permission (in guidance “How to complete a request for advance ruling/special permission and the related decision”).

Indirect changes in ownership, i.e. differences in the proportions of shareholding, are taken into consideration if a shareholder is incorporated and has at least a 20-percent holding, and the majority of the shares of this incorporated shareholder is transferred to a new owner. In such cases, all the shares are treated as having been transferred to a new owner.

Example: 

Example: X Oy owns all of the shares in Z Oy. When more than half of X Oy's shares are transferred to a new owner, all the shares of Z Oy are treated as having been transferred to a new owner.

Changes in ownership of a stock-exchange-listed company, with its shares being publicly traded, do not prevent the deductions discussed here.

Changes of shareholding, information on past losses

Enter the tax year of the change if more than half of corporate stock has changed owner at one time during the past ten tax years.

Similarly, enter the year even if this has occurred progressively: the change in ownership may have happened during a period spanning several years, or there may have been indirect changes of ownership during the past ten tax years. In this case, indicate the tax year before which or during which any losses made by the company would not be deductible because the current owner is different. In addition, write out a separate enclosure to explain the changes of ownership and the dates when they occurred.

Example: Corporate stock consists of 100 shares, held by one single individual. The individual sells 50 shares to someone in 2016, and one share to someone in 2017. This means that more than half of the stock changed hands, taking into consideration both years 2016 and 2017. The company made losses for the 2013 to 2017 tax years.

The company must enter 2016 as the tax year when the change took place, and write out a separate enclosure to explain the changes of ownership and the dates when they occurred.

The company is in this case not allowed to deduct its losses for 20123to 2016 from its 2018 profits. In 2017, a year when the company also made a loss, just one share was transferred to a new owner. Consequently, the company is entitled to deduct its 2017 loss from its 2018 profits.

There may be a change in ownership relations although the owners stay the same: for example, the company issues a set of new shares, but only some of the old shareholders sign up to purchase them.

If you file Form 6U on paper, remember to sign and date the form. 

List of enclosure forms and their instructions:

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