Foreign organisation as a resident taxpayer in Finland
A foreign corporate entity is considered a resident taxpayer in Finland if its place of effective management is in Finland. The place of effective management is the place where the corporate entity's board of directors or other decision-making body makes top-level decisions on daily management with regard to the other circumstances relevant to the company’s organisation and business operations. Resident taxpayers pay tax to Finland on income they receive both from Finland and from abroad.
Read more about the place of effective management.
If the foreign corporate entity has a place of management in Finland, but it is not the place of effective management, the place of management may give rise to a permanent establishment in Finland. In this case, the foreign corporate entity is a nonresident in Finland. Read more about the permanent establishment and a nonresident foreign corporate entity’s liability to pay taxes.
Employer obligations
Foreign corporate entities 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 employers. Companies acting as regular employers must sign up for the Employer Register. A company is a regular employer if either of the following two criteria is met:
- The company pays wages to at least 2 employees regularly.
- The company pays wages to at least 6 employees simultaneously, even if their employment contracts are temporary and only for a short period.
Employers who pay wages occasionally 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 registered in the Employer Register. Also, the company must file the employer’s health insurance contributions on the employer’s separate report.
Read more about employer obligations.
Enter the company in the appropriate registers
Enter the company in the Tax Administration's registers by submitting a start-up notification for foreign businesses (Form Y1) and attachment 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 if needed:
- Prepayment register
- VAT register
- Employer Register
Income tax return
A foreign corporate entity treated as a resident taxpayer must submit tax return 6B electronically 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. Read carefully the instructions for completing the income tax return before filing it.
Read more about filing the tax return.
End of resident taxpayer status
The resident taxpayer status ends when the foreign corporate entity's place of effective management is no longer in Finland. After this, the foreign corporate entity is regarded as a nonresident taxpayer. The foreign corporate entity can have a permanent establishment in Finland after the resident taxpayer status has ended. More information about permanent establishments for purposes of income tax.