Finland’s corporate tax rate is a flat 20% on profits, with no graduated brackets and no small-business discount. Resident companies pay it on worldwide income; non-resident companies pay it only on income attributable to a Finnish permanent establishment. The rate has held steady since January 1, 2014, when it was reduced from 24.5%.
Who Pays the 20%
The rate applies uniformly to limited liability companies (osakeyhtiö or Oy), cooperatives, and Finnish branches of foreign companies that qualify as a permanent establishment.1Finnish Tax Administration. The Income Taxes Assessed on Limited Liability Companies and Cooperative Societies A startup with €10,000 in profit and a subsidiary with €10 million in profit both pay at the same rate.
Capital gains at the corporate level are not taxed separately. Share disposals, real estate sales, and other asset gains flow into ordinary taxable income and are taxed at 20%.
Building the Taxable Income Figure
Taxable income starts from accounting profit under Finnish GAAP, then gets adjusted for items where tax rules diverge from accounting rules. All revenue counts: sales, interest, royalties, rent, gains on asset sales.
What You Can Deduct
Expenses incurred to earn taxable income are generally deductible — wages, rent, materials, purchased services. Client entertainment and other representation costs are only 50% deductible. Fines and penalties from non-business conduct are not deductible at all.
Fixed assets are written off on a declining-balance basis. Machinery and equipment depreciate at up to 25% per year of remaining book value.2Finnish Tax Administration. Purchase Prices of Assets, Deducted Fully or Through Depreciation Buildings run from 4% to 20% depending on type and useful life. A temporary 50% accelerated depreciation on new machinery ran through tax years 2020–2025 and has now expired.3Finnish Tax Administration. Depreciation and Full Deductions for Low-Value Assets
The Interest Cap
Interest on business loans is deductible, but Finland limits stripping. If net interest expense (interest paid minus interest received) stays at or below €500,000 per year, no limitation applies. Above that, net interest is deductible only up to 25% of taxable EBITDA. A separate safe harbor allows up to €3 million of net interest paid to unrelated third-party lenders regardless of the EBITDA cap. The rule mainly bites on intercompany financing from foreign affiliates.
Losses
Tax losses carry forward for ten years. There is no carry-back. If more than half of a company’s shares change hands directly or indirectly during a loss year or afterward, the right to use those losses is forfeited unless the Finnish Tax Administration grants a special permit.
R&D Additional Deductions
Companies doing qualifying R&D can claim a permanent additional deduction on top of expensing the costs normally. The general additional deduction is 50% of wages and purchased R&D service costs, with a floor of €5,000 and a cap of €500,000 per tax year, available from the 2023 tax year onward.4Finnish Tax Administration. Deductions for Research and Development A company spending €200,000 on eligible R&D deducts the full €200,000 as a business expense and then claims another €100,000 on top.
Since 2024, companies that grow their total R&D spending year over year can claim an extra additional deduction of 45% of qualifying costs, capped at another €500,000. Stacked with the general deduction, the ceiling reaches €1 million in additional deductions beyond the normal expense write-off.4Finnish Tax Administration. Deductions for Research and Development
Costs already covered by direct government grants or other public subsidies are excluded. A detailed account of the R&D activity must be attached to the return, and Vero can impose a punitive tax increase if a claim does not meet the statutory requirements.
Withholding on Payments to Non-Residents
When a Finnish company pays dividends, royalties, or certain other income out to non-residents, it withholds at source. The default rates for corporate recipients:
- Dividends: 20%, unless a treaty or EU directive reduces or eliminates it. Under the EU Parent-Subsidiary Directive, dividends paid to a qualifying EU parent holding at least 10% of the paying company’s capital are exempt.5Finnish Tax Administration. Tax Rates on Dividends and Other Payments From Finland to Non-Residents
- Royalties: 20%, reducible under an applicable tax treaty or the EU Interest and Royalties Directive.6Finnish Tax Administration. Withholding Tax at Source on Dividends, Interest and Royalties and the Payors Obligations
- Interest: generally exempt from Finnish withholding tax under domestic law.
Finland has an extensive treaty network, and treaties frequently drop the dividend or royalty rate well below 20%. Check the applicable treaty before paying.
The International Layer
Participation Exemption
Dividends received by a Finnish company from other Finnish companies or from qualifying EU/EEA subsidiaries are generally tax-exempt. For subsidiaries outside the EU and EEA, dividends are fully taxable unless a treaty provides relief, which most treaties do where the Finnish company holds at least 10% of the foreign company’s shares.
A parallel exemption covers capital gains on share sales. If a company has held at least 10% of a subsidiary continuously for at least one year, the gain on selling those shares is exempt, provided the shares were part of fixed business assets and the seller is not a private equity firm.
Controlled Foreign Corporation Rules
Finland’s CFC rules attribute the undistributed profits of a low-taxed foreign entity to its Finnish controllers. An entity counts as low-taxed if it pays foreign income tax below three-fifths of what a comparable Finnish company would pay, which lands at an effective rate below 12%. Attributed profits are then taxed at the standard 20% rate in Finland.
Transfer Pricing
Related-party transactions must follow the arm’s length principle, and Finnish rules align with the OECD Transfer Pricing Guidelines.7Finnish Tax Administration. Transfer Pricing Documentation Large companies (at least 250 employees, or exceeding both €50 million in net sales and €43 million in balance-sheet total) must prepare a Master File and Local File. Smaller companies are exempt from the full documentation, though Vero recommends at least a free-form record.8Finnish Tax Administration. Transfer Pricing Documentation For individual transactions with a single related party totaling €500,000 or less per year, a simplified format applies even for large enterprises.
Group Contributions
Finnish groups can shift taxable income between companies using group contributions: the payer deducts, the recipient books taxable income. To qualify, both companies must be Finnish-resident limited liability companies or cooperatives, the parent must directly or indirectly own at least 90% of both, the group must have existed for the entire fiscal year, both companies must share the same fiscal year-end, and the contribution must appear in both statutory financial statements.
Filing and Prepayments
The corporate tax return is filed electronically within four months from the end of the month in which the accounting period closes. For a December 31 year-end, that means the end of April.
Tax is collected in advance through prepayments during the fiscal year. The schedule depends on the estimated liability:
- €2,000 or less: two installments, due in the third and ninth months of the accounting period.
- More than €2,000: twelve monthly installments, each due on the 23rd of the month.9Finnish Tax Administration. Instructions for Making Prepayments
If actual income runs meaningfully above or below the estimate, a company can apply to Vero to adjust prepayments mid-year. After the return is filed and the final tax assessed, any shortfall becomes back tax and any overpayment is refunded with interest.
Late Filing and Late Payment
For self-assessed taxes such as VAT, the late-filing penalty is €3 per day for the first 45 days, up to €135. After 45 days, the penalty becomes €135 plus 2% of the unpaid tax, capped at €15,000 per tax type.10Finnish Tax Administration. Late Penalty Charges
Late corporate income tax payments accrue interest on top of any penalty. In 2026, back taxes and additional prepayments carry interest at 4.5% per year. An additional prepayment made after its assigned due date accrues at 9.5%.11Finnish Tax Administration. Late-Payment Interest With Relief The lower rate rewards companies that settle up voluntarily before formal assessment.
What the 20% Does Not Cover
Corporate income tax is only one part of doing business in Finland. VAT applies separately at a standard rate of 25.5% (in force since September 1, 2024), with a consolidated reduced rate of 13.5% from January 1, 2026 for items such as groceries, restaurant services, books, pharmaceuticals, passenger transport, accommodation, and cultural admissions.12Finnish Tax Administration. The Changes to VAT Rates13Finnish Tax Administration. The Reduced VAT Rate of 14% Will Be Lowered to 13.5% in 2026 VAT registration is mandatory once taxable turnover exceeds €20,000 per year, with no threshold for non-resident suppliers.
Employers also carry statutory social insurance contributions on wages — pension, unemployment, health, and workers’ compensation — that together typically run 20% to 22% of gross wages before workers’ compensation.14Finnish Centre for Pensions. Statutory Social Insurance Contributions in Finland in 2026 For most companies with staff, payroll charges outweigh the corporate income tax bill.
Companies owning real estate pay an annual municipal real estate tax on the property’s taxable value, with rates set by each municipality inside statutory ranges that differ by property type.15Finnish Tax Administration. Value of Real Estate and Real Estate Tax Rates