Foreign organisation as a resident taxpayer in Finland
Due to the amendment to the act on income tax (Tuloverolaki 1535/1992) that entered into force on 1 January 2021, an organisation whose place of effective management is located in Finland is considered a resident taxpayer in Finland. The place of effective management is the place where the organisation’s board of directors or other decision-making body makes the highest-level decisions on daily management. Resident taxpayers must pay tax to Finland on income they receive both from Finland and from abroad. Read more about income tax and tax rates in Finland.
Foreign organisations that do not meet the criteria for tax residence are non-resident taxpayers. If the organisation has a place of management in Finland but it is not the place of effective management, it may still be regarded as the organisation’s permanent establishment in Finland as before. Read more about the permanent establishment and a non-resident foreign organisation’s liability to pay taxes.
Foreign organisations that are resident taxpayers in Finland have the same employer obligations in taxation as Finnish employers, and they must submit information to the Incomes Register in the same way as Finnish companies. For purposes of taxation, employers can be considered either regular or casual. Companies acting as regular employers must always sign up for the register of employers. A company is a regular employer if it meets either of the following two criteria:
- The company pays wages to at least 2 wage earners regularly.
- The company pays wages to at least 6 wage earners simultaneously, even if their employment contracts are temporary and only for a short period.
Employers who pay wages casually do not need to be entered in the employer register, but they can choose to be registered voluntarily.
The company must report the wages it has paid by submitting an earnings payment report to the Incomes Register. The report must be submitted even if the company is not in the employer register. Also, the company must file the employer’s health insurance contributions on the employer’s separate report.
Enter your company in appropriate registers
Enter the company in the Tax Administration registers by submitting a start-up notification for foreign organisations (Form Y1) and Form 6204. The forms are available in the Business Information System (ytj.fi). Report the place of effective management under Additional information on page 4 of the start-up notification. Also attach a free-form account of the place of effective management. If the company already has a Finnish Business ID, report the details on the notification of changes (Form Y4).
Enter the company in the following Tax Administration registers as needed.
- Prepayment register
- VAT register
- Employer register
Foreign organisation treated as resident taxpayers must submit a tax return for every accounting period. The return must be filed within four months from the end of the last month of the accounting period. The tax return must be filed even if the company has not had any regular activities. The tax return must be filed electronically, for example in MyTax. Tax resident foreign organisations file the following details on the income tax return (Form 6B): income, expenses, assets, liabilities and other details relevant to taxation. Read more about filing the tax return.
End of resident taxpayer status
A foreign organisation is no longer considered to have its place of effective management in Finland if the grounds on which the place of effective management was based cease to apply. When this happens, the foreign organisation is no longer treated as a resident taxpayer. If the foreign organisation is still considered to have a permanent establishment in Finland, it may be regarded as a non-resident taxpayer in Finland because of the permanent establishment.