New Finnish withholding tax legislation will enter into force on 1st January 2021. This will have impact on all shareholders, resident outside Finland, holding Finnish securities in a bank outside Finland. The new regulation includes detailed provisions on when tax treaty based withholding rates can be applied to dividends at the payment stage. More details of the new legislation available on Finnish Tax Authority’s website at www.vero.fi/en/businesses-and-corporations/about-corporate-taxes/financial-sector/legislative-change-nominee-registered-shares/
Due to the new taxation model and new provision to tax liability there will be limitations to apply relief at source at dividend payments. In the cases where relief at source cannot be applied a 35% maximum tax will be withheld. Over-withheld tax can be reclaimed from Finnish Tax Authority after the dividend payment year has ended. Further information of the reclaim process available at www.vero.fi/en/businesses-and-corporations/about-corporate-taxes/financial-sector/digitalisation-of-tax-at-source-applications/
All shareholders are encouraged to look for information regarding the local practices related to the new withholding tax regulation from the custodian bank they are holding their shares in.