Overview of taxes on financial transactions within the EU - Finland

Financial transaction tax - Finland

An overview of Finland, one of nine EU Member States considered to apply a tax on financial transactions.

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Status

In force

Introduced

1996

Legislative reference

Transfer Tax Act (29.11.1996/931) as amended

Type of tax

Transfer tax

In scope instruments

Certain Finnish securities (as a rule all shares in companies, but not bonds or shares in investment funds).

Taxable event (transaction)

Transfer (of the legal title) of certain Finnish securities

Territorial connection for liability – condition for taxability is:

Residence of issuer?

Limited to securities issued by Finnish companies.

Location of transaction (e.g. traded on local stock exchange)?

N/A

Location of party (e.g. at least one party to the transaction is resident)?

The transferee or transferor has to be a Finnish resident or a Finnish branch of certain financial institutions.

With effect from 1 March 2013, the tax applies to foreign companies whose assets consist, for more than 50 percent, of immovable property in Finland, if one of the parties to the transaction is a Finnish resident tax payer or a branch of a foreign financial institution. In that case, the rate that applies is the rate applicable for real estate companies (see below).

With effect from 1 March 2013, the tax also applies to Finnish companies principally holding real estate investments in Finland, even if the seller and buyer are both non-resident in Finland. The rate that applies is the rate applicable for real estate companies (see below). 

Financial intermediary is resident

N/A 

Other relevant conditions for taxability

N/A

Exempt transactions

There are several exemptions – in particular, transfers of securities that occur on a qualified stock exchange.

Person responsible for collecting/remitting tax

Generally the transferee (or the broker in some cases).

Liable persons

Generally the transferee (or the broker in some cases).

Person who in practice bears the tax

The transferee

How enforced

The transfer tax is paid on the taxpayer's own initiative by submitting a transfer tax return. Unpaid transfer tax may be noticed in tax audits, but it is not actively supervised by the tax administration.

Penalties in case of failure to file/pay

Penalties can be imposed if the taxpayer neglects to pay the transfer tax. The penalties consist mainly of tax increases to up to 50 percent, if the taxpayer has willfully tried to avoid paying the lawful transfer tax.

Tax base

Price or other consideration for the transaction.

With effect from 1 March 2013, the transfer tax base has been expanded to include, e.g. any payment which is a condition for the sale and which the purchaser makes to a third party.

Special rules can apply, especially for housing companies.

Tax rate(s)

1.6 percent

With effect from 1 March 2013, the rate levied on the transfer of shares of housing companies, mutual real estate companies and other real estate companies is raised from 1.6 to 2.0 percent.

Cap/Floor/Threshold/Allowance

N/A

Other comments

N/A

 
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