Credit can be given on tax paid to foreign country

If you have paid inheritance tax to a foreign country, you can receive credit for it when your Finnish inheritance tax is assessed.

You may be given credit if all the conditions listed below are met:

• You are an heir or inheritor and on the date when the decedent died, Finland was your country of tax residence.
• You have paid tax on the inheritance to a country other than Finland.
• You have received the Finnish Tax Administration’s inheritance tax decision, and it indicated that the same assets are subject to inheritance tax in Finland.

Credit can only be given for tax paid to a sovereign state

Only the types of foreign taxes that were paid to a sovereign state (i.e. to a central government) can be credited by Finland. This means that if the foreign tax was paid to a local province, a federal state, etc., you cannot receive credit for it.

When you claim credit for the foreign tax, complete the Finnish inheritance tax return and enclose a photocopy of a tax demand received from a foreign authority and a photocopy of the receipt as proof of payment.

No credit on tax paid to a foreign tax authority is given if:

• tax has been paid on inherited immovable property located in Finland (such as lots, real estate property used for leisure, agricultural farms, forestry farms, and other land including parcels of land that have not undergone a cadastral procedure);
• tax has been paid on inherited corporate stock if the corporation’s assets, to more than 50 percent, consist of immovable property located in Finland (for example, a housing company or a real-estate company).

Example: Antti, the decedent, was a tax resident of Spain at his date of death. The assets and property that Antti left behind are located in Spain – with the exception of Antti’s summer cottage located in Finland. His daughter Sini living in Finland and his son Tomi living in Spain are Antti's only heirs. The Tax Administration will assess Sini’s inheritance tax on the entire share of the inheritance going to her. As for Tomi, the Tax Administration will assess Tomi’s inheritance tax as relating only to the Finnish-located summer cottage. 

Sini is entitled to get credit for any tax she had paid to Spain related to her part of the assets located there, because she lived in Finland at the date of Antti’s death. Tomi is not entitled to the credit because at the date of death, he was not a Finnish tax resident and did not live here.