Withholding tax at source on dividends paid to nominee-registered shares

Tax at source must be withheld on dividends paid to a non-resident taxpayer. Tax at source is withheld in accordance with the Finnish Tax at Source Act unless a tax treaty or another international treaty is applied on the dividend at the time of payment.

When applying tax at source rates in accordance with Finnish legislation, the dividend beneficiary in accordance with Finland’s national legislation, i.e. the one who has the right to the dividend on the record date defined in the dividend distribution decision, must be determined. In this case, the tax treaty’s provisions on the beneficial owner are not significant.

Tax at source withheld on dividend

The amount of tax at source withheld on dividends paid to a non-resident taxpayer is

  • 20% if the dividend beneficiary is a corporate entity
  • 30% if the dividend beneficiary is other than a corporate entity
  • 35 %, if the dividend is paid to a nominee-registered share and the dividend beneficiary is unknown

The tax at source rate of 20% can be applied on dividend income, if the foreign beneficiary is equivalent to a Finnish corporate entity. Finnish corporate entities include limited companies, cooperative enterprises, savings banks, mutual insurance companies, associations and foundations. The dividend beneficiary may provide, for example, a trade register extract or a certificate issued by the tax authority as a certificate of their legal form.

When the dividend beneficiary is not a corporate entity, the tax at source withheld is 30 %. The tax at source is 30 % when, for example, the dividend beneficiary is a natural person, a business operator or self-employed individual, or a partnership.

If the dividend payor or an Authorised Intermediary can report the identifying information of the dividend beneficiary in their knowledge to the Tax Administration in their annual information return, 30 % tax can be withheld on the dividend. In this case, the dividend payor or the Authorised Intermediary does not have tax liability on tax at source left unwithheld.

If the dividend beneficiary is unknown and thus the payor or the Authorised Intermediary cannot report the information on an annual information return to the Tax Administration, 35 % tax be withheld on the dividend.

Tax exemption based on national legislation

The dividend beneficiary may be entitled to an exemption from tax at source based on national legislation.

The requirement for granting tax exemption based on national legislation when paying the dividend is that the fulfilment of the criteria for granting the tax exemption in question has been verified.

The dividend beneficiary must present evidence of this to the payor or the Authorised Intermediary. The type of the evidence depends on the criteria for granting the tax benefit in question and usually the requirement is a decision from the Tax Administration on the matter, such as tax at source card or an advance ruling.