Tax System

Finland enacted a major tax reform with effect from 1 January 1993. In the tax system income is divided into investment income and earned income. Earned income is taxed at a progressive tax rate and investment income at a flat rate of 28 %. Corporate tax rate in Finland is the same as the investment income tax rate, 28 %.

CORPORATE RATES AND EFFECTIVE RATE AFTER DISTRIBUTION

Resident companies are liable for tax on their worldwide income. Resident companies are those registered in Finland. Non-resident companies are taxed only on their Finnish-source income.

The 28% national income tax rate for corporations also applies to subsidiaries and branches of foreign corporations. The effective rate for distributed profits is at least 28% because of the imputation system. Branch profit remittances are not subject to withholding tax.