Tax-at-source on dividend, interest and royalty income
When a foreign corporate entity receives dividends, interest or royalties from Finland, the payor must withhold tax-at-source at the following rates:
- 20 % if the beneficiary is identified as a corporate entity,
- 30 % if the beneficiary is identified but it is e.g. unclear whether it is considered a corporate entity,
- 35 % if there is no information on the dividend beneficiary of a nominee-registered share of a publicly listed company.
Note that relevant tax treaties or other legal grounds can have an effect on the applied tax-at-source rate.
Beneficiaries can take action to amend the applied rate at three different stages:
- By presenting the required information to the payor before the payment,
- By presenting the required information to the payor after the payment but during the same payment year (a so called "Quick Refund" procedure),
- By applying for a tax refund from the Tax Administration after the payment year.
The required information consists of documentation that verifies the identity of the beneficiary and its eligibility to either tax treaty benefits or benefits deriving from other legislation. If there is any uncertainty about the correct withholding rate, the beneficiary can submit an application for a tax-at-source card or an advance ruling from the Tax Administration during the payment year. In cases where the payor withheld tax-at-source in excess, the beneficiary may request a refund from the Tax Administration after the payment year. You can find a more detailed description of the aforementioned stages for each income type below.
The relevant tax treaty, national legislation or EU law can have an impact on the tax-at-source rate of dividend income. The payor can apply the rate according to the tax treaty between Finland and the dividend beneficiary's country of residence if it can be certain of the dividend beneficiary's eligibility to treaty benefits. The tax-at-source rate can be as low as zero if the dividend beneficiary presents documentation verifying its eligibility to tax-exempt income based on either the relevant tax treaty, national legislation or EU law. When necessary, a foreign corporate entity can submit an application for a tax-at-source card or for an advance ruling from the Tax Administration.
It is possible to amend the tax-at-source withheld in excess already during the dividend payment year. The dividend beneficiary can present the required information of its eligibility to a lower tax-at-source rate to the payor after the dividend payment. Based on this information, the Finnish payor or its account operator can correct the amount of tax withheld during the dividend payment year. When necessary, the dividend beneficiary can apply for a tax-at-source card from the Tax Administration for this procedure as well.
Legislation contains separate regulations regarding procedures at the time of payment, and later during the year of payment, relating to dividends paid to nominee-registered shares of publicly listed companies. In these cases, an Authorised Intermediary (AI) registered in the Tax Administration's register may assume tax liability for dividends, and grant tax treaty benefits to its clients at the time of the dividend payment or later during the dividend payment year. Read more about the taxation of dividends paid to nominee-registered shares.
After the dividend payment year, the dividend beneficiary can apply for a refund of tax-at-source on dividends from the Tax Administration. The beneficiary must apply either electronically or by completing Form 6163e during the three calendar years that follow the year of withholding.
Interest and royalty income
Interest paid to nonresidents is generally tax-exempt in Finland. Similarly, no tax is withheld on royalties within the meaning of the Directive 2003/49/EC on interests and royalties. If necessary, the beneficiary may apply for a tax-at-source card for royalty and interest income from the Tax Administration. If the payor has withheld tax-at-source on royalty and interest income, the beneficiary may apply for a refund from the Tax Administration already during the payment year and the following three calendar years. The beneficiary must apply either electronically or by completing Form 6163e.
Related tax forms
- Applications for tax-at-source refunds and tax-at-source cards
- Foreign corporation’s tax-at-source card application for dividend, interest and royalty income (6211e)
- Application for Refund of Finnish Withholding Tax - Foreign Corporations and Organisations (6163e, 6167e and 6165e)