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This is an unofficial translation. The official instruction is drafted in Finnish (Työkorvauksen maksaminen rajoitetusti verovelvolliselle ulkomaiselle yritykselle, VH/2358/00.01.00/2026) and Swedish (Arbetsersättning till ett begränsat skattskyldigt utländskt företag, VH/2358/00.01.00/2026) languages.
The guidance gives detailed instructions for the situations where a payer – a Finnish service recipient or a foreign company comparable to a Finnish service recipient – will need to withhold tax at source upon paying nonwage compensation for work (=trade income) to a nonresident foreign company.
Chapter 2 is updated to reflect the recently revised provisions of § 25, subsection 3 of the act on tax prepayments (Ennakkoperintälaki (1118/1996)). The change came into force on 1 January 2026.
A number of other smaller updates were made to the present version of the guidance.
1 General information on the taxation of a non-resident company
A corporate entity registered abroad is a non-resident taxpayer in Finland unless its place of effective management is located in Finland. A natural person residing outside Finland is a nonresident in Finland if he or she stays in Finland for an uninterrupted period of max. six months and does not have their permanent home and abode in Finland. A nonresident taxpayer is only liable for paying tax to Finland on income earned in Finland as defined in the act on income tax (Tuloverolaki (1535/1992)). In addition, if an applicable tax treaty exists, its provisions may limit Finland’s right to tax.
Finland has the taxing rights in respect of the income of a foreign company resident in the other contracting state of a tax treaty generally when the foreign company has a perma¬nent establishment here. The question of whether a permanent establishment is formed is determined by the provisions of the applicable tax treaty. The definition for ‘perma¬nent establishment’ in the majority of Finland’s tax treaties with other countries is based on Article 5 of the OECD Model Tax Convention. Nevertheless, there is some variation among the treaties, so the details may vary and definitions may be different from the one in the Model Tax Treaty.
Under some tax treaties, a self-employed individual residing outside Finland is also liable to pay tax on business activities to Finland if he or she stays in Finland for more than 183 days during 12 consecutive calendar months, although otherwise, the activities would not give rise to a permanent establishment in Finland (e.g. the tax treaties with Estonia, Latvia, Lithuania, and the Nordic Tax Convention).
If no tax treaty between Finland and the country of residence of the foreign company is in force, Finland has the taxing rights in respect of the income of the company originating from business activities in Finland, or from practicing a profession or trade in Finland, even if the company has no permanent establishment here.
2 The obligation to withhold tax at source
The Finnish service recipient or a comparable foreign company has the obligation to withhold tax at source on nonwage compensations for work paid to nonresident foreign companies when the work or comparable services had been performed in Finland. The authorities will deem a foreign company with a permanent establishment in Finland to be comparable to a Finnish employer, and as a consequence, comparable to a Finnish service recipient, as well. In the same way, a foreign corporate entity is deemed comparable to a Finnish service recipient when the entity is a resident taxpayer because it has its place of effective management here. If a foreign company has no permanent establishment nor place of effective management in Finland, it is not under the obligation to withhold tax at source on payments of nonwage compensation to nonresident foreign companies although the work had been done in Finland.
The service recipient does not need to withhold tax at source if:
- the foreign company is entered in the prepayment register in Finland, or
- the foreign company presents a tax-at-source card showing 0% of tax to the service recipient.
In addition, the service recipient does not need to withhold tax at source if the foreign company provides proof that a treaty – such as a tax treaty – prevents Finland from collecting tax. Tax treaties usually prevent collecting tax on payments of nonwage compensation to foreign companies when the foreign company does not have a permanent establishment in Finland. Nevertheless, if the nonwage compensation is paid for construction work of houses and other buildings, for earthmoving, water engineering, or for other construction work, assembly or installation project work, shipbuilding work, transporting or cleaning, caring or nursing work, or if the non-wage compensation for work is paid for the workforce of leased employees in the sectors listed above, tax should always be withheld at source, upon payment, unless the foreign company is on the prepayment register in Finland or the foreign company presents a tax-at-source card showing 0% of tax (§ 10f of the act on the taxation of non-residents’ income (Laki rajoitetusti verovelvollisen tulon verottamisesta (627/1978)).
The rate of tax to be withheld at source is 13% when the nonwage compensation is paid to a foreign company comparable to a Finnish limited company (osakeyhtiö; aktiebolag) or comparable to a Finnish partnership. The rate is 35% when the nonwage compensation is paid to a self-employed person who operates a trade or business.
If the foreign company wishes to avoid having tax at source withheld from the nonwage compensation it receives, it is recommended that the company enters the Finnish prepayment register or requests to be issued a 0% tax-at-source card.
We recommend foreign companies to apply for a prepayment registration or to ask for a 0% tax-at-source card at an early stage – preferably before the work in Finland and invoicing is started. If the date of payment of the nonwage compensation falls before the date of the foreign company’s prepayment registration or before the date of receipt of the 0% tax-at-source card, the service recipient will have to withhold tax at source.
A foreign company can be entered in the prepayment register if the general conditions for entry are met. However, if Finland has no tax treaty with the country of residence of the foreign company, or if its country of residence is not an EEA state, the Tax Administration cannot grant a prepayment registration unless the foreign company has a permanent establishment in Finland.
More information on entering the prepayment register is available in the Tax Administration’s guidance Starting up business in Finland.
More information on a service recipient’s obligation to withhold tax at source is available in Foreign leased employees and taxation in Finland.
More information on the obligations of an employer is available in Employer's obligations.
3 Reporting to the Incomes Register
After paying nonwage compensation to natural persons who are nonresident taxpayers, the payer must always submit a report to the Incomes Register. The report must be submitted even if no tax had been withheld at source. Nonwage compensation for work paid to a nonresident corporate entity will only need to be reported if it had been required that the payer should withhold tax at source. Additionally, payments of nonwage compensation must also be reported to the Incomes Register if no tax at source had been withheld although it should have been withheld.
For more information, see Reporting data to the Incomes Register: international situations.
4 Withholding the tax at source upon payment, and paying it on to the Tax Administration
The payer is under a duty to withhold the tax at source when paying the nonwage compensation to the recipient. The payer must provide the recipient with a document itemising the compensation paid and the tax at source.
After that, the payer – the service recipient – will need to pay the amount on to the Tax Administration through MyTax (vero.fi/mytax).
For more information on paying the amounts on to the Tax Administration, see Self-assessed taxes.
5 Refunding excess tax at source withheld
5.1 The preconditions for refunding, and alternative ways to carry out a refund
It may be that the payer had withheld tax erroneously on an item of income not subject to tax, or the payer might have withheld more tax at source than what is required in the relevant international treaty, or there may be other errors or mistakes. To remedy the error, the excessive amount can be refunded to the recipient of the nonwage compensation.
There are two options for refunding the tax: the company that withheld the tax at source can, under certain conditions, refund it to the foreign company during the year of payment, or the foreign company can submit an application for refund to the Tax Administration.
5.2 The payer that withheld tax sends a refund to the foreign company
If tax at source has been withheld groundlessly, the foreign company that received the compensation may furnish the Finnish service recipient company with a written explanation proving that the service recipient did not have to withhold the tax at source. In practice, a valid explanation is a retroactive 0% tax-at-source card concerning the calendar year of payment, issued by the Tax Administration. To provide documentation indicating that the recipient of the payment had later obtained a prepayment registration is not a valid explanation for the purpose of proving that no tax had needed to be withheld at source.
If the payer had withheld too much tax at source or had withheld it groundlessly, the payer can remedy the error by deducting the excess amount from any tax at source to be collected later, provided that a payment is made later to the same recipient during the same calendar year. If no payments are made later to the same recipient during the calendar year, the payer can send a refund of the tax at source to the recipient. Such a refund would have to be made during the same calendar year. After the payment year has ended, the payer can no longer make a correction to any tax that had been withheld erroneously at source. Instead, the foreign company must submit an application for refund to the Tax Administration as described in section 5.3 below.
When making the correction and sending the refund, the payer must give the recipient a corrected document on the payment with the correct amount of the tax at source. The payer is required to refer to the original document clearly when making the correction and drawing up the corrected document.
For more information on correcting withheld taxes and reporting them, see Correcting data in the Incomes Register, section 2.3. The same principles are applied when the payer corrects a tax at source collected in the same year.
5.3 The foreign company submits an application to the Tax Administration
A foreign corporate entity can use Form 6165e, Application for refund of Finnish withholding tax on other income than dividends, interest, and royalties (Non-individual applicant, e.g. a corporate entity) to submit an application for refund. A nonresident taxpayer who is a natural person can use Form 6166e, Application for refund of Finnish withholding tax on other income than dividends, interest, and royalties; individual applicant.
The application must include the document from the Finnish payer itemising the compensation paid and the tax at source withheld, and a statement from the Finnish payer that confirms that no withheld tax at source amounts have been refunded to the applicant. The applicant is always required to complete the application form – as required in the instructions for the form – with sufficient information on the applicant’s business activity in Finland, and the applicant must attach a document equivalent to a Finnish excerpt of the Trade Register, and if relevant, a photocopy of the business contract showing the services or work performed relating to the compensation received.
However, no tax at source will be refunded with either of the above methods, if Finland has the right to tax the income. The most common reasons for this are that the applicant’s activity gives rise to a permanent establishment in Finland, and that the applicant stays here for longer than 183 days. In this case, the foreign company must submit an income tax return in Finland, and the tax that the payer had withheld at source will be credited to the company in connection with its tax assessment here. The foreign company is required to attach a document received from the payer proving the payer had withheld tax at source when paying compensation to the foreign company.