Taxes in Finland: New Tax Benefits for Foreign Companies
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Taxes in Finland: New Tax Benefits for Foreign Companies

Foreign companies can now take advantage of new tax incentives in Finland. The tax breaks can reduce the cost of joint research and development projects by 150%. In addition, tax-free shares will encourage employee commitment and new e-identification and e-authorisations are being introduced.

The new tax incentives are for all companies operating in Finland, both domestic and international and do not constitute state aid under the EU’s definition, explain the Ecovis experts in Finland.

One of the new tax incentives encourages the share-based commitment of employees. It is not limited to start-ups, but applies to all non-listed companies. When non-listed limited liability companies issue shares to employees in Finland, the subscription price may be lower than the market value of the shares. If the subscription price is the share’s mathematical value, an individual employee who buys such shares will not be treated as having received a taxable benefit.

Would you like to take advantage of the tax conditions in Finland for your company? We will help you with settlement.
Jaana Palomäki, Managing Partner, ECOVIS SGO Finland Ltd, Helsinki, Finland

150% Tax Deduction for Joint R&D Projects

Companies conducting R&D activity with a genuine research organisation meet the criteria for a tax deduction in Finland. The new tax law came into effect in January 2021 and gives companies a 150% tax deduction for joint R&D projects from 2021-2025.

If the actual R&D work is performed by a sub-contracted party (university/research institute etc.), the deduction is 50% on top of the existing deduction, which is 100%. The minimum threshold for tax deduction of costs is EUR 10,000/fiscal year, with a maximum of EUR 1,000,000. This means that the actual deduction is between EUR 5,000 – 500,000 per fiscal year.

Suomi.fi e-Authorisations

The Finnish authorities are modernising their electronic systems. The “KATSO” service will be replaced by Suomi.fi e-identification and e-authorisations. The authorities in Finland use “KATSO” as an identification and authorisation service for companies. The “KATSO” services will cease to operate on 30 April 2021. E-authorisation is an even more secure solution that can not only be used by government services, but also by the private sector. With Suomi.fi e-authorisations, private persons, companies, and organisations can authorise someone else to act on their behalf. A mandate is an electronic power of attorney, the details of which are entered in the authorisation register.

Facts & figures on Finland: You and your company can benefit from this

  • Finland’s 20% corporation tax rate is the lowest in the Nordics and one of the lowest in the EU.
  • The Finnish government’s goal is to raise the R&D percentage of GDP to 4% in 2030.
  • Finland has the highest number of digital start-ups per capita in the world.
  • Finland is ranked first in the global Covid Economic Recovery Index and offers a safe research and development environment.

For further information please contact:

Jaana Palomäki, Managing Partner, ECOVIS SGO Finland Ltd, Helsinki, Finland
Email: jaana.palomaki@ecovis.fi
Pertti Kivinen, Senior Partner, ECOVIS SGO Finland Ltd, Helsinki, Finland
Email: pertti.kivinen@ecovis.fi

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ECOVIS SGO Solutions Oy
Mikonkatu 9
00100 Helsinki
Phone: +358 40 500 34 27
www.ecovis.com/fi