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Nordic Agreement Concerning the Collection and Transfer of Tax (TREKK Treaty)

Date of issue
1/31/2025
Validity
1/31/2025 - Until further notice

This is an unofficial translation. The official instruction is drafted in Finnish (Pohjoismainen sopimus veron kannosta ja siirrosta (TREKK-sopimus), record number VH/1181/00.01.00/2024) and Swedish (Nordisk överenskommelse om uppbörd och överföring av skatt (TREKK-avtalet), record number VH/1181/00.01.00/2024) languages.

This guide discusses the Nordic Agreement Concerning the Collection and Transfer of Tax, also known as the TREKK Treaty. This guide discusses matters relating to the collection of tax including the question of which one of the Nordic countries will have the right to collect a prepaid tax when the employer company and the employee are tax residents of a Nordic country different from the one where the employee works. The guide also explains the preconditions for transferring tax between two Nordic countries and outlines situations in which an individual taxpayer’s tax may be transferred. Additionally, it provides readers with instructions on how employment within the Nordic countries must be reported to the authorities in different circumstances (NT1 and NT2 information).

The detailed guide Taxation on employment income earned abroad provides further guidance for employers (in chapter 7 of the guide) who send employees to work in a foreign country. The detailed guide Taxation of foreign employees coming to Finland – chapters 7 and 8 – contain instructions for Finnish and foreign employer companies who send foreign employees to work in Finland.

The instructions issued by the Incomes Register Reporting data to the Incomes Register: international situations – chapter 2.5 – give further instructions on submitting the NT1 and NT2 information.  The brief guidance article for individual taxpayers Working in a Nordic country – taxes can be reassigned is designed for employees who need instructions for completing their tax return and for adding a request for transferral of an amount from one Nordic country to another.

The Nordisk eTax website, which all Nordic tax authorities are responsible for, is intended for persons who are  tax residents of one Nordic country and who own property elsewhere or receive income sourced to another Nordic country. The Nordisk eTax website is multilingual, with translations into all Nordic languages and English.

The present version of this detailed guidance is updated. It has a new layout and revised text with more precise information.

1 Foreword

The Nordic Agreement Concerning the Collection and Transfer of Tax is based on Article 20 of the Nordic Convention on Mutual Administrative Assistance in Tax Matters (37/1991, hereinafter “the Nordic Convention on administrative assistance”). The agreement is also known as the TREKK Treaty, using the Danish word ‘trække’ (‘withhold’). The current TREKK Treaty (Treaty No 97/1997) entered into force on 1 January 1998. The treaty is applied in Iceland, Norway, Sweden, Finland, Denmark and the Faroe Islands (an autonomous region of Denmark). Greenland is not party to the TREKK Treaty.

Among the Nordic countries, the TREKK Treaty determines the country where tax must be withheld or prepayments collected. In addition, it contains detailed rules for transferrals of taxes between the Nordic countries.

The TREKK Treaty is applicable to situations where a Nordic business enterprise, for example, pays wages for work done in another Nordic country. The objective is to prevent tax prepayments from having to be made for such wage income in more than one Nordic country. Another objective is to ensure that the wages do not escape prepayments altogether, so taxes will always be prepaid either to the worker’s country of residence or to the country where the work is done.

References to ‘home country’ (hemstat) in the TREKK Treaty have the same meaning as ‘country of residence’ has in Article 4 of the Convention between the Nordic countries for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital – the Nordic tax treaty (26/1997).

Transfer of a tax becomes feasible from one country to another after an individual taxpayer has paid tax to one of the Nordic countries party to the TREKK Treaty while the taxing rights concerning the individual taxpayer’s income belong to another Nordic country. The transferred tax counts as a payment of a tax levied in the receiving country. The objectives of the transferrals are first, to ensure that the final tax on income is paid to the right country, and second, to avoid double taxation. Tax can be transferred in connection with prepayments, tax assessment or corrective assessment. One of the treaty objectives is to avoid situations where an individual taxpayer is given a tax refund on the basis of an item income, which also is subject to tax in another Nordic country.

In the text below, ‘prepayments’ and ‘prepaid tax’ may refer to tax withheld (at source) by the payor and to prepayments made by the workers themselves. A tax authority often requires an individual worker to make prepayments if the employer is not under a legal obligation to withhold tax on the wages.

2 Overview of the TREKK Treaty

2.1 Scope of application

In accordance with its Article 1, the TREKK Treaty is applied on income taxes within the meaning of the Nordic tax treaty (26/1997). Only the categories of taxes are within the scope of application that can be levied on the types of income that the Nordic tax treaty concerns. This way, the TREKK Treaty does not apply to tax on interest income withheld at source, nor to employees’ and employers’ health insurance contributions that are withheld, etc.

Article 3 of the TREKK Treaty lays down that the treaty’s provisions concerning collection of tax are related to taxes on income from work. The meaning of ‘income from work’ covers wages, and additionally, non-wage compensation for work which is often also called trade income. Additionally, under Article 8 of the TREKK Treaty, the treaty’s provisions concerning transferral of tax revenues are related to income from work, income in the form of a pension, and income from the operation of business.  The TREKK Treaty is applicable, besides income in the form of a pension, to income consisting of social benefits based on legislation on social insurance, including sickness allowances. The treaty is applied on pensions regardless of whether they are taxable as earned income or taxable as capital income. Whether the pension is based on a legal statute or based on a contract signed voluntarily is not important.

According to the Nordic tax treaty, when a worker, a resident individual of a Nordic country, works in another Nordic country for an employer resident in that Nordic country (the country where work is done), the latter country has the taxing rights over the worker’s wages. The TREKK Treaty imposes no obstacle that would prevent the country where work is done from collecting a prepayment. In the above circumstances, when a resident individual of a Nordic country works in another Nordic country for an employer resident in that Nordic country, there is no need for having any taxes transferred.

2.2 Applying the TREKK Treaty on business income

The TREKK Treaty’s provisions, in Chapter II, on collection of tax concern income from work, i.e. they concern wages and trade income, but they do not concern income from business. This way, the TREKK Treaty does not prevent the Nordic countries from demanding taxpayers that they make prepayments of tax relating to business income. However, the TREKK Treaty’s provisions on transferral of taxes in Chapter III also concern income from business. As a result, the TREKK provisions on tax transfers can also be applied on corporate entities. However, the TREKK Treaty has rarely been applied on them. Under Article 9 of the TREKK Treaty, transferrals of tax at the stage of preassessment are only feasible in the case of income from work and income in the form of a pension. From this, it follows, that any transfer of tax on a taxpayer’s business income can only concern a tax confirmed in the final assessment for the year.

Income tax paid on earnings or capital income from a natural person’s business can be transferred. The TREKK Treaty also applies to an income tax paid by a corporate entity.

If a company conducts business in another Nordic country without making prepayments there, and the company is later found to have had a permanent establishment in that country, the country can request that tax be transferred there. When a tax confirmed in the year’s final assessment is being transferred, the company’s country of residence may restrict the size of the amount to be transferred, to be no higher than the refund the company received. In the case of a corporate entity, if it is discovered afterwards that a permanent establishment had been formed, the tax paid to another Nordic country is only taken into account in the final assessment or in a corrective reassessment.

2.3 The competent authority and international exchange of information

Tax transfers and information exchange relating to TREKK are regarded as a form of multilateral administrative assistance between Nordic tax authorities. The parties in charge of providing administrative assistance are the competent authorities in each country.

The competent authority in TREKK matters for Finland is the Tax Administration's Taxation Unit. The Taxation Unit has responsibility for collecting and transferring taxes, and is also in charge of the exchange of information between the Nordic authorities.

When an employer has sent a worker to another Nordic country to work there, the employer must notify the tax office in the employer’s Nordic country of residence of whether the employer will continue to withhold tax in the Nordic country where the worker is resident, or whether the country where work will be done will receive the taxing rights; after this statement from the employer is received, the competent authority will send it on to the competent authority of the country where the worker will work.

In the case of a Finnish employer, this is done by submitting the “earnings payment report” to the Incomes Register complete with the section for “NT information”. When filling in the spaces of the earnings payment report, the employer must select either the NT1 form type or the NT2 form type depending on whether or not the employer will continue to withhold tax in the residence country as previously. For more information on the obligations of an employer, please see chapter 3 below.

The mechanism of information exchange is also in operation whenever the authorities send requests or offers regarding transfer of taxes from one Nordic country to another. Accordingly, the competent authority sends the requests or offers to the competent authorities of other Nordic countries. In the same way, the competent authority is also in charge of processing all the notifications coming from other Nordic countries. Being the competent authority, the Taxation Unit at the Finnish Tax Administration oversees any recovery of taxes in conjunction with international administrative assistance.

Although the employers are under obligation to report information and although a regular information exchange is in place between the Nordic authorities, individual taxpayers working in different countries will still have their usual responsibility to file tax returns as they earn income, either in the country where they work or in their country of residence. Any income from abroad, in addition to income from domestic sources, must be reported on tax returns filed in the country of residence. Due to the above, it is additionally required of the individual taxpayer to inform the tax office of their work in a foreign country, already at the preassessment stage. This includes situations where a worker will work in a foreign country and the foreign country will receive the taxing rights over the wages earned.

2.4 The TREKK Treaty and Finland’s internal legislation

The provisions of § 39 of the Decree on tax prepayment and § 6 of the Act governing the incomes register require employers to provide the Finnish authorities with additional information in case they have employees who work in another Nordic country. Employers reporting in Finland need to submit the above information to the Incomes Register.

Internal legislation contains provisions that take account of the TREKK Treaty’s requirements. According to the provisions of § 34 of the Act on assessment procedure (558/1995), prepayments transferred from another country to Finland are used towards the taxes levied during the tax year concerned. Likewise, when prepayments have been transferred away from Finland to another country, they can no longer be used in the Finnish tax assessment for the year. Any tax transferred from another country to Finland under § 60 of the Act is deducted from the amount of tax levied in Finland in connection with any reassessment, on the condition that the transfer was made before the reassessment. Chapter 11 of the Act governing tax collection and recovery (Veronkantolaki (11/2018)) contains several rules on how taxes should be transferred from one country to another.

Considering the above national legal rules on tax transferrals and the TREKK Treaty’s provisions, it can be stated that a tax paid in another Nordic country is comparable to a tax paid in Finland. Taxpayers can be given credit for taxes transferred from another Nordic country when the taxpayer’s taxes are assessed in Finland. For this reason, in accordance with the TREKK Treaty, the receiving Nordic country cannot charge interest on the part of the tax that matches the amount to be transferred from another Nordic country. This prevents taxpayers from having to pay interest on back taxes for tax payments made initially in another Nordic country.  Correspondingly, the Nordic country sending a tax to another Nordic country is not expected to add any credit interest to the amount.

3 Collection of taxes

3.1 The Nordic country having the right to demand prepayments

Under Articles 3 to 5 of the TREKK Treaty, the Nordic country where work is done can demand that the individual taxpayer make prepayments, if that country also has the right to tax the worker’s wages in the final assessment for the year. The question of taxing rights of the relevant Nordic countries is resolved on the basis of the Nordic tax treaty. When an employee works for an employer resident in the worker’s Nordic country of tax residence, and the work is done in another Nordic country, the country of work may demand prepayments if any of the conditions below is fulfilled:

  • The employee stays for more than 183 days during a consecutive period of 12 months in the country of work, in one or more stretches.
  • The employer’s permanent establishment located in the country of work pays the wages, and the wases are considered as a cost of the permanent establishment.
  • The employee is a leased employee, under an employee-leasing contract, or
  • The work is related to a hydrocarbon deposit as referred to in Article 21, paragraph 7 of the Nordic tax treaty and the work goes on longer than 30 days.

If none of the above conditions applies, the provisions of the TREKK Treaty prevent the country of work from demanding a prepayment of tax, and as a result, the individual employee will need to make prepayments to his or her Nordic country of tax residence.

However, if prepayments need to be made in the country of work, the TREKK Treaty lays down that the employee’s Nordic country of tax residence cannot demand prepayments.

3.2 The NT1 information: tax withheld in the country of residence

3.2.1 Working in another Nordic country

When an employer sends its employees to another Nordic country to work, and according to the Nordic tax treaty, that country has no taxing rights on the employees’ wages, the tax is withheld in the employees’ country of tax residence. The aims of the TREKK Treaty include the idea of tax withholding in one single Nordic country. On the other hand, the TREKK Treaty’s aim is to prevent any situations where no withholding is carried out in either one of the two Nordic countries.  Consequently, employers must submit “NT1 information” to the tax authorities in their employees’ country of residence to communicate the fact that employees have been sent to other Nordic countries to work.

The procedure for NT1 information in Finland is to fill in the “earnings payment reports” of the Incomes Register. The NT1 information must be submitted no later than on the fifth date after the first payment date of wages for work in another Nordic country after the employee has started working in another Nordic country. After receiving the NT1 information, the Tax Administration will send it on to the competent authority of the Nordic country concerned. The Tax Administration will additionally send the employer and the employee a notification of tax being withheld in Finland when work is performed in another Nordic country (i.e. the NT1 information).

If necessary, the employee can present the received notification to the tax authority of the country of work. Under the provisions of the TREKK Treaty, after the notification has been presented, the country of work can no longer demand a prepayment. However, there is normally no need to present the notification in that country because its tax authority receives the information from the tax authority of the Nordic country of residence. Alternatively, the tax authority can otherwise verify whether the country of work has the taxing rights with respect to the wages.

Example 1: A Finnish company’s employee, a Finnish tax resident, is sent to Sweden for a two-month job. When the job is finished, he returns to Finland. The company has no permanent establishment in Sweden, and the Finnish employee is not a leased employee. Sweden does not have the right to tax the wages.

When the first payment of wages to the employee has been made, the employer will need to submit its earnings payment report, complete with NT1 information, to notify the Finnish Tax Administration that withholding is carried out in Finland. The Tax Administration will send this information on to the Swedish Tax Agency. The Tax Administration sends notifications both to the employer and to the employee, stating that the Finnish employer continues to have the obligation to withhold tax in Finland.

However, if the authority of the country of work has established that the employee is a leased employee, this can override the protection afforded by the NT1 certificate. In this case, under the TREKK Treaty, the country of work would need to notify the country of residence of the fact that prepayments are collected by the country of work because the person is actually a leased employee. After receiving this information, the country of residence cannot demand prepayments. It is appropriate in similar situations for the individual employee to contact the tax authority of the country of residence to discuss the matter, and if needed, the employee can submit an application for a revised tax card.

3.2.2 Working in Finland

If an employer, resident of another Nordic country, sends its employees to Finland, and under the circumstances, Finland has no taxing rights with respect to the wages, the employee withhelds tax in the employees’ country of residence. In these situations, the competent authority of the other Nordic country sends the NT1 form received from the employer to the Finnish Tax Administration.

3.3 The NT2 information: no withholding in the country of residence

3.3.1 Working in another Nordic country

When an employee works in a foreign country, the question of which country will have the taxing rights is resolved in accordance with the provisions of internal legislation and additionally, in accordance with what is agreed in the tax treaty.

If a Finnish resident individual works for a Finnish employer in another Nordic country, so that the wages are subject to the six-month rule laid down in § 77 of the act on income taxation, the wages are fully exempt from Finnish tax. Because no tax is withheld on tax-free earnings, the employer can choose to apply the six-month rule and forgo withholding tax on the wages, and there is no need to request a revised tax card for the employee. However, the employer has an obligation to withhold health insurance contributions from the wages even if the wages are exempt from tax on the basis of the six-month rule. The relevant provisions can be found in Chapter 18, § 29.2 of the Finnish Health Insurance Act (1224/2004). The amount withheld in order to cover the health insurance is often called a “minimum withholding”.

If under tax-treaty provisions, the country of work has the taxing rights with respect to the wages, but the six-month rule does not apply on the wages, the employer does not have the above option to choose on the employer’s initiative to not withhold tax in Finland. In these circumstances, the employee would have to apply for a revised tax card to prevent the withholding or to lower the amount.

In sum, the employer can refrain from withholding tax on the wages, either by invoking the 6-month rule or by reference to the employee’s revised tax card issued so as to eliminate double taxation. In both scenarios, the employer must fill in the earnings payment report and submit it to the Incomes Register in order to give the NT2 information to the Finnish Tax Administration, i.e. stating that no tax is withheld.

Example 2: A Finnish employer has posted a worker to Sweden to work there for one year. The Swedish Tax Agency may require prepayments because the planned duration of the work is longer than 183 days within a 12-month period. The wages earned for work done in Sweden are tax-exempt in Finland under the 6-month rule. However, the Finnish employer proceeds to withhold the minimum amount related to health insurance.

When the first payment of wages has been made, the employer will need to submit an earnings payment report complete with NT2 information, to notify the Tax Administration that no tax is being withheld in Finland. The Tax Administration will send this information on to the Swedish Tax Agency.

The report with the NT2 information must be submitted within five days of the first occasion on which tax is not withheld on the worker’s pay relating to working in a foreign country. An employer needs to submit the NT2 information for every calendar year. As a result, in this example, if work goes on after the end of the current calendar year, the employer will have to give the NT2 information again regarding this worker. The deadline for this is end of January. After the employer gave the NT2 information to the Incomes Register, the competent authority in Finland sends it on to the competent authority in the Nordic country concerned. The authorities of the Nordic country where the work is done can then take steps to request prepayments on the basis of the NT2 information received.

The Tax Administration’s guides Taxation of employment income earned abroad and Six-month rule for wage income earned abroad describe the employer’s responsibilities in greater detail.

For more information on Incomes Register reports, see Reporting data to the Incomes Register: international situations – chapter 2.5 of the guide (Additional information on work in a Nordic country).

3.3.2 Working in Finland

An employer that is a resident of another Nordic country can send a worker to Finland so that prepayments on their wages are made to Finland. In that case, the Nordic employer will need to submit the NT2 information to the employer’s country of residence. After that, the competent authority of that country will send the information on to the Finnish Tax Administration. If the Nordic employer is not treated as having a permanent establishment in Finland, it does not have to withhold tax in Finland on the wages. Under the circumstances, the worker must turn to the Finnish Tax Administration, to ask for a calculation of tax prepayments.

In an alternative scenario where the employer has a permanent establishment in Finland, or where the employer has voluntarily requested entry into the register of employers, the employer must withhold tax (or tax at source) in Finland. In these circumstances, the worker should ask the Tax Administration for a tax card or for a tax-at-source card for the wage income. If no tax card is presented, the employer is required to apply either a 60-percent withholding or a 35-percent rate of source tax.

For more information on work done in Finland, see Taxation of foreign employees coming to Finland.

3.4 Taxing rights of the country of work are determined later

If at the beginning, a Finnish employer has given the authorities the NT1 information indicating that withholding will take place in the worker’s country of residence, and some time later, it becomes known that the country of work gets the taxing rights, so no tax is withheld any more by the Finnish employer, the employer has to declare the non-withholding by giving the NT2 information to the authorities. In this case, the employer is not allowed to make a refund to the worker for any tax already withheld. Instead, the tax authority of the country of residence will transfer the paid-in tax to the country of work.

Example 3: A Finnish company posts a worker, a Finnish tax resident, to Denmark to work on a contract with a planned duration of four months. The employer has initially informed the Tax Administration that tax on the worker’s wages will be withheld in Finland (giving the NT1 information). However, later, the employer extends the contract to nine months. This means that the worker will end up staying in Denmark for more than 183 days, and in accordance with the Nordic tax treaty, Denmark will therefore have the taxing rights with respect to the wages. At the same time, it is discovered that the six-month rule applies to the worker’s wages in Finland.

Although the tax on his wages was withheld in Finland at the beginning, the employer is not expected to make changes afterwards to the NT1 information submitted to the tax authority. Instead, on the next payday, the employer only withholds the minimum amount. The employer will need to notify the Tax Administration that tax will no longer be withheld in Finland. To do this, the employer has to give the NT2 information to the Incomes Register within the 5-day deadline from the payday. The employer will fill in the earnings payment report accordingly. The Tax Administration will send the information on to Denmark. If needed, the amounts the employer had withheld during the first months will be sent to Denmark as well, under the framework of the TREKK process.

3.5 Mutual agreement if two countries demand prepayments

If prepayments have been charged on the same item of income in two Nordic countries, the country that was not entitled to demand prepayments must send back any prepayments made there, as provided in Article 6 of the TREKK Treaty. The competent authority of the other country must be notified before the prepayment is sent. If necessary, the competent authority of the other country will make a demand that the tax be transferred to that country.

It may be that the employee’s country of residence and the country where he or she works will both interpret their national tax laws and the Nordic tax treaty to mean that they have the taxing rights with respect to the employee’s wages. However, the TREKK treaty determines which one of the two Nordic countries gets the right to demand prepayments. If the tax authority of a Nordic country, which according to the TREKK treaty should forego demanding prepayments, refuses to accept a decision made by the other Nordic country, the dispute would have to be resolved through a mutual agreement between the competent authorities, as provided in Article 6 of the TREKK Treaty.

If the country of work invokes any of the criteria listed in above in 3.1 and demands prepayments to be made, the employee’s country of residence cannot demand prepayments until the dispute has been resolved. The country of work, on the other hand, cannot demand prepayments until the dispute has been resolved if the contract is for no more than 183 days of work during a 12-month period, and the employer’s country of residence is the same as the worker’s country of residence.

3.6 Cross-border commuters

As laid down in Article 7 of the TREKK Treaty, cross-border commuters are outside of the scope of application of the tax collection provisions that determine which Nordic country can demand prepayments (Articles 3–6). However, the TREKK provisions on tax transfers are applicable on cross-border commuters. This means that where necessary, the taxes levied on the income received by cross-border commuters can also be transferred. For more information, see the Finnish Tax Administration’s guide on the tax treatment of Nordic cross-border commuters.

4 Tax transfers

4.1 Transferring tax from Finland to another Nordic country, or vice versa

Either Finland or the other Nordic country can initiate the transferral of tax between Finland and another Nordic country. If a Nordic country has the right to tax a worker’s income and prepayments have been made in another Nordic country, the tax can be transferred. Tax can be transferred in connection with prepayments, tax assessment or corrective assessment. The provisions of the TREKK Treaty contain detailed rules on deadlines. For more information, see 4.3 below.

If prepayments are transferred from Finland to another Nordic country, the taxpayer does not get credit for them in Finland. The transferred amount does not accrue interest in Finland. The Tax Administration issues a specific decision concerning a transfer.

If the employer had withheld tax in Finland on the wages paid to a worker, but according to the Nordic tax treaty, another Nordic country has the taxing rights with respect to the wages, and the worker would be receiving a tax refund in Finland, the Tax Administration will inform the other Nordic country of the fact of the refund. If a response from the other Nordic country indicates that the worker’s taxes are assessed there and there is no need for an additional transfer of tax, the taxes the employer had withheld in Finland remain with the Finnish assessment, and the upcoming tax refund will be paid to the worker.

In the reverse case where there is a tax transferred to Finland, the amount transferred is treated in the taxpayer’s tax assessment in the same way as if the tax were originally withheld in Finland. No interest is added in Finland to the amounts transferred to Finland. Any tax transferred to Finland from a Nordic country that will not be used towards a taxpayer’s tax liability is refunded to the taxpayer.

The Nordic competent authorities are in charge of evaluating whether transferral is justifiable, what the exact amount to be transferred is between the Nordic countries concerned, either as an amount requested or as an amount offered.  Only the amount of tax required for exact coverage of the taxpayer’s tax liability is requested to be transferred. If Finland only requests the transfer of some of the tax paid in another country or if there are no grounds for requesting a transfer, the taxpayer must apply to the authorities of the other country for a refund of any excess or mistakenly paid amounts.

The TREKK Treaty contains detailed rules on deadlines for the transferrals. For more information, see 4.3 below.

4.2 Tax transfers at various stages of assessment

4.2.1 Transfers made at the pre-assessment stage

The prepayments cannot always be made in the country that is ultimately found to have the right to tax a worker’s income. Employers who post workers to another Nordic country often initially withhold tax in the workers’ country of residence because at the beginning, it is still unclear who among the workers will end up staying in the country for more than 183 days. When work begins, it is often impossible to know whether the employer will ultimately become treated as having a permanent establishment in the country of work, or whether the authorities of that country will consider the workers to be leased employees. Another possibility is that prepayments are made in the Nordic country of work at the beginning, but as it turns out later, only the worker’s country of residence has the taxing rights if, for example – contrary to what was originally planned – the worker will ultimately spend a shorter time in the country of work.

If prepayments were first collected from a worker in another Nordic country but the Nordic tax treaty gives Finland the taxing rights with respect to the worker’s income, a necessity arises to evaluate whether the prepayments, first collected elsewhere and later to be transferred to Finland will be enough to cover this worker’s tax liability in Finland for the tax year. Under the TREKK Treaty, the other Nordic country may carry out a transfer of a tax to Finland as early as at the pre-assessment stage. However, normally the Tax Administration will not order the worker to make prepayments to Finland for the same income for which he or she has made prepayments in another Nordic country. In case a decision by the Tax Administration on prepayments on the same income had been issued beforehand and a transfer takes place, the Tax Administration can give credit to the worker for the amounts. In general, the majority of transfers are made later, i.e. at the stage when the tax authority is assessing the taxpayer’s taxes for the entire year. If the Finnish tax on the income will be higher than the amount received in Finland through a TREKK transfer, the individual worker has an opportunity to make an extra prepayment to avoid a back tax. One way to increase the prepaid total is that the individual simply asks the employer to withhold more than what is indicated on his or her tax card.

Tax withheld on wages in accordance with the Finnish Prepayment Act (1118/1996) or prepayments made by the worker otherwise in Finland, can be transferred to another Nordic country on the basis of TREKK before the Tax Administration has completed the worker’s assessment for the year. Under Article 9 of the TREKK Treaty, to transfer taxes at the preassessment stage is possible in the case of income from employment and income in the form of a pension (which also includes social security contributions). However, these transfers cannot be made in the case of business income.

In accordance with the provisions of § 22, Prepayment Act, the Tax Administration could make a refund if the payor had withheld money on an item of income on which no tax is levied in Finland. However, the Tax Administration cannot refund taxes if the reason is an individual worker’s work in another Nordic country until a message is sent to the other Nordic country concerning the refund. A refund can be paid, for example, if a worker’s wages are tax-free on the basis of the six-month rule.

Prepayments can be transferred from Finland to another Nordic country on the condition that under the Act on assessment procedure, the taxpayer could be given credit for the paid-in tax in Finland. This means that prepayments can even be transferred in situations where the employer has withheld tax on wages but failed to file reports to the Incomes Register on the withholding, or failed to pay the withheld amount forward to the tax authority. However, in the above circumstances, the TREKK transfer cannot be made unless there is positive proof of the withholding.

4.2.2 Transfers after the year of payment of the income

Articles 10 and 11 of the TREKK Treaty contain provisions on a 3-year period when tax needs to be transferred. This is described in more detail in section 4.3.

After assessment for the tax year is complete in Finland for an individual’s taxes, a refund within the meaning of § 50 of the Act on assessment procedure can be transferred to another Nordic country, for example if a withholding or prepayment had gone to Finland although the other Nordic country actually had the taxing rights. The date when assessment is complete varies, i.e. every individual taxpayer has a different end date of assessment. The above transfer to another Nordic country can only be made if the refund still remains unremitted to the individual taxpayer.

Example 4: A Finnish resident works in Sweden since last October. His original contract was planned for 3 months only. His Finnish employer had given the Finnish Tax Administration NT1 information when the work began, and withheld tax on wages, also on the wages he earned in Sweden.

When the worker submits his tax return for the year, he notifies that his work continued after the turn of the year, and has been going on in Sweden for more than 183 days within a period of 12 months. These circumstances give Sweden the taxing rights with respect to the wages he receives for working in Sweden.

When his Finnish taxes are assessed for the year, the exemption method is applied to the wages received for working in Sweden. This gives rise to a tax refund. The Tax Administration sends the Swedish Tax Agency a notification concerning the tax refund. The Swedish Tax Agency makes a request for a TREKK transfer. The Tax Administration deducts the amount to be transferred from the worker’s refund before paying it to the worker. The Finnish Tax Administration notifies the worker of the transfer.

If the exemption method or the six-month rule is only applied to the taxation of wages in a reassessment, any refund arising from assessing the taxpayer’s taxes again as referred to in § 76, Act on assessment procedure, can be transferred to another Nordic country.

Example 5: A taxpayer who has moved from Finland to Denmark had a second job in Denmark, the new country of residence. The second job consisted of telework for a Finnish employer over a remote connection. The employer withheld taxes in Finland, paying them on to the Finnish authority. The taxpayer forgot to report this income in the tax return in Denmark. Two years later, the tax authority notices the non-filing, and Denmark imposes a back tax with interest. The taxpayer attempts to clear up the situation in Denmark. At this time, it becomes known that according to the tax treaty, only Denmark had the right to tax the wages.

In a situation illustrated in this example, the taxpayer would have to submit a claim for adjustment to the Finnish Tax Administration, to also have the Finnish taxes corrected. Either one of the two Nordic countries can take the initiative to start a TREKK process for transferring the paid-in taxes.

After the taxpayer submits the claim for adjustment, the Tax Administration will adjust the Finnish taxes. Then, in accordance with the TREKK Treaty, the refund resulting from the adjustment will be sent to Denmark.

In the same way, another Nordic country may send information to Finland concerning a tax refund. This may happen if any form of prepayment of tax had gone to the other Nordic country but the taxing rights, in fact, belong to Finland.

4.2.3 Income taxable at source

Finland can also offer to refund a tax withheld at source, as referred to in § 11.2, Act on the taxation of nonresidents’ income (Lähdeverolaki, laki rajoitetusti verovelvollisen tulon verottamisesta (627/1978)), for transfer to another Nordic country. An example of a situation where a refund may be transferred this way is the following: tax was first withheld at source on a wage paid to a nonresident, but all of the work was done in another Nordic country, which means that not only the national legislation but also the tax treaty will prevent Finland from levying tax on the wages. The tax that had been withheld at source can be refunded either on the basis of a request, or on the initiative of a tax authority. According to the provisions of § 11.3 of the Act on the taxation of nonresidents income, a tax withheld at source, which later becomes transferred to a foreign country, cannot be refunded to the taxpayer.

In the same way as other transfers, to transfer a tax from one Nordic country to another is feasible in the case of an imposed amount of source tax in connection with taxation according to § 16 of the Act on the taxation of nonresidents income.  In this case, when a Finnish source tax is imposed on the taxpayer, the tax that becomes transferred to Finland will give rise to a credit for the taxpayer.

4.2.4 Mutual agreement procedure

Article 28 of the Nordic tax treaty contains provisions on a mutual agreement procedure (MAP). The Nordic tax treaty gives taxpayers the right to challenge any double taxation of their income through the competent authorities of the Nordic countries that are involved. The MAP procedure is usually the last resort for eliminating double taxation, only to be implemented if an appeals procedure has been exhausted first. It is possible to apply the provisions of the TREKK Treaty also on a MAP process in its various stages, on the condition that the countries have reached agreement on this.

4.3 Limitations and deadlines for tax transfers

At the stage when one Nordic country is collecting a tax to be prepaid, based on a preassessment, the amount to be transferred must not exceed the prepayments that should have been made on the income in the country requesting the transfer. In the same way, the amount transferred cannot exceed the amount of prepayments received by the country that receives the transfer request.

At the preassessment stage, transfer requests to the authorities of other Nordic countries must arrive by

  • 1 February of the year following the year when the income was earned in the case of Denmark and the Faeroe Islands,
  • 1 April of the year following the year when the income was earned in the case of Norway, and
  • 31 May of the year following the year when the income was earned in the case of Iceland, Sweden and Finland.

After these deadlines, the transferring country has the right, under Article 10 of the TREKK Treaty, to spend any prepayments accumulated there to first cover the country’s own income tax related to the tax year concerned. In other words, the Nordic countries party to the TREKK Treaty can restrict the transferrable amount to only match the refund the taxpayer actually received.

If a request is not made until 3 years have elapsed since the end of the year when the income was earned, the transferring country can, under Article 11 of the TREKK Treaty, spend the tax revenue also to cover other tax claims, before making the transfer. At this stage, all domestic taxes and charges have priority over the transfer regardless of the tax year.

If any item of income in one Nordic country has been assessed there, in such a way that a refund becomes payable to the taxpayer, and if another Nordic country imposes tax on the same item of income, as well, the first Nordic country will need to delay the refund (Article 12 of the TREKK Treaty).

If the second Nordic country has not requested a transfer of tax, the first Nordic country must inform the second Nordic country of the refund, before remitting the refund to the taxpayer. If after notifying the second Nordic country, the first Nordic country does not receive a transfer request in 30 days, the refund can be remitted to the taxpayer.

The 30-day deadline is often extended – in the context of applying the provisions of the TREKK Treaty to practice – because it is not always possible for the Nordic country receiving a request to fulfill it in just 30 days. However, a situation requiring the taxpayer himself to pay the tax to the other country is successfully avoided. That situation would also involve the other country’s charging of interest on the late-paid tax. Moreover, tax remaining unpaid in another Nordic country might need to be collected from a taxpayer in Finland if the other country requested official assistance for collection from Finland in accordance with the Nordic Convention on Administrative Assistance.

4.4 Tax transfers and exchange rates

Transfers of tax revenue from Finland to other Nordic countries are made at the latest euro conversion rates of the European Central Bank. Reliance on these rates is based on chapter 7 of an agreement made between the Nordic countries in accordance with Article 20 of the Nordic Convention on Administrative Assistance.  After a tax authority of another Nordic country has transferred an amount of money to Finland, the corresponding tax entry into the Finnish Tax Administration’s accounting will be made in euros. The taxpayer concerned will be given credit for the transferred tax according to the euro amount that the Tax Administration recorded. Conversion of non-euro amounts coming to Finland is performed by the bank that conveys the payment.

Page last updated 2/12/2025