Filing and paying tax on rental income from property abroad

Taxpayers can also have rental income from a country other than their country of residence. See instructions for the following situations:

Rental income from Finland while living abroad

Rental income from Finland is usually taxed in Finland. Rental income from property let in Finland is taxed in Finland even if the taxpayer resides abroad.

Tax on rental income is always charged at the capital gains tax rate. The taxpayer’s country of residence does not affect the tax rate.

1

SET UP PREPAYMENTS

Set up prepayments as soon as you let out a house or a flat located in Finland to avoid back taxes.

See instructions for how to pay

2

SET UP SUPPLEMENTARY PREPAYMENTS, IF NECESSARY

If you notice that your prepayments are too low, ask the Tax Administration to increase your payments. Requests for higher prepayments need to be made well in advance and in any case by mid-November. You can also set up supplementary prepayments.

Calculate supplementary prepayments (www.vero.fi/taxcalculator)

3

FILE RENTAL INCOME IN TAX RETURNS

All rental income and associated costs must be included in your tax return. You must include this information even if no taxable rental income remains after you have deducted your expenses.

See instructions for filing

Example: A Russian citizen called Maria who lives in Russia buys a holiday home (flat) in Finland and lets it out for the majority of the year when she is not holidaying in Finland herself.

Maria’s rental income from the flat is taxed in Finland, and she needs to declare her rental income and expenses annually using form 7H. Maria can make the same deductions from her rental income as Finnish landlords. As Maria also occasionally uses the flat herself, she can only deduct costs that she incurs while the flat is let.

Rental income from a flat in Finland while living in Spain or Portugal

Rental income from flats located in Finland is not taxed in Finland if the taxpayer lives in Spain or Portugal. The exception is based on tax treaties that Finland has signed with Spain and Portugal.

The exception does not apply to rental income from houses. Rental income from houses located in Finland is taxed in Finland even if the taxpayer lives in Spain or Portugal.

Rental income from property abroad while living in Finland

All rental income from property abroad needs to be declared in Finland.

According to tax treaties, rental income from immovable assets (such as property) can be taxed in the country in which the property is located. Rental income from movable assets located abroad, on the other hand, is usually only taxed in Finland if the taxpayer lives in Finland.

See instructions for how to declare

Filling in form 7H (flats) or 7K (houses) to be appended to tax returns:

  • Tick the “Property abroad” box.
  • Declare tax paid abroad under “Additional information”.
  • Also enter the amount of rental income or losses in your tax return.

Tax Return on the Web (tax.fi/taxreturn) is closed.

You can no longer submit details for 2017 online. Please file the details on your pre-completed tax return form and attachment forms, if necessary. Send the forms to the tax office by post.

Credit method

The credit method refers to Finland taxing income generated abroad but subtracting any tax paid abroad from the amount of tax payable in Finland. Finland has signed tax treaties for eliminating double taxation by means of the credit method with certain countries, such as the other Nordic countries.

If a taxpayer receives rental income from such a country, the Tax Administration

  • taxes the rental income at 30% (or at 34% if the capital gains exceed EUR 30,000)
  • subtracts the amount of tax that the taxpayer has paid abroad.

Interest on mortgages on let properties is deducted from capital gains in Finland. Taxpayers can ask the Tax Administration to deduct any foreign property tax paid from their rental income as expenses incurred from earning an income.

Exemption method

According to tax treaties, the exemption method applies to rental properties located in

  • Spain
  • Portugal
  • France
  • Egypt.

In these cases, rental income is not taxed in Finland, but it may increase the amount of tax payable on other capital gains. This is why income from these countries also needs to be declared in Finland.

If the exemption method is applied, deductions for expenses incurred from earning an income and interest on income generation loans cannot exceed the amount of taxable rental income.

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