Finland has a gift and inheritance tax system that requires every beneficiary to pay tax on gifts and on his or her share of an estate. Inheritance tax must be paid in Finland if the deceased or the inheritors lived in Finland at the time of deceased's death. Inheritance tax covers all property of the deceased whether it is situated in Finland or not. Double taxation is eliminated with inheritance tax treaties. Gift tax is levied if the donator or the beneficiary lived in Finland at the time of donation. A person is deemed to be living in Finland when having a permanent home in Finland.

In principle, the tax authorities value transferred items at market value. However, in practice, the values are 60% to 70% of market values. Gifts given within a period of three years preceding a deceased's death are includible in the estate. The value of an advance will also be added to the net value of the inheritance.

The tax rates are the same for inheritance and gift taxes and increase in multiples based on the beneficiary's relationship to the deceased or donor. The maximum multiple for those with the most distant relationship is three times the table rates set out in Appendix 12, page 90.

Finland has concluded tax treaties with some countries to avoid double taxation on inheritances and gifts (see Section F.10, page 60).

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'.