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 %.


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.


Residents are liable to tax on their worldwide income. Non-residents are taxed only on their Finnish-source income.

Tax rate on investment income is 28%. Earned income of residents is subject to progressive national income tax and flat-rate municipal and church taxes. The maximum progressive rate including flat rate municipal and church taxes in Helsinki is 57% in 1996. In addition, sickness insurance premiums, pension premiums and unemployment insurance premiums are levied at 9,15 % on income exceeding FIM 80,000.

Earned income of non-residents is taxed at a flat rate of 35%, unless the taxation is avoided through the application of a relevant tax treaty. Even expatriates coming to work in Finland may benefit same 35 % flat rate taxation if they fill certain requirements (see xx).

The content of this article is intended to provide a general information on the subject matter. It is therefore not a substitute for specialist advice.

For further information contact Mr. Jukka Nisonen on +358 0 1727 7282, Tilintarkastajien Oy - Ernst & Young Kaivokatu 8, 00100 Helsinki, Finland or enter a text search 'Ernst & Young' and 'Business Monitor'.