Tax treatment abroad not in line with the tax treaty
It may be that your income from abroad has not been taxed as provided for in the applicable tax treaty. If you have paid too much tax in another country, you should apply to that country for a refund.
Too much tax on dividend, interest or royalty income
Countries typically impose withholding tax on dividends, interest and royalties paid to nonresidents at rates of 25% to 30%. However, treaties for the avoidance of double taxation may provide for nonresidents in a contracting state to be subject to much lower rates — perhaps of the order of 15% — in which case nonresidents must show that they qualify for such rates. If satisfied that a nonresident does indeed qualify, a payer can withhold tax at the lower rate provided for under the treaty; if not, it must apply the higher rate and the nonresident must ask for a tax refund later. Contracting states usually have special forms for use in making such applications.
If you do request a refund from another country, you will usually need to enclose a Certificate of Tax Residence from your local Finnish tax office with your application form.
Too much tax on other types of income
If you are a company resident in Finland, you may find that what you consider business income has been taxed as royalty income in the country of source; and because you have not had a permanent establishment there you may be of the view that the country has no right to tax that income. If you appeal, you may be entitled to refund there.
Example: A Finnish-resident company receives income in State 'A', net of 10% tax at source, because the payer classes the income as copyright royalty and treats it as such under the article on royalties in the tax treaty.
However, the Finnish company takes the view that the income is business income royalties and demands a refund from 'A'. If the appeals board in 'A' holds that the income is not in fact royalty income, the company will get a refund (in 'A').
Other possible steps
The standard appeal procedure may leave matters unresolved; the tax authority in the source country may classify your income differently from the Finnish Tax Administration. If this is the case, you should contact your local tax office in Finland. It can examine the grounds for the decision in the source country. If it accepts their reasoning, it may still be possible to reassess your taxes in Finland and eliminate the double taxation.
Mutual Agreement Procedure
Finland’s tax treaties provide for the Mutual Agreement Procedure (MAP). Under MAP, competent authorities from contracting states – typically the Ministry of Finance or the Tax Administration – can try to resolve cases where taxation has not been in accordance with the tax treaty and provide relief for any double taxation. These negotiations may result in one or both states giving up part or all of their tax. MAP cannot be seen as a primary option, but it may be of use in situations in which the other state has failed to effect a tax adjustment despite an appeal.