Paying dividends, interest and royalties to foreign beneficiaries
Dividends, interest and royalties received from a Finnish source are normally subject to tax in Finland. Your country of residence will later give you credit for the tax withheld by Finnish payers, as provided in the tax treaty between Finland and that country.
When you live abroad, the taxation of Finnish-sourced dividends, interests and royalties depends on the provisions of the tax treaty. Although you may be treated as a foreign tax resident, the treaty allows Finland to collect a source tax on your receipt of dividends, interest and royalties at a rate set in the treaty (often 15 percent).
Non-resident receiving dividends, interest or royalties from a Finnish source
If you are not a resident in Finland and get dividends, interest or royalties, the Finnish payer must withhold tax at source. Typically, the rate is 30 percent. If the payment goes to a shareholder of nominee-registered shares, the payer does not have the details necessary for identification of the beneficiary. In that case, the tax to be withheld at source is 35 percent.
Depending on the provisions of different tax treaties, a lower rate — or even a full exemption from taxation — may be in force.
The payer has the right to withhold the source tax at lower rates as set out by the treaty on the condition that you present your full taxpayer identification details and proof confirming that the treaty is applicable in your circumstances.
The identification details are the following:
- Your name
- Date of birth and other official ID information
- Address in country of residence
- A certificate from that country's tax authorities proving that they treat you as their resident.
If it is unclear what the rate of withholding should be for the dividends, interest or royalties that you are receiving, ask the Finnish Tax Administration to prepare a tax-at-source card (Form 5057) for you.
Alternatively, ask the Finnish Tax Administration to prepare an advance ruling (in finnish) (this is a service against a charge).
No Finnish tax on interest income
If you are not a resident in Finland and receive interest payments, you are normally not liable to pay Finnish tax. Examples of these are the interest payments on bank deposits, bonds and debentures. For royalties covered by the Directive 2003/49/EC on interests and royalties, you pay no tax in Finland.
Too high withholding at source
If too much source tax was withheld on your receipts of dividends, please contact the payer. The payer is able to adjust the withholding during the same year when they paid you.
If the payer made no adjustment during the year of payment, contact the Finnish Tax Administration and submit an application for refund. You can submit an application for refund after the year of payment has ended. You can do so either in MyTax or by submitting an “Application for refund of Finnish withholding tax” (Form 6164e) on paper.
Finnish tax not refunded in your home country
If you are a non-resident and your country of residence is in the European Economic Area (EEA) and the tax withheld in Finland on your dividends cannot be fully refunded in your home country, you may lodge a claim with the Finnish Tax Administration in order to have the dividends taxed in the same way as if a Finnish resident had received them. The earliest time when you can do so is after the tax assessment has ended in your country.
Submit the claim on the following forms:
- Certificate of tax treatment concerning dividends (Form 6161e)
- Application for refund of Finnish withholding tax (Form 6164e).
You are generally liable to pay tax in Finland but live abroad
If you are deemed a Finnish resident but you live abroad, the lower withholding rates defined by the bilateral tax treaty may be applicable in some cases. This requires that your country of residence, for tax purposes, is regarded as being the country where you live — not Finland. Submit an application for a tax card (Form 6207a, only available in Finnish and Swedish) for payments of dividends, interest and royalties.
Alternatively, you can demand that a tax treaty be applied afterwards. You can make this demand on the pre-completed tax return in MyTax. If you don't use MyTax or other electronic filing, you must fill out Form 50B on paper in order to report your income.
For more information (in Finnish and Swedish), click Yleinen ja rajoitettu verovelvollisuus.
Alternatively, ask the Finnish Tax Administration to prepare an an advance ruling (in finnish) (this is a service against a charge).