Gift taxes in international situations
Were you given money or other assets and property as a gift? Are you a tax resident of Finland, or is the donor a tax resident of Finland? You must submit a tax return and pay gift tax to Finland. Even if both of you live in a foreign country, gift tax must still be paid in the case of immovable property situated in Finland – for example, a summer house, a flat or apartment.
‘Immovable property’ refers to:
- Various types of real estate such as a lot where a building can be constructed, summer cottages, other recreational property or residences, agricultural farms, forestry farms.
- The stocks or shares of a corporate entity with a net worth of which more than 50% consists of immovable property in Finland – including shares in a housing company (asunto-osakeyhtiö; bostadsaktiebolag).
However, there is a lower threshold for gift taxes: if one donor gives you gifts in the course of 3 years and total value stays below €5,000, the gifts are exempted from tax and there is no need to submit gift tax returns.
Please note that a sales contract where the price is below current market price may be seen as a gift. If you buy property under a condition that you only have to pay 75% of its fair market value, it is considered a gift-like sale. The amount subject to gift tax is the difference between what you paid and the fair market value.
Examples of circumstances where a gift tax return has to be submitted
You, the gift recipient, must file a gift tax return and pay Finnish gift tax in situations like the following:
- You live in Finland and someone who also lives here donates real estate situated in Spain to you.
- You live in Finland and someone who lives in another country donates a sum of money to you.
- You live in a foreign country and someone who lives in Finland donates a sum of money to you.
- You live in a foreign country and someone who also lives in another country donates a summer cottage situated in Finland plus a sum of money to you. You must pay gift tax to Finland, however, only for the summer cottage because it is treated as immovable property.
- You live in a foreign country and someone who lives in Finland gives you a gift. The gift tax return must be submitted, although the property might be situated in a foreign country.
Subject to certain preconditions, if you live in Finland and you have paid gift tax to a foreign country, your Finnish gift-tax assessment may take account of – give credit for – the amount you paid. Fill in the necessary details on your foreign-paid tax when you complete the appropriate spaces on the Finnish gift tax return.
Instructions for gift tax filing and paying
Find out the gift's taxable value
After you have received a gift, you must valuate it in order to complete the gift tax return form. Use the fair market value, i.e. the probable selling price. This means the amount the seller would have received for it on the date when the gift was given to you. This value is the base for the gift tax assessment to be carried out by the Finnish Tax Administration.
There is no requirement to file a gift tax return for:
- Gifts worth less than €5,000.
- Gifts from one donor, received within a period of 3 years, and the total value is less than €5,000.
Submit a gift tax return
Gift recipients must submit a return within 3 months from the date of gift.
Gift tax returns must be submitted to the Finnish Tax Administration even if the provisions of a tax treaty prevent Finland from imposing gift taxes.
You need the following information for completing the return form:
- Gift value
- Gift date
- Family relationship between donor and recipient
The above information also has an impact on how much gift tax you must pay.
To submit the return you have the following options:
- file a paper form.
- file the return electronically in MyTax where you can log in securely to handle your tax affairs.
If you cannot log in to MyTax, complete your gift tax return on paper.
Pay the gift tax
After you submit the return, you receive the Tax Administration’s decision on your gift tax in approximately 6 months. The decision letter is enclosed with instructions for payment.
The first due date will be approximately 3 months from the date when you receive the gift tax decision. If your gift tax is less than €500, you must pay it on one single due date. Amounts above €500 are divided in 2 separate instalments. In this case, the second due date is 2 months later than the first due date.
Run the calculator to estimate how much gift tax you must pay
Other taxes relating to property and assets
Please note that if you receive immovable property in Finland – a summer cottage, etc. – you become liable for other taxes that are related to your ownership of the property. For example, owners of real estate must pay real estate tax every year.