Advanced Search

The Law On The Elimination Of International Double Taxation

Original Language Title: Laki kansainvälisen kaksinkertaisen verotuksen poistamisesta

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now for only USD$40 per month.

Law on the elimination of international double taxation

See the copyright notice Conditions of use .

In accordance with the decision of the Parliament:

ARTICLE 1 (12,12,2005)
The elimination of international double taxation

The abolition of international double taxation on foreign income is laid down in this Act.

This law shall also apply when the abolition of double taxation of income is a provision in an international agreement, in so far as the agreement does not provide otherwise.

This law also applies to the abolition of double taxation on the basis of membership of the European Parliament, the transitional allowance, the pension, the invalidity pension and the survivor's pension. (24.4.2009/262)

This law applies to state income tax, municipal tax, church tax and Community income tax.

ARTICLE 2 (22.12.2009)
Hypening method

Double taxation will be abolished, unless otherwise provided otherwise provided otherwise, by deducting the tax paid in a foreign country from the same income tax in Finland under Articles 3 to 5 ( Method of compensation ). A foreign tax shall be deemed to have been paid once the foreign final tax has been paid or the corresponding prior tax has been paid for the foreign final tax.

ARTICLE 3
Foreign tax credit

The amount of taxes received from a foreign country in Finland shall be deducted from the amount of taxes paid in a foreign country for the same result ( Foreign tax credit ). However, in a foreign country, taxes on the amount of dividends received from a foreign country shall be deducted from the amount of tax paid in a foreign country on the basis of the total amount of the dividend income. (21.12.2004)

The taxable amount shall be credited only to the number of taxes paid to the foreign State, unless the amount of other taxes paid in a foreign country is also credited under an international agreement.

The tax payable in a foreign country shall also be deemed to be the amount transferred or transferred by the Finnish authorities to the relevant authority of another State for the purpose of deducting the taxable person's tax.

Taxes paid in a foreign country shall be credited to the same result in Finland for the same result.

Interest or royalty payments made by a company in a Member State of the European Union or a company located in another Member State situated in a Member State shall be deemed to originate in that Member State. The granting of a compensation must take account of Directive 2003 /49/EC of the European Parliament and of the Council on a common system of taxation applicable to interest and royalty payments made between associated companies of the Council of the European Union ( Directive on interest and royalties ) Article 6 (2) and (3), as amended by Council Directive 2004 /76/EC. (29.10.2004)

§ 4 (22.12.2009)
Maximum amount of compensation

Compensation cannot exceed the amount of taxes paid in Finland from a foreign country.

The maximum amount of compensation is calculated on the basis of a source of income and, in the case of a natural person and a estate, by means of taxes. The offsetting of the foreign tax is equal to or greater than the income generated by income from a revenue source or income from the tax payable in the case of a foreign country, as the result of a source of income or of income. For the purposes of calculating these ratios, the amounts resulting from the deduction of revenue from the acquisition and maintenance of income and interest shall be considered as income.

For the purposes of the calculations referred to in this Article, only taxable income in Finland shall be counted in Finland, which shall be subject to a tax credited under this Act in a foreign country. Similarly, in Finland only taxable income is counted as income from the source of income or income.

Notwithstanding the provisions of paragraph 1, in the case of interest falling within the scope of Council Directive 2003 /48/EC on taxation of savings income in the form of interest payments, the amount may be higher than the amount of taxes payable in Finland.

§ 5 (22.12.2009)
Unused foreign tax credit

If the amount of taxes paid in a foreign country is not entirely credited as a result of the restrictions provided for in Article 4, the amount missed ( Unused foreign tax credit ) Deduct from the taxable person the following five tax years from the tax year to the same source of income or the taxes imposed on the same income group. Unused foreign tax credits may be credited for the next five tax years. Unused foreign tax credits are deducted in the order in which they were born. After deduction of unspent foreign taxes, the amount of foreign taxes to be credited against the same tax year will be deducted.

In the case of interest referred to in Article 4 (4), the excess over the tax payable on the same income in Finland may be deducted in the same tax year from the other tax payable by the State. The amount which cannot be deducted shall be returned to the taxable person.

ARTICLE 6
Progressive exemption method

The income from a foreign country to which Finland has waived the right to tax in the international agreement is the taxable income of the natural person, the grouping and the estate. However, a proportion of the tax paid by the taxable person shall be deducted which corresponds to the proportion of the income exempt from the tax exemption from the income and income of the income (s) ( Progressive exemption method ). For the purpose of calculating income from a foreign country, expenditure and interest resulting from the acquisition or retention shall be deducted, unless otherwise provided elsewhere. However, expenditure and interest rates are not deductible in so far as they exceed the amount of income received from a foreign country where they would be deducted from the income tax law (1535/92) , the Law on the Taxation of Business (160/68) Or the income tax law of the farm (543/67) Included. The reduction of the income tax will be subject to different taxes in relation to those taxes.

The provisions of this Article shall also apply to income other than those referred to in paragraph 1, where the Income Tax Act or other law so provides.

§ 7
Method of exemption for Community taxation

The arrival of a foreign country, which Finland has waived in the international agreement, is not eligible for the Community's taxable income.

Expenditure and interest on the acquisition or retention of income from a foreign country shall not be deductible, even if they are to be deducted from the income tax law, the tax on the taxation of economic activity or the holding of agricultural holdings. According to the income tax law. However, the Community may deduct expenditure and interest on the income tax revenue.

§ 8 (22.12.2009)
Procedure

The taxable person shall require the refund of a foreign tax in writing when the tax is delivered. The taxable person shall provide an explanation of the amount of the foreign tax and the basis for payment, as well as the fact that the tax of a foreign country has been carried out, as well as on the other matters necessary for the adoption of the credit. In addition, the foreign language document must be issued by an authorized translator or other reliable Finnish or Swedish translation.

If the taxable person has shown that the conditions for the granting of the credit are otherwise in place, but he is unable to provide all the explanations provided for in paragraph 1, the credit may be granted in a reasonable amount.

The refund of the foreign tax must be required before the tax expires. If the tax of a foreign country has not been carried out by then, or if, for any other reason, it has not been possible to do so, the taxable person may, even after that, make a claim for the adjustment of the compensation. This requirement, as well as the modification of the compensation provided for in this Act, shall be subject to the tax adjustment provisions.

§ 9 (11.06.2010/515)
Change in foreign tax

Where a foreign tax on the basis of a foreign tax has been amended, the taxable person shall inform the tax administration. If such a change has not been taken into account when the compensation is given, the tax administration shall correct the payment.

§ 9a (24.4.2009/262)
Abolition of double taxation on the European Parliament's performance

The provisions of this Act shall apply to the elimination of the premium, the transitional allowance, the pension, the invalidity pension and the double taxation of the survivor's pension on the basis of membership of the European Parliament.

The revenue referred to in paragraph 1 shall apply to the tax paid to the European Community in respect of the tax paid to the foreign State.

ARTICLE 10
More detailed provisions

More detailed provisions on the implementation of this law shall be adopted, where appropriate, by a regulation.

ARTICLE 11
Entry into force

This Act shall enter into force on 1 January 1996.

The law applies for the first time in the taxable amount for 1996.

This law repeals the tax credit law (161/81) .

Entry into force and application of amending acts:

30.12.2003/1283:

This Act shall enter into force on 1 January 2004.

The law shall apply from 1 January 2005.

THEY 137/2003 , VaVM 32/2003, EV 83/2003

29.10.2004:

This Act shall enter into force on 1 November 2004. The law shall apply to interest and royalty payments due on or after 1 May 2004.

THEY 130/2004 , No 15/2004, EV 123/2004

21.12.2004:

This Act shall enter into force on 1 January 2005.

The law shall apply for the first time in the tax treatment provided for in 2005.

THEY 210/2004 , VaVM 34/2004, EV 199/2004

22.12.2005/1148:

This Act shall enter into force on 1 January 2006.

The amendment to Article 4 (5) applies for the first time in the taxable amount for the year 2006.

However, the provisions in force at the time of entry into force of this Act shall continue to apply to cases relating to the elimination of international double taxation in 2005 and beyond.

THEY 144/2005 , VaVM 44/2005, EV 218/2005

24.4.2009/26:

This Act shall enter into force on 1 May 2009.

The law shall apply from the first day of the parliamentary term beginning in 2009.

THEY 222/2008 , VaVM 4/2009, EV 25/2009

22.12.2009/1360:

This Act shall enter into force on 1 January 2010.

The law will apply for the first time in the tax treatment provided for 2010.

THEY 197/2009 , VaVM 33/2009, EV 179/2009

11.6.2010/515:

This Act shall enter into force on 1 September 2010.

THEY 288/2009 , VaVM 12/2010, EV 37/2010