The government proposal to amend tax legislation, including the Act on the Taxation of Nonresidents' Income, has passed in the Parliament of Finland

News, 4/15/2019

The government proposal to amend the Act on the Taxation of Nonresidents' Income, the Act on Assessment Procedure, the Act on Tax Prepayment, and legislation on the publicity and confidentiality of tax information has passed in the Parliament of Finland.

The amended legislation will enter into force on the 1st of January 2021. The regulations regarding the taxation of dividend income to nominee-registered shares will first be applied to dividends paid on the 1st of January 2021 or thereafter.

The amendment to the Prepayment Act will first be applied to dividends paid on the 1st of January 2020 or thereafter. Tax-at-source shall be withheld at 50% for Finnish resident beneficiaries receiving dividend income based on nominee-registered shares in situations where information on the beneficial owner is not reported.

The Foreign Custodian Register and related simplified procedure, as described in § 10 b of the Act on the Taxation of Nonresidents' Income, will be abolished with the introduction of the new legislation. In light of the new legislation, taxation according to a tax convention can only be applied when,

  • the dividend beneficiary has been identified
  • beneficial owner information regarding the dividend beneficiary is reported to the Finnish Tax Administration with the annual information return.

The legislative change will allow Finland to adopt the OECD TRACE model, for which the Finnish Tax Administration will be providing detailed guidance.

Communication regarding the legislative changes will be published on the new Financial Sector page on tax.fi. The contents of the page are constantly being updated, and information will also be available in English. The page will contain up-to-date information on the effects of the legislative change as well as details on how to contact the Finnish Tax Administration for further information.