Foreign dividends
If you receive dividends from abroad, their taxation depends on the country, from which the payment comes.
Dividends from a partner country are taxed in the same way as Finnish dividends
Foreign dividends are taxed in the same way as dividends received from Finland, if they are from:
- Another country in the European Union (EU)
- Another country in the European Economic Area (EEA)
- A country, with which Finland has a taxation agreement concerning dividends.
In those cases:
- 85% of the dividend you receive from a listed company is taxable capital income and 15% is tax-exempt income.
- You pay capital income and/or earned income tax on the dividend you receive from an unlisted company, depending on the mathematical value of the shares or their fair market value
Tax is not withheld from the dividends of a foreign company. Depending on the tax agreement, the company may withhold tax at source.
| Dividend | 100 000 | ||
|---|---|---|---|
| Mathematical value of shares | 800 000 | ||
| The part of Jaakko’s dividend treated as capital income | 64 000 | Jaakko’s dividend income taxed as capital income | 16 000 |
| The part of Jaakko’s dividend treated as earned income | 36 000 | Jaakko’s dividend income taxed as earned income | 27 000 |
The part of dividend treated as capital income consists of a profit of eight per cent on the mathematical value of the shares (800,000 x 8% = 64,000).
The part of dividend treated as capital income is under EUR 150,000, and therefore 25% of the amount (EUR 16,000) is taxable capital income. 75% or EUR 48000 is tax-exempt income.
The remaining part of the dividend, EUR 100,000 – EUR 64,000 = EUR 36,000, is treated as earned income. 75% (EUR 27,000) of the dividend treated as earned income is taxable earned income and 25% (EUR 9,000) is tax-exempt income.