Starting up business in Finland Detailed guidance

This is an unofficial translation. The official instruction is drafted in Finnish (Toiminnan aloittaminen Suomessa, VH/2360/00.01.00/2026) and Swedish (Att inleda verksamhet i Finland, VH/2360/00.01.00/2026) languages. 

The subject matter of this guidance is the reports and written accounts that a foreign company must file with the Tax Administration when starting business operations in Finland.

Updates were made to section 4.4 below to reflect the changes effective from 1 January 2026 in the information-reporting rules that concern foreign employers. These rules will be applicable when a foreign employer leases out an employee coming from a foreign country to perform work on board a Finnish vessel or aircraft. Further updates were made to chapter 6 below, to reflect the recently revised provisions of § 25, subsection 3 of the Act on tax prepayments. The provisions came into force on 1 January 2026. The present version of the guidance additionally contains several other smaller updates. 

1 A foreign company’s liability for income tax

1.1 General remarks

A foreign company means a company established or registered outside Finland. Foreign companies are usually considered non-resident taxpayers in Finland with limited tax liability. However, if the company’s place of effective management is in Finland, it is considered a resident taxpayer with full tax liability in Finland.

National legal rules governing foreign companies' liability to tax are found in § 9 and § 10 of the act on income tax (Tuloverolaki (1535/1992)). 

1.2 Non-residency

Foreign companies are considered non-resident taxpayers with limited tax liability, unless their place of effective management is in Finland. Non-resident foreign companies are usually only liable to pay tax to Finland on income received from Finland, such as income earned by operating a trade or business here. However, if a non-resident company has a permanent establishment in Finland, the company is liable to pay tax on all income related to the permanent establishment. 

In Finnish national legislation, the definition of a permanent establishment is in § 13 a of the act on income tax. In addition, the tax treaties Finland has signed with other countries normally include further details on how a permanent establishment is defined for companies located in the contracting states. A permanent establishment is a fixed place of business through which the company runs some or all of its operations. For more information on the existence of a permanent establishment and the income taxation of a foreign corporate entity, see the Tax Administration guidance Income taxation of nonresident foreign corporate entities. The principles of determining the existence of a permanent establishment described in the guidance also apply to the tax assessment of partnerships. For more information on how an existence of permanent establishment is defined in the income tax assessment of a foreign business operator, see the Tax Administration guidance Income taxation of foreign self-employed individuals.

In certain circumstances, Finland has the right to levy tax on certain income that a non-resident company has received from Finland even if the company does not have a permanent establishment in Finland. Under Finnish national legislation, Finland has the taxing rights with respect to income generated by real estate property including flats and apartments in housing-companies if they are located in Finnish territory. For this reason, rental income received from the property is taxable, or if the property is sold for a profit, this profit is a taxable capital gain (§ 10, act on income tax). In addition, a company may be liable to pay tax at source to Finland on dividends or other such income received from Finland.

Tax treaties may restrict the taxing rights of Finland, when such rights are based on Finland's national legislation. In cases where Finland does not have a tax treaty with the country in which a foreign corporation is resident, the right of the Finnish government to levy taxes is determined solely on the basis of Finland’s national tax legislation. You can see the list of tax treaties currently in force on the Tax Administration’s Tax treaties page.

1.3 Tax residency

A corporate entity established or registered abroad is a resident taxpayer with full tax liability in Finland if its place of effective management is in Finland. The corporate entity’s place of effective management is considered to be in Finland if its board or other decision-making body that makes the highest-level decisions on daily management is located in Finland. However, when the location of the place of effective management is being determined, other circumstances relevant to the company’s organisation and business operations are also taken into account.

The period during which a foreign corporate entity treated as a resident taxpayer liable for tax usually begins either from the date it was founded or registered or from the date when Finland became the country of its place of effective management. However, foreign corporate entities could not be residents here before the 2021 tax year.

A foreign corporate entity that is a resident taxpayer in Finland is liable to pay tax to Finland on income received from Finland and from abroad. The tax assessment of a resident foreign corporate entity is conducted according to the same provisions as the taxation of a domestic corporate entity. Factors such as the source of income, taxability of income and deductibility of expenses are determined in the same way as in the tax assessment of a Finnish corporate entity.

If the circumstances based on which the place of effective management was deemed to be located in Finland no longer exist, the place of effective management can no longer be considered to be in Finland. Therefore, the foreign corporate entity can no longer be considered a resident taxpayer in Finland, starting from the date when the place of effective management was no longer in Finland. If the corporate entity is still considered to have a permanent establishment in Finland, the entity will be liable to pay tax in Finland on its income attributable to the permanent establishment.

For more information on how a foreign corporate entity’s tax residency status and the location of its place of effective management are determined, see the Tax Administration guidance on resident and non-resident corporate taxpayers.

2 The start-up notification

Both resident and non-resident foreign corporate entities must submit a start-up notification to the Tax Administration to register the company before it can start its business activities in Finland. Based on the notification, the company is issued a Business ID and the company is entered in the Tax Administration’s register of taxpayers. The company can also use the start-up notification form to apply for other registrations, to best serve the purpose of its business, with the different registers kept by the Tax Administration: the VAT register, the register of employers and the prepayment register. In the insurance industry, it is required that every insurance company operating in Finland be registered as liable for tax on insurance premiums.

The start-up notification must be filed on Form Y1, Y2 or Y3. These forms are published jointly by the Tax Administration and the Finnish Patent and Registration Office (PRH). Form Y1 is for setting up a business when the founder is a foreign corporate entity. Foreign businesses comparable to Finnish general partnerships and limited partnerships must use Form Y2, and similarly, foreign self-employed individuals use Form Y3. Read more about start-up notifications for foreign businesses on ytj.fi.

Foreign companies must enclose a Trade Register certificate or similar, issued by the authorities of their country and add a translation into English, Finnish or Swedish.

The certificate or other account must include the following:

• Company name
• its municipality of registration
• line of business
• accounting period
• list of the people who may sign for the company

If the certificate does not include these details, the foreign company (if it is a limited-liability company or a partnership) must additionally enclose a photocopy of its Articles of Association, Charter or a similar agreement and add a translation into English, Finnish or Swedish.

In addition to the above, when the foreign business is comparable to a Finnish general or limited partnership, the following information on the people being its partner-shareholders is mandatory:

• name
• Finnish personal ID, if issued
• date of birth
• address

In the case of foreign self-employed individuals, if there is a registration in force in the domicile country in the trade register or a comparable registration, the self-employed individual must enclose a registration excerpt and the details listed above. Foreign self-employed individuals are always expected to enclose a photocopy of their passport.

A foreign corporate entity that has its place of effective management located in Finland needs to fill in the ‘additional information’ section of Form 6204 to declare the existence of the place of effective management. Form 6204 should be attached to the corporate entity’s Form Y. In addition, the foreign corporation must enclose a free-form account of the facts related to the existence of the place of effective management.

Foreign companies conducting construction and installation must additionally enclose their building contracts in photocopy. Similarly, foreign companies engaged in leasing employees in Finland must enclose copies of their contracts.

If the foreign company already has a Business ID, it can enter into the Tax Admin-istration’s registers by submitting a notification of changes. The same enclosures must be added to the notification of changes as to the start-up notification. A notification of changes must also be submitted if the company’s activities change from what was reported on the start-up notification and its enclosures or in connection with the company’s registration. Any changes that can affect the company’s liability to pay income tax or VAT or its registration status in Finland must be reported. Corporate entities must report changes on Form Y4, partnerships on Form Y5, and self-employed individuals on Form Y6. You can check the existence of a Business ID in Business Information System's Company Search on ytj.fi. The forms and instructions for filing are available on the Business Information System website (ytj.fi).

The company’s Form Y must be signed by a person who has the right to sign for the company or by another party they have authorised to do so. Forms and other documents are mailed to: The Tax Administration (Verohallinto), Business Information System, P.O. Box 2000, 00231 HELSINKI, Finland.

When the foreign company has been registered based on a start-up notification or a notification of changes, the Tax Administration will send a notice of registration to the company. After the registration, the company’s registration details can be seen in the Business Information System’s Company Search on ytj.fi.

When the company is being registered, the Tax Administration will examine whether the company has its place of effective management or a permanent establishment in Finland for the purposes of income taxation. Whether the company has a permanent establishment for the purposes of VAT will also be determined during registration. However, the tax residency status cannot always be resolved on the basis of the submitted registration details. Planned business may change, and the duration of its operation may be longer than expected. If the tax residency status cannot be determined in connection with registration, it will be determined during the assessment procedure based on the information provided by the company. The company can also request the Tax Administration to issue an advance ruling on their tax residency status for the purposes of income tax and VAT. Advance rulings are subject to a fee. If necessary, you can contact the Tax Administration in a number of ways. See the Contact information and services page on vero.fi, the Tax Administration’s website.

While it is normally not necessary to complete more than just one form, there are some circumstances when a company must inform the Trade Register authority separately. An example of these circumstances is the setting up a branch (sivuliike; filial) for the foreign business enterprise. For more information, visit the website of the Finnish Patent and Registration Office www.prh.fi.

3 Registering for VAT

Submitting an application for VAT registration

Under § 1 of the Value Added Tax Act (30.12.1993/1501), taxpayers must pay VAT on the sales of goods and services in the conduct of business which takes place in Finland. Foreigners conducting business in Finland are also required to report and pay VAT. For purposes of value-added taxation, a “foreigner” means a business operator that has a registered domicile for its business in another country outside Finland (§ 10, VAT Act).

Foreign companies must submit an application for VAT registration for sales of goods or services in Finland, and the company must pay the VAT to the State of Finland. However, in the case of certain selling to consumers in situations where the foreign company can use a VAT special scheme for its reporting and payments of Finnish value-added taxes, there is no need to submit an application for VAT registration. For further information on VAT special schemes, see Arvonlisäveron erityisjärjestelmät (in Finnish and Swedish, link to Finnish).

A foreign company operating a business subject to VAT is required to apply for VAT registration if the company has a fixed establishment for purposes of value-added taxation in Finland, and that establishment takes part in the sales of goods or services in Finland. The tax authority will determine the existence of a foreign company’s fixed establishment for VAT purposes based on the information provided in the start-up notification and if necessary, on further information received from the company. For more information on what is deemed to be a fixed establishment for purposes of VAT, see VAT registration of foreigners in Finland, a Tax Administration’s detailed guide.

The operation of business of a foreign company registered or domiciled in another EU member state is VAT-exemptible in Finland if the company’s turnover earned in Finland for the calendar year is max. €20,000 – and in the entire EU, max. €100,000 (§ 3 and § 3a of the VAT Act). A further requirement for exemptibility is that the foreign company have a valid registration in the EU VAT scheme for small business (SME). Because the selling is VAT-exempt, the company would not need to apply for VAT registration even if the company were treated as having a fixed establishment in Finland that participates in the selling. For more information, see the Tax Administration’s guidance VAT exemption for small businesses.

Companies that operate a business deemed to be subject to VAT must complete a start-up notice if the business is new (Forms Y1–Y3), or a notice of changes in the company’s circumstances (Forms Y4–Y6). The Tax Administration will finalise the company’s VAT registration when the VAT-taxable business operation begins, and this will be recorded as the start date of registration. However, companies can be entered in the register as soon as they start buying goods and services for business purposes.

The reverse charge mechanism (§ 9 of the VAT Act)

In general, the seller of goods or services is under a duty to pay VAT. However, commercial transactions between business enterprises involve several situations where the duty to file and pay VAT lies with the buyer (the reverse charge mechanism).

In general, if a foreign business has no fixed establishment in Finland that would participate in the selling of goods or services, and if the foreign business has not applied for VAT registration on a voluntary basis, the buyer is the party that needs to pay VAT (within a reverse-charge scheme as provided in §9, VAT Act). In these circumstances, there is no need for the foreign business to submit an application for VAT registration.

However, the mechanism is not applied in the following circumstances, and the foreign seller will still be required to apply for VAT registration if:

1.  The buyer is a foreigner with no fixed establishment and no VAT registration in Finland (exception: if the sector of activity is the selling of construction services where the buyer performs construction work on an ongoing, non-temporary basis. (§ 8c of the VAT Act).
2. The buyer is a private individual.
3. The sale is a “distance sale of goods” from another EU country to individuals in Finland or to buyers equated with individuals. For more information, see the instructions on value-added taxation of distance sales of goods Tavaroiden etämyynnin arvonlisäverotus (in Finnish and Swedish, link to Finnish).
4. The service being sold is transportation for passengers.
5. The service being sold is one of the following: right of entrance – not online attendance – to educational, scientific, cultural, entertainment and sports events, fairs, exhibitions, etc., and services directly associated with such entry.

And further, no VAT reverse charge mechanism is applicable to selling in Finland of goods and services when the seller is a small enterprise having a domicile or registration in the EU territory. This also requires that the small enterprise uses the European SME scheme for value-added taxation and that its operation in Finland is covered by the scheme. In this case, there is no need for the seller to apply for VAT registration in Finland – although no reverse charge mechanism is applied – because the selling is deemed to be exempt from VAT.

The VAT reverse charge mechanism applies to construction services sold in Finland and to related employee leasing (§ 8c of the VAT Act). In general, when a foreign business having no fixed establishment in Finland sells a construction service, the VAT reverse charge mechanism is applicable (§ 9 of the VAT Act) in situations where the other requirements of the mechanism are fulfilled. For more information, see chapter 7 of the Tax Administration’s guide VAT registration of foreigners in Finland. For more information concerning the construction industry, see the Tax Administration's detailed guidance on reverse charge liability (in Finnish and Swedish, link to Finnish).

Applying for VAT registration on a voluntary basis

Foreign companies are entitled to ask for a voluntary VAT registration, i.e. for registration on application (§ 12 of the VAT Act). To be able to register for VAT voluntarily, if the foreign company has no domicile nor a fixed establishment in a EU member state or in Norway, the company must have a VAT representative approved by the Tax Administration. The earliest possible time for applicants to be entered in the VAT register is at the date when the Tax Administration receives the application.

After the company has applied for voluntary VAT registration in Finland, the reverse charge mechanism will no longer be applied on the company’s selling in Finland between business enterprises (§ 9 of the VAT Act).

The VAT notification duty

Foreign businesses have a notification duty if they exclusively carry out VAT-exempt intra-Community supplies or VAT-exempt intra-Community acquisitions in Finland (§ 72a and § 72f of the VAT Act). For more information on the concepts of “intra-Community supply” and “intra-Community acquisition” and related VAT, see the Tax Administration’s guide “VAT and EU goods trade” Arvonlisäverotus EU-tavarakaupassa (in Finnish and Swedish, link to Finnish).

Foreign businesses having a valid registration in Finland for the notification duty are entitled to carry out supplies (=selling) in Finland and the VAT reverse charge mechanism can be applied, i.e. the buyer must pay the VAT. The foreign business can additionally carry out supplies that are exempted from VAT. Based on a special rule, the foreign business can also carry out VAT-exempt intra-Community acquisitions. However, it is not possible for a business having a notification-duty registration to submit a VAT return with VAT to be paid, to be deducted, or with VAT related to an import transaction. Read more about the notification duty in chapter 5 of VAT registration of foreigners in Finland.

Selling within the zero-rate VAT category

Foreign companies engaged in zero-rate selling in Finland need to apply for Finnish VAT registration because otherwise they cannot receive refunds of the input VAT when they buy goods and services here. Examples of selling – i.e. supply – subject to zero-rate VAT include the selling to export markets and the selling to intra-Community markets. Foreigners that pursue these activities cannot be granted the reimbursement generally intended for foreigners in value-added taxation. For this reason, to submit an application for VAT registration is the only way to recuperate input VAT, paid when buying Finnish goods and services.

For more information on the concepts of “intra-Community supply” and “intra-Community acquisition” and related VAT, see the Tax Administration’s guide “VAT and EU goods trade” Arvonlisäverotus EU-tavarakaupassa. For more information on exports, see “VAT on exports” Vientikaupan arvonlisäverotus (in Finnish and Swedish, links to Finnish for both guides).

VAT special schemes

Foreign businesses are entitled to join an EU VAT special scheme to deal with VAT reporting and payment to Finland in conjunction to their selling of certain goods and services to consumers here. The foreign business that has signed up for the special scheme will only need to obtain registration in a “Member State of identification”. After that, the business can file and pay VAT in a centralized manner, sending all VAT returns and VAT payments for the goods/services sold using only the Member State of identification as its point of contact. For further information on VAT special schemes, see Arvonlisäveron erityisjärjestelmät (in Finnish and Swedish, link to Finnish)

Filing tax returns for VAT and paying VAT

Value added taxes must be filed and paid in the Tax Administration’s MyTax e-service (vero.fi/mytax). For more information, see Self-assessed taxes.

4 Registration as an employer

4.1 General remarks

If you are an employer who pays wages on a regular basis and you are treated as having a permanent establishment for purposes of income taxation or you are treated as a resident taxpayer because your place of effective management is in Finland, you must sign up for the Tax Administration's register of employers. Employers that are not required to register can still choose to do so voluntarily.

Read more about paying employer’s contributions: Self-assessed taxes.

4.2 Non-resident taxpayers with a permanent establishment in Finland and foreign corporate entities treated as a resident taxpayer due to the place of effective management

If a foreign company has a permanent establishment in Finland for purposes of income tax, or if its place of effective management is in Finland, it is treated in the same manner as a Finnish employer. The foreign company must therefore register as an employer if it pays wages regularly. An employer is considered to be paying wages regularly if it pays wages to two or more people on a permanent basis, or to at least six people at the same time even if their employment contracts are temporary and meant to be valid for a short term only. And further, an employer is considered to be paying wages regularly if, in addition to paying wages to one person who is permanently employed, it also pays wages to one or several persons with temporary or short-term employment contracts.

The foreign employer company must withhold tax on the wages it pays, following the instructions printed on each worker’s tax card. Foreign employees staying for a shorter time than six months are, in most cases, issued a tax-at-source card by the Tax Admin-istration. If the employee fails to show the tax-at-source card, you as the employer must withhold 35% tax at source. Foreign employees staying longer are issued the ordinary type of tax card; if such an employee fails to show it to you, you must withhold 60%.

In addition, you as the employer are required to pay the employer's health insurance contribution if the employee is insured in Finland according to the Health Insurance Act. However, you do not have to pay the contribution if your employee has a certificate issued by their country of residence, such as an A1 certificate. The health insurance contribution must be paid every month based on the amount of wages and fringe benefits subject to withholding. The rate of the employer's health insurance contribution changes from year to year.

Information concerning the wages paid and the related employer's contributions must be submitted to the Incomes Register. If you are registered as an employer, you must also notify the Incomes Register if you have not paid any wages during the calendar month. Read more about reporting employer’s contributions to the Incomes Register at incomesregister.fi.

You are treated as a casual employer if you only have one wage earner on the payroll during the year, or if there are a maximum of five wage earners but the length of their employment is shorter than a calendar year. However, even if you are a casual employer, you must still report any paid-out wages and the related employer's contributions to the Incomes Register. You can also choose to enter the register of employers voluntarily as a casual employer. If you register, you have the same obligations as a regular employer.

For more information, see the Tax Administration’s bulletin on the obligations of a foreign employer.

4.3 Non-resident foreign company with no permanent establishment in Finland

If a foreign company does not have a permanent establishment in Finland for purposes of income tax, it does not need to register as an employer. In these circumstances, the employees carry the responsibility of making the prepayments of income tax on their earnings. This only concerns the ones who stay in Finland for longer than six months. However, in certain cases a foreign company must still report its wage payments to the Incomes Register. For further instructions, see Reporting data to the Incomes Register: international situations.

A foreign company can choose to be voluntarily register as an employer in Finland. A company that has voluntarily registered as an employer has the same obligations as a company that has a permanent establishment for the purposes of Finnish income tax.

If registration as an employer is in force, the company must withhold tax on the wages it pays to employees, following the instructions printed on each employee’s tax card. A company registered as an employer must also withhold tax at source on any income paid to non-residents, which is taxable in Finland, such as wage income paid to a leased employee. In such a case, the employee need not take care of their prepayments to the Finnish Tax Administration.

4.4 Employee leasing

A foreign employer can lease out an employee coming from outside Finland to work for a service recipient in Finland. If the foreign employer is a non-resident taxpayer with no permanent establishment in Finland, the employer or the employer’s representative must submit an “Employee leasing notice” to the Incomes Register, on which the required details are reported concerning the leased employee now working in Finland. In addition, the foreign employer or its representative must submit an Earnings payment report to the Incomes Register, to give details on the wages paid to the leased employee. Starting in 2026, the above Employee leasing notice and Earnings payment report must also be submitted to the Incomes Register in situations where the leased employee comes from a foreign country to work on board a Finnish vessel or aircraft.

The employee leasing notice, indicating start of the leasing activity, can be sent either in connection with the earnings payment data or separately. However, there is no need for the foreign employer or representative to submit these two reports, if Finland has a tax treaty with the leased employee’s country of residence that prevents Finland from taxing the leased employee’s wage income.

If the foreign employer has a permanent establishment in Finland or is treated as a resident taxpayer due to its place of effective management in Finland, the employee leasing notice does not need to be filed. However, the foreign employer or its representative must still submit the earnings payment reports to the Incomes Register, to give details on all wages paid to the leased employee.

The foreign company must also collect tax at source on the leased employee’s wages or withhold tax on them, if the company has a permanent establishment in Finland or if it is treated as a resident taxpayer due to its place of effective management in Finland. In other cases, the employer is not obligated to collect tax at source or withhold tax. Instead, the employees themselves must pay the taxes to the Tax Administration.

Foreign employers treated as resident taxpayers in Finland and non-resident employers registered in prepayment register must themselves report details on leased employees and the wages paid to them to the Incomes Register. If a non-resident employer has not been registered for prepayment, a representative of the employer must file the reports to the Incomes Register. In circumstances where there is no representative appointed by the employer or the representative does not report the required information, the reporting obligation falls on the employer regardless of whether they are registered for prepayment.

For further guidance on employee leasing and the obligations of the foreign employee-leasing companies, see Foreign leased employees and taxation in Finland. Read more about reporting to the incomes register on the Incomes Register page.

5 Registering as liable for tax on insurance premiums

Insurance companies with an operation in Finland must pay a tax on the insurance premiums agreed with their clients, if the object of insurance is a property located in Finland, an interest related to activities practised in Finland, or other interest in Finland. Sometimes the policyholder is the party liable to pay the tax. For more information on the liability to pay tax on insurance premiums, see the guidance on the tax on insurance premiums.  

6 Registering for the prepayment register

Companies that conduct business activities or are likely to do so can request to be entered in the prepayment register. There is no mandatory rule that would require a business to have a prepayment registration. If the company is not registered in prepayment register, the party that pays the company nonwage payment or compensation for use must withhold tax on the payment (see Chapter 8).

Non-resident foreign companies can be registered in the prepayment register if they have a permanent establishment in Finland. Non-resident foreign companies can also be registered in the prepayment register if their domicile is in a country of the European Economic Area or in a country that has signed a tax treaty with Finland (§ 25, subsection 3 of the act on tax prepayments (Ennakkoperintälaki (1118/1996)). Foreign corporate entities treated as resident taxpayers can be registered in the prepayment register in the same way as Finnish companies. For more information, see How to get a prepayment registration.

The information on whether a company is registered on the prepayment register is public. Customers of the company, paying nonwage compensation are required to check whether the payee is on the prepayment register. You can check the registration with the Business Information System’s Company Search feature on ytj.fi.

If a company liable to pay Finnish income tax has the prepayment registration, it carries the responsibility for its income tax payments independently. However, the fact that the company is registered on the prepayment register does not cause income tax liability in Finland. For more information on how prepayment registration affects business operations, see Registration for the prepayment register and its effect on the operation of business.

The Tax Administration can remove a company from the prepayment register if the company neglects its obligations to pay taxes or neglects its duty to report (§ 26, subsection 2, act on tax prepayments (Ennakkoperintälaki (1118/1996)). A company can be removed from the prepayment register if it has not filed its returns on VAT, employer's contributions or income tax, or if the company has not paid its VAT, income tax or prepayments.

If the Tax Administration sends a letter of inquiry for further information on the foreign company's operation in Finland, it must provide the requested information. The company may also be removed from the prepayment register if it does not give a reply to such a letter.

Registration may also be denied or removed based on previous negligence by the company’s managers or by other companies managed by them.

If the company’s activities in Finland end, the company must notify the authorities by filing a Form Y. The Tax Administration will then remove the company from the prepayment register (§ 26, subsection 1, act on tax prepayments (Ennakkoperintälaki 1118/1996)).

7 Prepayments

Companies that are liable for taxes in Finland must usually make tax prepayments on their taxable profits. The prepayment amount is based on an estimate of the taxable income to be received by the company in the tax year. If the estimate changes, the company can request an adjustment to the prepayment amount. If the paid-in prepayments are not enough to cover the actual income tax liability determined after the end of the year, the company must pay back taxes and late-payment interest with relief.

If you are self-employed, you are expected to complete Form Y3, the start-up notification (ytj.fi) and give your estimates of turnover and taxable income for your first year of business on it. Similarly, if you are a partnership, you complete Form Y2, the start-up notification (ytj.fi). Changes must be reported in MyTax (or on Form 5010, business operators and self-employed individuals, shareholders in a partnership). Corporate entities can request prepayment or changes to it in MyTax and by filing Form 5017e (Tax prepayment request/change request)).

For more information on requesting and making prepayments, see Prepayments — corporate taxpayers.

8 Withholding of tax at source on nonwage compensation paid to a foreign company

Tax must be withheld at source on nonwage compensation paid to a non-resident foreign company if the work had been performed in Finland. Nonwage compensation (often also called trade income) is the compensation paid for the performance of work, a one-off assignment, or for the rendering of a service. The party paying the nonwage compensation must withhold tax at source. However, non-resident payors need to withhold tax at source only if they have a permanent establishment in Finland, although the work had been carried out in Finland.

The invoice related to the nonwage compensation (trade income) may simultaneously also concern some selling of goods. As a result, the invoice should contain an itemisation where the nonwage compensation appears on a separate line or is itemised on another document attached to the invoice. Another approach is to issue two distinct invoices, one for the work, the other for the goods. Regardless of the amount of the nonwage compensation, tax must be withheld on it at source. If the part of the invoice consisting of the compensation remains unclear – on the invoice or the attachments – the entire invoiced amount will be the base for the payor’s withholding of tax at source.

However, the payers of compensation do not have to withhold tax at source if:

• the foreign company is prepayment-registered in Finland,
• the foreign company is able to present a 0% tax-at-source card to the payer, or
• the foreign company can show other documentation establishing that withholding is not necessary. This means documentation that proves that the foreign company cannot be treated as having a permanent establishment in the prevailing circumstances.

If the nonwage compensation is paid for construction, earthmoving, civil engineering or other construction work, installation or assembly work, shipbuilding work, transport work or cleaning, nursing or care, the payer can leave the tax at source unwithheld only if the recipient is on the prepayment register, or the recipient presents a 0-percentage tax-at-source card (section 10f, subsection 2 of the Act on the taxation of nonresidents' income). The same applies to nonwage compensation paid for the leasing of labour to the sectors listed above.

The percentage rate is 13% for the tax at source on payments going to companies that are similar to Finnish limited-liability companies or partnerships. The rate is 35% on payments to self-employed operators of trade or business (§ 7 of the act on the taxation of nonresidents' income).

If nonwage compensation is paid to a foreign corporate entity that is a Finnish resident, but not on the prepayment register, the payor must carry out ordinary, domestic withholding of tax upon payment. In this case, the rate of ordinary withholding is 13%.

If you are self-employed and going to receive income in Finland and need a tax-at-source card, complete Form 5057 (Application for a nonresident taxpayer's tax-at-source card, prepayment calculation, tax card). Enclose with the application Form 6205 (Explanation of business conducted in Finland by self-employed individual).

A foreign corporate entity can request a tax-at-source card by filing Form 6202 (Application for a tax-at-source card for trade income received by a foreign corporation). You must enclose a Trade Register certificate or similar, issued by the authorities of your country and add a translation into English, Finnish or Swedish, as well as a photocopy of the contract signed with the customer.

For more information on requesting a tax-at-source card and on refunds of tax at source withheld in excess, see Tax-at-source on trade income.

9 Filing a tax return

9.1 Foreign company treated as non-resident taxpayer

A non-resident foreign company only has to pay tax to Finland on the income it receives from Finland. If the company has a permanent establishment in Finland, the company is liable to pay tax on all income attributable to the permanent establishment.

The company must file tax return 6U electronically no later than four months after the end of the month when its accounting period ended. If the company – foreign corporate entity – believes that no permanent establishment for purposes of income tax is formed, it must additionally submit Form 80 as an attachment, to give a written account of the activities carried out in Finland. For more information, see Foreign companies in Finland – income taxes.

Businesses registered as partnerships and the self-employed must file their income tax returns by the beginning of April the year following the tax year. For more information on filing as a self-employed individual or partnership, see the Tax Administration pages Tax return – the self-employed and Tax return – general and limited partnerships. For more information on income tax filing as a foreign business operator, see the detailed guidance Income taxation of foreign self-employed individuals.

Read more on the reporting obligations in the Tax Administration’s official decisions:

• Official decision of the Tax Administration on filing of tax returns and corrections to real estate data (available in Finnish and Swedish, link to Finnish).
• The Tax Administration’s decision on information reported on a tax return (available in Finnish and Swedish, link to Finnish).

9.2 A foreign corporate entity treated as a Finnish resident taxpayer 

A foreign corporate entity that is a resident taxpayer in Finland is liable to pay tax to Finland on income received from Finland and from abroad.

Foreign corporate entities treated as resident taxpayers must file their income tax return 6B electronically within four months from the end of their accounting period. For more information on filing tax returns, see Taxation of limited liability companies and cooperative societies.

10 Changes to operations or terminating operations 

Companies must let the Finnish Tax Administration know of any significant changes as compared with the time of registration. Such changes may have an impact on the liability to pay VAT and income tax in Finland. Examples include a change of the estimated length of the period of business operation in Finland, new building contract, the inclusion of new kinds of business in the operation, an extension of the company’s stay in Finland, or a change in the company’s taxpayer status from non-resident to resident due to the location of the company’s place of effective management in Finland. The changes must be reported on a notification of changes (Form Y4, Y5 or Y6).

Foreign companies must submit a Y4, Y5 or Y6 notification form in order to let the Tax Administration know that their register details will change. Examples of changes to be reported include a changed company name, an address change or changes in other contact details of the company, the continued operation of business, wage payments, and the company’s VAT status. When the company ceases to operate business in Finland, it should give the required details concerning termination using the same forms, as listed above for reporting various changes. You must keep filing tax returns until the Tax Administration has removed the company from its registers. In other words, it is not enough just to file the notification of termination – you must wait until you are de-registered before you can stop filing returns.

Foreign companies must also always file an income tax return for their last year of operations. Upon termination, the company must review the amount of prepayments for the last year of operation. The company must provide new address and bank account information in order to receive any tax refunds.

A foreign corporate entity treated as a resident taxpayer must also submit a notification of changes if its place of effective management is no longer located in Finland. The corporate entity will no longer be treated as a resident taxpayer when the location of its place of effective management ceases to be here. If the corporation continues its activities in Finland, and it is considered to have a permanent establishment in Finland, it will be liable to pay tax on its income attributable to the permanent establishment.

If the country of tax residence of a foreign corporate entity treated as a resident taxpayer in Finland is changed to another country in accordance with Finnish legislation or a tax treaty signed for the avoidance of double taxation, the value of the transferred assets on the exit date (with the undepreciated acquisition cost of the assets deducted from the total value) is considered to be taxable income for the corporate entity, with the exception of assets that are still actually related to the entity’s permanent establishment in Finland. Similarly, if the business activities conducted by a permanent establishment are transferred to another country, or if the foreign corporate entity transfers assets from its permanent establishment in Finland to its head office or another permanent establishment located in another country so that Finland no longer has the right to tax these assets, the value of the assets on the exit date (with their undepreciated acquisition costs deducted from the total value) is treated as the permanent establishment’s taxable income (§ 51 e subsection 1, act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968)). For more information on exit tax, see the Tax Administration’ detailed guidance on the subject (Maastapoistumisverotus) (available in Finnish and Swedish, link to Finnish).