Going out of business - foreign companies
Foreign companies are always expected to let us know when they terminate business in Finland. The form to complete for this purpose is the 'Y' form "Notice of changes and Termination". Final income tax returns must be submitted at this stage.
Guidance for reporting
If you terminate your business in Finland you must file a 'Y' form "Notice of changes and Termination". The Tax Administration will pass the notice on to the Trade Register.
Select the correct form for your company:
- Y4: foreign-registered corporate entities
- Y5: foreign-registered partnerships (similar to Finnish 'ay' and 'ky' legal form)
- Y6: foreign self-employed businesses or professionals (sole proprietorships, sole traders).
Visit ytj.fi to download 'Y' forms. Send the completed form to PRH-Verohallinto, Business Information System, PO Box 2000, 00231 Helsinki.
When terminating your business, you must ask to be removed from our taxpayer registers, such as the Prepayment Register. You can do this on your 'Y' form.
Check your prepayments
We recommend that you total all your prepayments of taxes for the final calendar year of business in Finland. We also recommend that you let us know your new address and bank account number in order to facilitate payment of any tax refunds to you.
File final income tax returns and report VAT information as well as employer’s contributions
If your business name is not removed from our taxpayer registers, you must still keep filing VAT returns and reports of employer's contributions even though you no longer operate a business in this country. You must file the reports up to the date you are actually removed from the system – not the date your 'Y' form is filed. In other words, it is not enough just to file the 'Y' form: instead, you must wait until you are de-registered.
You must submit VAT returns to the Tax Administration on your VAT-taxable activity.
Wages paid, and taxes withheld, on 1 January 2019 and later: submit an earnings payment report to the Incomes Register by the fifth day after the day when you paid your workers.
- If you have paid no wages after 1 January 2019, you must submit an "employer's separate report".
Companies terminating their business must file their income tax return for the final year. You must do this within 4 months of the end of the calendar month when you terminated your business.
Example: Company A’s accounting period is 1 January — 31 December. On terminating its business, it files an appropriate 'Y' form and stating that its final day of operation is the twentieth of June, and requesting deregistration from taxpayer registers. Conclusion: Company "A” must file its income tax return for the reporting period 1 January — 20 June by 31 October.
Interruptions in Finnish operations
If your business has no intention of terminating its operations, but only to stop them "until further notice", you can let us know using a 'Y' form. This way, your company is de-registered from the Prepayment, VAT, and Employer Registers, but its Finnish Business ID code remains effective. To resume operations, you must complete another 'Y' form and ask for new a entry in the registers.
Taxation for the final year
When a permanent establishment is closed down its assets can be sold or transferred back to the company’s country of tax residence. Finnish taxation for the final year depends on how the business is closed and on the type of assets that the company has in Finland.
An amount equal to the fair market value of the assets is treated as taxable income, if the business is closed by:
- selling out the assets of the permanent establishment,
- transfer of the assets of the permanent establishment away from Finland, or
- disconnecting the business of the foreign company from the permanent establishment in Finland.
Another tax consequence of going out of business is that any reserves on the balance sheet must be cancelled i.e. treated as taxable income.
The permanent establishment may also be converted into a new, independent company. This conversion is treated under the going concern assumption, whereby the Finnish local branch is deemed to continue. This provision is only applied to situations where the country of tax residence of the foreign company is an EU member country.