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When dividends are paid out

In general, the payor must withhold withholding tax when dividends are paid to a natural person (Finnish resident) or withhold tax at source (lähdevero; källskatt) when dividends are paid to a nonresident natural person, nonresident corporate entity, or nonresident partnership. The payer must also submit other reports such as the tax return for self-initiated taxes and the appropriate annual information return to the Tax Administration.

Paying dividends to a natural person

Read the guidelines for situations where the payment of dividends is made to a natural person who is a resident – or to a natural person who is a nonresident. The definitions of resident and nonresident in the case of natural persons i.e. individual taxpayers are in this guide’s section Before paying the dividends under When the beneficiary is natural person or an estate. 

When dividends are paid to a natural person or to a domestic estate of a deceased person, the payor has to withhold withholding tax. The payor subtracts the amount of money matching the withholding tax rate from the dividends in connection with the dividend payment, and then passes the subtracted amount on to the Tax Administration.

Additionally, the payor needs to provide the Tax Administration with the necessary tax returns and information, concerning the dividends the payor distributed and also concerning the amount withheld. This means the: 

For more information, see After payment of the dividends and see  “Guidance on withholding on paid-out dividends and the related reporting” — Ennakonpidätys osingosta ja Verohallinnolle annettavat ilmoitukset and Withholding on dividends and cooperative surplus – how to file and pay.

The amounts of withholding

  • The rate is 7.5% up to €150,000 and 28% of the amount exceeding €150,000 of the dividends paid by a non-listed company (also including any “substituted” payments of dividends).
  • The rate is 25.5% of the dividends paid by a company listed on the stock exchange – subject to few exceptions (also including any “substituted” payments of dividends)
    • If the legal act controlling rental operation of certain limited-liability companies in the housing sector (knows as REIT companies) applies, the dividends paid by these are subjected to a 30-percent withholding rate.
    • With regard to nominee-registered shares, sometimes the recipient of the dividends is known to be Finnish, but the payor is not aware of their identification information, which would be required for the Annual information return on dividends. In that case, a 50-percent withholding rate must be applied. For a more detailed description of nominee-registered shares and special cases of withholding tax, see Nominee-registered shares – Withholding rate 50% and the detailed guidance How to withhold tax on dividends paid to a resident shareholder when the underlying shares are nominee-registered.
    • When payors pay dividends to dividend recipients who have an equity savings account or a long-term (PS) savings account, no withholding is necessary. Dividends that are paid to the dividend recipients’ equity savings and ‘PS’ accounts are not taxed at receipt. Instead, amounts are withheld at the stage when the dividend recipient withdraws money from the account.  For information concerning the withholding to be effected when the beneficiary withdraws money, see “Tax treatment of equity savings accounts” — Osakesäästötilin verotus and respectively, for ‘PS’ accounts, “Information on withholding” – Ennakonpidätyksen toimittaminen (both detailed guides available in Finnish and Swedish).
    • No withholding is necessary if gross dividend is €20 or less.

Specific withholding situations

  • Any dividends a shareholder receives because of his or her work effort are taxable the same way as wages are, or the same way as nonwage compensation (i.e. trade income) is taxed.
    • If the tax treatment is that of wages, the payor has to withhold tax in accordance with the tax rules concerning wages.
    • If the tax treatment is that of nonwage compensation, the payor’s withholding process varies depending on whether the dividend recipient has a Prepayment registration and on whether or not the dividend recipient is the natural person whose work or personal service performance is the reason for distributing the dividends. If the dividend recipient is on the Prepayment register, it is not necessary for the payor to withhold tax because the beneficiary is liable to pay their advance taxes inde­pendently. On the other hand, if there is no registration, the payor must withhold tax on the dividends. Where the recipient of dividends based on work effort is a person other than the person who performed the work, no withholding tax is withheld. Instead, the received dividends are only taxed in the final tax assessment of the dividend recipient.
    • In addition, when dividends based on work effort are paid, the payor also needs to submit an entirely different set of tax returns and reports: the paid amount of dividends is reportable to the Incomes Register, and no annual information return is filed.
    • For more information, see Dividends and surplus based on work effort, the Tax Administration’s detailed guidance (available in Finnish and Swedish). The guidance addresses various arrangements and taxpayer situations including a scheme where a holding company, based on a pass-through arrangement, pays out the amount of the dividends connected with work.
  • No withholding tax needs to be withheld on dividends paid by a foreign company but, depending on the applicable tax treaty, the payor’s country of residence may levy a tax at source. Foreign companies’ dividend payments must be reported on the Annual information return on transferred foreign dividends, in accordance with the specification “VSULKOSE”. For more information on the taxes on dividends from foreign companies, see Special circumstances of payment of dividends, under Dividends and refunds of capital from foreign payors.

Corporate entities founded or registered in a foreign country but having their place of effective management in Finland are equated, for purposes of income taxes, with Finnish dividend payors. This means that these corporate entities have an obligation to withhold taxes and an information-reporting requirement no different from those imposed on Finnish companies. They must submit an annual information return on paid dividends. Read more about payments made by entities described above in Resident and nonresident tax liability of corporate entities, section 4.3 – Payments made by a foreign corporate entity treated as being a Finnish resident.

When dividends are paid to a natural person who is a nonresident in Finland, the payor must withhold tax at source.  The payor subtracts the amount of money matching the withholding tax rate from the dividends in connection with the dividend payment, and then passes the subtracted amount on to the Tax Administration.

Additionally, the payor needs to provide the Tax Administration with the necessary tax returns and information concerning the dividends it paid and the amount withheld. This means the following: Tax return for self-assessed taxes and the appropriate annual information return, either

For more information about reporting, see After payment of dividends and see Withholding tax at source on dividends, interest and royalties, and the payor’s obligations and “Guidance on withholding on dividend and surplus payments, how to file a report and pay the tax” — Ennakonpidätys osingoista ja osuuskunnan ylijäämistä – näin ilmoitat ja maksat veron.

Amount of tax to withhold at source

  • Generally, the rate for natural persons is 30%.
  • When dividends are paid, the rate set in the applicable tax treaty (or other international treaty) can be applied if the payor has received evidence from the dividend recipient regarding their rights to treaty benefits. The payer must verify that the evidence is satisfactory, entitling the dividend recipient to treaty benefits. For more information on making the necessary inquiry to identify who the dividends are being paid to, and on checking whether a tax treaty applies, see Before paying dividends, and see the detailed guides Withholding tax at source on dividends, interest and royalties, and the payor’s obligations and Payments of dividends, interest and royalties to non-residents.
  • A list of tax treaties in force with ongoing updates is released on the Tax Administration’s website, along with tables indicating percentage rates for tax withheld at source: Tax rates on dividends and other payments from Finland to nonresidents.
  • The tax at source rate is 35% when the dividends are paid by a listed company to a nominee-registered holder of shares and the payor or the Authorised Intermediary does not have the information on the dividend recipient as is required when submitting annual information returns to the Tax Administration.
  • No tax is withheld at source if, over the course of a calendar month, the withholding would be at most €10.00 on all income subjected to source taxation and originating from one payor.

Under certain conditions, natural persons who are nonresidents can submit a claim to have their income consisting of dividends taxed in accordance with the order laid down in the Act on assessment procedure. However, the time to make this claim is normally only at a stage when the country of residence has already assessed the nonresident natural person’s taxes for the year; as a result, the claim has no impact on the requirements imposed on the payor when paying out the dividends. Read more about how the claim is made in Payments of dividends, interest and royalties to nonresidents, section 3.3.2 – Taxes in accordance with the act on assessment procedure.

Payments of dividends to a corporate entity

Read below the guidelines for situations where the payment of dividends is made to a resident or nonresident corporate entity. The definitions of resident and nonresident corporate entity can be found in Before paying dividends under When the dividend recipient is a corporate entity.

When the dividend recipient is a Finnish resident corporate entity, the payer is not to withhold tax on dividends.

Although the payor does not withhold tax, the paid-out dividends must be reported in the Annual information return on dividends. For more information about reporting, see After payment of dividends.

In principle, the payor must withhold tax at source when paying a dividend to a dividend recipient that is deemed a nonresident corporate entity in Finland. The method is to subtract – matching the percentage rate of withholding tax – an amount of money from the dividends and then pass the subtracted amount on to the Tax Administration.

Additionally, the payor needs to provide the Tax Administration with the necessary tax returns concerning the dividends it paid and the amount of tax withheld. This means the following: Self-assessed tax return and the appropriate annual information return, either

  • according to the VSROSERI specification as the Annual information return on other payments to non-resident taxpayers when the payor is a non-listed company, or
  • reporting annual information on dividends in accordance with the TRACE Schema, when the payor is a listed company.

For more information about reporting, see After payment of dividends and guidance on Withholding tax at source on dividends, interest and royalties, and the payor’s obligations and “Guidance on withholding on dividend and surplus payments, how to file a report and pay the tax” — Lähdevero osingoista, osuuskunnan ylijäämistä ja koroista (rajoitetusti verovelvolliset) − näin ilmoitat ja maksat veron .

Amount of tax at source

  • In general, the withholding tax rate for corporate entities is 20%.
  • However, the withholding tax rate is 30% if, at the time of payment, there is no confirmation that the dividend recipient is equivalent to a Finnish corporate entity.
  • The withholding tax rate is 35% when the dividends come from a listed company and are paid to nominee-registered shares and the payor or the Authorised Intermediary cannot report the dividend recipient’s information on the annual information return to the Tax Administration.
  • The withholding tax rate is 15%, subject to certain restrictions, when the dividend-earning shares are included in the “investment assets”. Read more about stocks held for an investment purpose in Payments of dividends, interest and royalties to nonresidents, section 3.4.2 – Dividends paid for shares as part of investment assets.
  • When paying dividends, the withholding tax rate set in the applicable tax treaty (or other international treaty) can be applied if the payor has received evidence from the dividend recipient regarding their rights to treaty benefits. The payor must verify that the evidence provided by the dividend recipient meets the conditions of the tax treaty entitling the dividend recipient to the treaty benefits. For more information on making the necessary inquiry to identify the dividend recipient and on verifying the applicability of a tax treaty, see Before paying dividends. See also the detailed guidance on
  • No tax at source is withheld on dividends in situations defined separately in § 3 of the Act on the taxation of non-residents’ income. For more detailed information on the detailed guidance Withholding tax at source on dividends, interest and royalties: the payor’s obligations in connection with the benefits determined under § 3 and the requirements for granting these benefits at source are in section 2.4.1 – Tax at source benefits in accordance with section 3 of the Tax at Source Act.
  • Further, due to EU law no tax at source is withheld upon payment to a foreign corporate entitywhen the dividend recipient is considered equivalent to a Finnish corporate entity for which the dividends would be tax exempt.

No tax is withheld at source if, over the course of a calendar month, the amount of withholding tax for one dividend recipient would be at most €10.00 on all income subjected to tax at source and originating from one payor.

Payments of dividends to a partnership

For purposes of tax assessment, partnerships are not considered separate taxpayers. This means that a partnership, in itself, is not regarded as a resident taxpayer nor a nonresident taxpayer. When the income recipient is a partnership, the income-tax assessment is based on imposing tax on each partner.

However, the payor of dividends must make sufficient inquiry to determine whether the partnership is a Finnish or foreign partnership. Guidelines for these situations are discussed below. The definitions of resident and nonresident partnership can be found in Before paying dividends under When the dividend recipient is a partnership.

When paying dividends to a domestic Finnish partnership, payors are not to withhold any amounts of tax on the dividends.

Although the payor does not withhold tax, the paid-out dividends must be reported in the Annual information return on dividends. For more information about reporting, see After payment of dividends.

In principle, payors must withhold tax at source on dividends paid to a foreign partnership, then remit the withheld amount of tax to the Tax Administration.

Additionally, the payor needs to provide the Tax Administration with the necessary tax returns concerning the dividends paid and the amount of tax withheld. This means the: Self-assessed tax return and the appropriate annual information return, either

  • according to the VSROSERI specification as the Annual information return on other payments to non-resident taxpayers when the payor is a nonlisted company, or
  • reporting annual information on dividends in accordance with the TRACE Schema, when the payor is a listed company.

For more information about reporting, see After payment of dividends.

Amount of tax at source

  • In principle, the withholding tax rate for non-corporate dividend recipients is 30%.
  • The withholding tax rate is 35%, when the dividends come from a listed company and are paid to nominee-registered shares and the payor or the Authorised Intermediary cannot report the dividend recipient’s information when submitting the annual information return to the Tax Administration.
  • In certain circumstances, the payor can apply the tax treaty in force between the partnership’s partner’s country of residence and Finland. For more information, see Withholding tax at source on dividends, interest and royalties, and the payor’s obligations, section 2.3.1 — General information on the application of tax treaties at source.

No tax is withheld at source if, over the course of a calendar month, the amount of withholding tax for one dividend recipient would be at most €10.00 on all income subjected to tax at source and originating from one payor.

Applying the rate indicated on the dividend recipient’s tax-at-source card 

The Tax Administration can issue the income recipient a tax-at-source card by the income recipient’s application. The tax-at-source card contains a specific indication of the type of income that the card should be applied on. Accordingly, if the Tax Administration issued a tax-at-source card for dividend income from listed companies, the card’s withholding rate cannot be applied if the company distributing the dividends is a non-listed company. Other types of income indicated on tax-at-source cards include royalties, and interest – although the latter is rarely used because the national legislation has accorded interest payments an exemption from tax withheld at source. 

The tax-at-source card must be at the payor’s disposal at the time of the income payment, otherwise the payor cannot apply the card’s withholding rate. The payor is required to identify the income recipient and also required to verify that the name stated on the tax-at-source card is the income recipient’s name. To do this, it is necessary for the payor to have the income recipient’s identification information available. Generally, the account operator handles the work relating to the above inquiries and identifications on behalf of the payor. 

The payor of the income is accordingly the party responsible for making sure that the correct amount of tax is withheld. However, when a listed company pays dividends on nominee-registered shares, the Authorised Intermediary can assume responsibility for the accuracy of the tax withheld. In these cases, the Authorised Intermediary has the primary responsibility for any uncollected taxes. The payor still has a secondary liability for taxes. If there is no indication that the Authorised Intermediary would assume responsibility for the dividends, then the payor carries responsibility for the accuracy of the taxes. 

For more information on Authorised Intermediaries in the context of tax-at-source cards utilised, for example, for the objective of income recipient’s identification, see the detailed guide Authorised Intermediary’s responsibilities and liabilities, section 3.1 – Responsibility to investigate and verify.

Detailed guidance

Page last updated 1/9/2024