This GMS Flash Alert reports on recent tax developments in Finland involving the growing use of digital services for tax compliance matters and some changes to the personal taxation regime.
The Finnish government has presented a governmental proposal on legislative changes concerning tax procedure rules.1
Below we highlight some of the more important aspects of changes to the tax procedure rules and briefly mention changes to the taxation rules in respect of gift and inheritance taxes, mortgage interest, and the household deduction.
Global mobility managers supervising the tax compliance needs of their assignees and with responsibility for overseeing the work of tax service providers, as well as the taxpayers (both employers and employees) and the tax service providers themselves, need to be aware of the increasing use of electronic means and formats for fulfilling their tax compliance obligations and communicating with the tax authorities, as this impacts the way they file returns and submit information and data to the Finnish tax authorities.
The slight changes discussed below to the taxation of individuals could impact taxpayers – while the household deduction has gone up slightly, a boon to taxpayers, the limitation on the deductibility of home loan interest, could be a bane (for those taxpayers with home loans).
The Finnish tax authorities are making greater use of digital services. For example, there is a new electronic service, called MyTax (OmaVero), which was introduced this year to replace the old Tax Account (Verotili) electronic system. Through this new system, employers and individuals can submit documents and information directly to the tax authorities. For instance, the employers’ monthly obligation to declare self-assessed taxes and employers’ contributions, previously called “periodic tax returns” (kausiveroilmoitus), can now be made through MyTax. However, not all returns can be made through the MyTax service.
Before, the employers’ annual notifications (vuosi-ilmoitus) could be filed in paper form. From 2016 onwards, annual notifications are only possible if the employer has no more than four employees in Finland. Otherwise the employers’ annual notification must be filed through an electronic filing system, such as ilmoitin.fi or through Tyvi-service providers. MyTax does not yet accommodate filing annual notifications to the tax authorities.
If an error has been made, or incorrect information has been included in the employer’s annual or monthly notification on taxes and various contributions, the methods used to correct such errors have changed. Since 1 January 2017, corrections or adjustments should be made by way of filing a completely new notification, with both the corrected information and all other necessary information.
One of the most significant changes in 2017 relates to the rules on how to appeal the tax decisions of the Finnish tax authorities. The statute of limitations for appeals of income tax-related matters was previously up through the fifth year from the start of the year after the year when the taxation was finalized.
From year 2017 onwards, the statute of limitations for appeals, in most cases, has been reduced to three years. The order of appeals has not changed, hence appeals are first made to the Board of Appeals (Verotuksen oikaisulautakunta). Only after that can appeals be made to the Administrative Court (Hallinto-oikeus) and, if permitted, to the Supreme Administrative Court (Korkein hallinto-oikeus). Special rules apply in certain situations, for instance, in cases of preliminary rulings.
The material taxation rules have not undergone amendments as significant as those to the tax system procedural rules, but there have been some changes.
1 HE 29/2016 vp – this proposal was over 500 pages long. For the text of the proposal (in Finnish).
The information contained in this newsletter was submitted by the KPMG International member firm in Finland.
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