• Palvelu: Veropalvelut, Kansainvälinen yritysverotus, Yritysverotus
  • Aihealue: Lainsäädäntö- tai säännösuutinen
  • Päivämäärä: 21.1.2014

Amendments in Finnish corporate income taxation as of 2014 

The corporate income tax rate was reduced to 20 % as of 2014. Several other changes to corporate income taxation were also introduced including changes relating to R&D incentives, deductions relating to education and entertainment expenses.

Corporate income tax rate reduction

The corporate income tax rate was reduced from 24.5% to 20%. The new CIT rate became effective as of 1 January 2014. The CIT rate is now clearly below the EU average.


If a company’s accounting period was changed after 21 March 2013, then a higher tax rate of 24.5 % is applied. This applies despite possible valid commercial reasons. The rule eliminates the possibility of extending of company’s accounting period to fiscal year 2014 and benefitting from the lower CIT rate.


Withholding tax rate on royalties, dividends and interest paid non-resident companies was also reduced down to 20%.

R&D tax incentive limited

The tax incentive for research and development provides for a double-dip in relation to R&D-related salary costs.


The applicability of the incentive was limited until the end of 2014.

Accelerated tax depreciation incentive limited

Certain qualified investments to production assets provide for an accelerated depreciation. The applicability of the incentive was limited until the end of 2014.

Additional tax deduction for education

An additional tax deduction was introduced for the education of employees.

Depreciation rules

The proposed amendments in depreciation rules were not enacted. Depreciations are still made on the basis of the pooled items.

Entertainment expenses

Entertainment expenses are fully non-deductible as of January 2014.

Dividends received by corporations

Dividends received by a non-listed company from a listed company shares are 100% taxable income, if the company owns less than 10% of the share capital of the distributing listed company.


Dividends distributed by a non-resident company are tax exempt, if the distributing company is mentioned in the Parent-Subsidiary Directive or other company residing within the EU/EEA liable to tax at least 10% for its income. Dividends are 100% taxable, if a non-listed company receives dividend distributed by a listed company and if the ownership less than 10%.


Dividends distributed by a non-resident company residing outside the EU/EEA are 100% taxable income. Double tax treaties usually however eliminate taxation of direct-investment dividends.

Interest deduction limitation rules

Interest deductions limitation rules limit deductibility of interest paid both to domestic and foreign companies within a group of companies. Maximum of 25% interest is of the fiscal EBITDA is deductible.


The limitation is not applied if the total sum of net interest expenses does not exceed EUR 500 000. Should the threshold be exceeded, deductibility of all intra-group net interest expenses is limited. The limitation does not have an impact deductibility of interest expenses paid to non-affiliated companies.

Distribution from reserve for unrestricted equity (“SVOP”)

Distribution from listed companies’ unrestricted equity is taxed as dividend as of 2014. The limitation applies also to distributions from the unrestricted equity of unlisted companies. However, the distribution may be taxed as a capital gain if the share subscription price is marked in the unrestricted equity and repayment is made to the particular individual shareholder.


The repayment has to be made from the shareholder’s capital investment marked in the unrestricted equity. Only the amount corresponding to the original investment is taxed as a capital gain. Any profit distribution is taxed as a dividend.


Investments to unlisted company’s unrestricted equity benefit from a two-year transition period. The new rules apply only as of 2016.

Dividends income received by a Finnish resident individual

Taxation of dividends from an unlisted company to individuals.


25% of dividend is taxed as capital income if dividends do not exceed 8% of company’s net assets and are not more than EUR 150 000. If EUR 150 000 threshold is exceeded but within the 8% annual yield, 85% is taxed as capital income. Dividends exceeding 8% yield are taxed as earned income up to 75% of that amount.


As for the dividends received by private individuals from listed companies, 85% of dividends are taxed as capital income. The progression limit for capital income taxation was lowered to EUR 40,000. Capital income exceeding the limit will be taxed at 32% instead of 30% applicable on lower amounts.

Examples of a total tax burden:

1. Dividends not exceeding the 8% net asset value limit

Total income 100 000
Corporate Income Tax 20 % 20 000
Dividend 80 000
Capital Income Tax 30 % (32 %) on the taxable part 25 % -6 000 (-6 400)
Net dividend 74 000 (73 600)


The total tax burden of owner-entrepreneur is 26 % (26.4 %).

2. The Company does not have net assets

Total income  100 000
Corporate Income Tax 20 % -20 000
Dividend 80 000
Capital Income Tax 30 % (32 %) on the taxable part 85 % 20 400 (-21 760)
Net dividend 59 600 (58 240)


The total tax burden is the same for private individuals who are fully liable to tax on dividends from listed companies.


Please note that the progression limit is not taken into account in the second example. The tax burden is EUR 20,960 if the dividend is distributed only to one shareholder.


Kristiina Äimä

P. 020 760 3698




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