Frequently Asked Questions - Russian invasion of Ukraine

Donations of this type are not tax-deductible in income taxation. In the same way, donations in cash are not tax-deductible in income taxation. Because the part that you donate of your company’s products would be given away instead of being sold in the normal way, the company cannot make the usual income-tax deductions for the cost of manufacturing or purchasing of those products.

As for value-added taxation, please note the temporary VAT rule change:
Donations from VAT-registered businesses to Ukrainian refugees become VAT-exempt (only in Finnish or Swedish)

When you or your company sells goods and services, you receive income which is subject to tax even though your customer might pay the price of your goods and services directly to a charity organisation. If you donate amounts of income that are bound to arrive to yourself or to your company, it is considered a gift. You can make no tax deductions based on such a gift, not from the income you receive personally, nor from the income your company receives. The above tax treatment remains the same regardless of whether you donate something as a private individual, your company donates it, or a third party donates it with your or your company’s consent.

If you are a performer who gives a performance at a concert without pay, the result is that you have not received any taxable income.

If a business enterprise or a corporate entity organises a concert for charity, the revenues from the concert are its income subject to tax. If the organiser is a business enterprise, it cannot deduct the donated revenues from the concert on its tax return.

If the organiser is a corporate entity promoting the public good, the revenue is not seen as taxable business income if the objective of organising the concert had been to gather financing for the entity’s activities.

It is always your decision to make such a donation because your employer cannot make the decision – without asking you first – to send part of an employee’s wages to charity. In other words, you are the one who makes the decisions on how your wage income is used: you choose whether or not your employer should donate part of your wages to charity. For this reason, the donation itself has no impact on your taxes, i.e. also the amount that you donate is part of your taxable wage income.

If you receive rental income from renting out a dwelling, it is taxable income. You can make tax deductions from this rental income based on any expenses you have had to pay that are connected to the rental operation.

If you rent out a dwelling and receive below-market rent, the maximum limit for tax-deductions is the amount of rental income that you actually receive. Accordingly, if the result of the rental operation is a loss, you are not allowed to deduct that loss.

If you receive no rental income at all, you are not allowed to make any tax deductions for expenses, either.

The above tax treatment remains the same if you have a company that provides accommodation free-of-charge or rents out apartments to those who have fled Ukraine.

The wages received from work in a foreign country may be tax-exempt in Finland if your work and presence in the foreign country lasts for at least 6 months, and you stay in Finland for no more than 6 days per month on average (the six-month rule). 

Because of various exceptional circumstances, an individual taxpayer’s presence in Finland can be longer if the reason for coming home is that work in the foreign country is interrupted due to an unexpected, serious cause.

Ukraine is under martial law, and Finland’s Ministry for Foreign Affairs has instructed everyone to leave Ukraine and some territories of the Russian Federation without delay. Political unrest may extend to Russia and Belarus, and the Ministry for Foreign Affairs has instructed everyone to avoid travelling there.

If an individual’s work assignment in Ukraine, Russia or Belarus is now interrupted or completely terminated due to the reasons referred to above, the individual’s wage income from employment in those countries may be exempt from income tax by virtue of the six-month rule.

Note: The tax exemption for work lasting more than 6 months only applies to work done abroad, not to work done in Finland.  Income for work done in Finland, including remote work, is always taxable in Finland.

For more information about the requirements, see Overseas work.

The capital gain you receive when selling a dwelling with profit is tax-exempt income under the following conditions:

• You have owned the shares that entitle you to the apartment, or you have owned the house or part of the house for at least 2 years, and
• you or your family members have lived in it for at least 2 consecutive years.

If you offer your permanent home for rent to people fleeing Ukraine – or let them live there for free – it means that the period when you live there yourself is interrupted, and the tax requirement of 2 consecutive years is not fulfilled. Even a short period of renting out or giving the dwelling to people fleeing Ukraine is seen as an interruption of the time period when you and your family live there. However, from the perspective of the tax rule that requires 2 consecutive years of living, you are allowed to let part of the dwelling be used by people fleeing Ukraine and keep living in the remaining part of the dwelling. 

There are no special provisions on the deductibility of losses from sales receivables resulting from sanctions imposed on payment transactions. Losses from sales receivables can be deducted in income taxation insofar as payments can no longer be justifiably expected and a reduction in value is evident. Deductibility does therefore not require that a reduction in value would be final. In principle, reductions in the value of sales receivables are considered tax-deductible if they have been recorded as expenses according to good accounting practice. Reductions in value will be considered separately for each receivable. More information is available in the Tax Administration’s detailed guidance on the deductibility of reductions in value in the taxation of business income (available in Finnish and Swedish).

Law does not separately provide for the deductibility of specialist service expenses in income taxation. Specialist service expenses are thus deductible if they have been paid for the purpose of producing or maintaining income. More information on the allocation of specialist service expenses to the correct taxpayer and on the deductibility of specialist service expenses relating to the disposition of shares is available in the Tax Administration’s detailed guidance (available in Finnish and Swedish).

In principle, expenses paid for the purpose of producing or maintaining income are deductible. Damages and contractual penalties governed by private law are deductible expenses if they have been paid for the purpose of producing or maintaining income. On the other hand, payment consequences comparable to penalties under public law are not deductible.

The reserve may not be deducted because only reserves separately specified as deductible in the act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968, hereafter: Business Tax Act) are deductible in income taxation.

Deductibility of reductions in the value of securities depends on the asset type. If the securities are included in financial assets or other assets, a reduction in value may be deducted only if the securities are disposed of or if the loss in value is final. Interruption of trading does not as such mean a final loss in value. As regards securities included in current assets, a reduction in value can be deducted, as a rule, at the same time as a non-current deduction recorded in the financial statements as changes in inventory is made. However, if the securities are financial instruments held for trading, deductible expenses are reductions in value recorded as expenses in the profit and loss account in accordance with the international accounting standards as referred to in chapter 5, § 2 a or chapter 7 a, § 1 of the Accounting Act.

In principle, expenses paid for the purpose of producing or maintaining income are deductible. Such expenses paid in cash are therefore also deductible. As regards expenses paid in cash, the purpose of producing income must be proven by means of receipts and other documentation, for example.

Advance payments are usually included in financial assets. Reductions in the value of financial assets are deductible in income taxation only if they are final. However, if the debtor is a limited liability company and the creditor or the creditor's group companies alone or together own at least 10% of the debtor’s share capital, a loss of receivables is not treated as deductible expenses in income taxation. This limitation does not apply to venture capital companies. More information is available in the Tax Administration’s detailed guidance on the deductibility of reductions in value in the taxation of business income (available in Finnish and Swedish).

Subsidiary shares are usually included in the parent company's fixed assets. According to the Business Tax Act, the disposal price of a corporation’s fixed-asset shares is, under certain conditions, tax-exempt income and the acquisition cost is treated as non-deductible expenses. This means that capital gain from fixed-asset shares is tax-exempt and capital loss is non-deductible. The Business Tax Act also limits the deductibility of the acquisition cost of fixed-asset shares in situations where the disposition is not tax-exempt. In such a case, the capital loss can be deducted only from the taxable disposal price of the fixed-asset shares in the tax year and the next five tax years. However, this limitation does not apply to the disposition of real estate company or housing company shares. The tax treatment of the disposition of fixed-asset shares is discussed in the Tax Administration’s detailed guidance (available in Finnish and Swedish). Subsidiary shares can also be included in the parent company's other assets. There are limitations to the deductibility of the acquisition cost of shares that are included in other assets but are not real estate company or housing company shares. Loss arising from the disposition of shares included in other assets can be deducted only from taxable profit arising from the disposition of other assets in the tax year and the next five tax years. More information is available in the Tax Administration’s detailed guidance on the removal of the distribution of sources of income (available in Finnish and Swedish).

In general, if you live outside Finland on a permanent basis, you can drive your foreign-registered motor vehicle in Finland exempt from tax and you do not have to submit a declaration for the tax-exempt use. However, please note that sanctions on the import of cars from Russia may limit your rights to use the vehicle in Finland.

Russian-registered cars must exit Finland no later than 15 March 2024 (the press release by the Finnish Customs)

For more information about the sanctions and their effects, see the website of the Finnish Customs

Read more about restrictions on the import of vehicles registered in Russia in the press release by the Ministry of Foreign Affairs

Read more about tax-exempt vehicle use in Finland

Read more in Ukrainian: Якщо ви постійно проживаєте за кордоном, ви зазвичай можете користуватися транспортним засобом без оподаткування у Фінляндії

Read more in Russian: Если Вы постоянно проживаете за рубежом, то, как правило, Вы можете пользоваться в Финляндии транспортным средством без уплаты на него налогов

In general, because you live outside Finland on a permanent basis, you can drive a foreign-registered motor vehicle in Finland exempt from tax, and there is no need to submit a declaration for the tax-exempt use.

Read more about tax-exempt vehicle use in Finland. Check especially the time limits

Read more in Ukrainian: Якщо ви постійно проживаєте за кордоном, ви зазвичай можете користуватися транспортним засобом без оподаткування у Фінляндії

Read more in Russian: Если Вы постоянно проживаете за рубежом, то, как правило, Вы можете пользоваться в Финляндии транспортным средством без уплаты на него налогов

Because of the sanctions that are in force, some banks are unable to transfer money in the usual way, which may also prevent the transfer of tax payments to the Finnish Tax Administration.  

If the sanctions prevent the bank where you are a client from transfering money and your payments of Finnish taxes, we suggest that you open an account in another bank.

An alternative solution is to pay your taxes in cash at the Tax Administration’s offices in Finland. You must use the euro currency when paying. Further information about the tax offices and other offices of the Tax Administration that accept cash.

Note: if we receive no payment from you, we must transfer your unpaid tax balances to the Enforcement Authority for collection. In other words, the Tax Administration does not interrupt the recovery measures or the accrual of late-payment interest because of the sanctions.  Later, when the sanctions no longer prevent you from paying, you must send your payment to the Enforcement Authority, following the instructions you receive from them.

For more information, visit the Enforcement Authority’s website.

If you have a payment arrangement in force, and we receive no payment of the instalments that have been agreed, the arrangement will lapse.

Normally, the Tax Administration pays the refund into the bank account that we have on file.

If we cannot send your tax refund to your Russian bank account,

• The amount of the refund will come back to the Tax Administration’s bank account. In this case, you will not lose the refund. Instead, it is applied to any of your upcoming taxes that fall due, or it is sent to you again later, at a time when the sanctions no longer prevent us from sending it. In these circumstances, it is possible that you receive credit interest on the refund.
• You can also open a new bank account in another bank and inform the Tax Administration of the account number. Then we will send the refund to that bank account.