Finland's corporate taxation system includes various direct and indirect taxes, with CIT and VAT being the most significant taxes for companies operating in the country. Understanding the various tax rates, tax brackets, and legislation is crucial for corporations doing business in Finland.
Corporate Income Tax
Corporate Income Tax (CIT) in Finland is a direct tax levied on the net income of companies operating in the country. The Income Tax Act (Tuloverolaki 1535/1992), along with subsequent amendments, governs corporate income tax in Finland.
Domestic Companies:
Domestic companies in Finland are taxed on their worldwide income. As of 2021, the standard CIT rate is 20%.
Foreign Companies:
Foreign companies with a permanent establishment in Finland are subject to CIT only on the income attributable to the Finnish permanent establishment. The standard CIT rate of 20% applies.
Value Added Tax (VAT)
VAT (Arvonlisävero) is an indirect tax in Finland, applicable to the sale of goods and services. The Value Added Tax Act (Arvonlisäverolaki 1501/1993) governs VAT in Finland. VAT is levied on every stage of the supply chain, from production to consumption. There are three VAT rates in Finland:
- Standard rate: 24% (applied to most goods and services)
- Reduced rate: 14% (applied to specific goods and services, such as food products)
- Low rate: 10% (applied to certain services, such as passenger transport, cultural events, and hotel accommodations)
Sales Tax
Finland does not impose a separate sales tax, as the VAT system covers the taxation of goods and services.
Import Duties
Import duties in Finland are governed by the European Union (EU) customs legislation, as Finland is a member of the EU. Finland follows the EU's Common Customs Tariff (CCT) for imports from non-EU countries. Import duties vary depending on the product and its classification under the Combined Nomenclature (CN) code. Rates can range from 0% to 17% or higher, depending on the type of goods. In addition to import duties, imported goods are also subject to VAT.
Export Duties
Finland, as an EU member, does not impose export duties on goods exported to other EU countries. For exports to non-EU countries, Finland follows the EU's export regulations, which generally do not impose export duties except in specific cases, such as the export of certain agricultural or cultural goods.
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