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Finland - Income Tax

Finland - Income Tax

Taxation of international executives


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Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

7 May, 14 May or 21 May (in 2019).

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Finland?

Tax returns are due 7 May, 14 May or 21 May (in 2019). The date will be printed on the pre-completed tax return form. If a taxpayer has not received a pre-completed tax return form, they have to file a tax return by 21 May (2019).


All individual taxpayers will receive a pre-completed tax return form in March or April. They have to check the tax return and, if necessary, send it back with corrections to their local tax office.

The tax office may extend the time for filing pre-completed tax returns. An extension for a couple of weeks may be granted. The application must be filed prior to the tax return filing due date and must contain justification for granting the extension.

The final tax assessment will be made by the end of the following the tax year. If an insufficient amount has been withheld/advance tax paid, additional installments are due between July and February. For most tax payers, the first installment is due in August. If the tax withheld/advance tax paid exceeds the final total taxes and levies, a tax refund will take place. Interest charges are levied if the final tax liability exceeds preliminary tax paid. For the tax year of 2019 the rate is 2 percent. A EUR20 deduction, or at most an amount equaling the interest charges levied, can be made from the final interest charges levied in case final tax liability exceeds preliminary tax. If the final amount of tax is less than the taxpayer has paid in advance, they will receive an interest of 0.5 percent on the refund.

The employer is required to withhold tax on all salaries paid to the employee. The amount of the withholding is determined on a progressive basis by the amount of the salary including fringe benefits. However, a foreign employer without a permanent establishment in Finland paying salaries from abroad is not liable to withhold Finnish payroll tax from salaries.

The penalty for failing to pay the taxes on time is a surtax of 7 percent. The penalty for late filing of the tax return or filing an incorrect statement ranges from EUR50 to EUR5,000 depending on the amount of unreported income. The law also makes higher penalties in the form of a certain percentage of the unreported income possible and this can be up to 30 percent on added income, depending on the length of time the return has been overdue and the purpose of not filing the total amount of income.


Non-residents, who have not been residents during the tax year, do not need to file a tax return on their wage income.

Tax rates

What are the current income tax rates for residents and non-residents in Finland?


State tax rates are as follows:

Income tax table for 2019    

Taxable income bracket Total tax on income below bracket Tax rate on income in bracket
From EUR To EUR EUR Percent
8 6.00

Municipal tax is levied at flat rates. The tax varies between 16,50 percent and 22,50 percent in 2019 depending upon the municipality. The local communities of the Evangelical-Lutheran and Orthodox churches levy church tax. Church tax is imposed at flat rates between 1 percent and 2.20 percent (2019) that are set annually for the following year by each community’s ecclesiastical council.

A public broadcasting tax (Yle-vero in Finnish) was introduced on 1 January 2013. The amount of the public broadcasting tax in 2019 is 2.5 percent of the amount in excess of EUR14,000 of the earned and capital income, but the maximum annual amount is EUR163 per person.


The salary income of a non-resident is subject to a flat tax rate of 35 percent. However, a standard deduction of EUR510 per month or EUR17 per day is granted if this is stated in the employee’s tax-at-source card.

Since beginning of year 2014 it is possible for non-residents to apply for a progressive tax rate instead of the flat 35 percent tax rate. The progressive tax rate for non-residents is calculated based on their worldwide income. Thus non –residents need to provide Finnish tax authorities information on their worldwide income when applying the progressive tax rate.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Finland?

An individual is treated as resident if they have a permanent home or habitual abode in Finland or otherwise has stayed in the country/territory for a period of more than 6 months. When moving abroad a Finnish citizen is still considered as a Finnish tax resident for the year they move abroad and the following 3 full calendar years, unless they produce evidence that they have not maintained substantial ties to Finland during the tax year in question.

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/territory for more than 10 days after their assignment is over and they repatriate.

There is no de minimus number of days rule as such when it comes to residency start and end date.

What if the assignee enters the country/territory before their assignment begins?

The residency status is based on the arrival date.

Termination of residence

Are there any tax compliance requirements when leaving Finland?

No obligation exists to file a tax return before leaving the country/territory, but a person with unlimited tax liability in Finland needs to file a tax return in Finland according to normal tax return filing schedules (that is, 7 May, 14 May or 21 May in 2019).

What if the assignee comes back for a trip after residency has terminated?

In principle, residency will not be extended by a trip after residency has terminated. However, it shall be noted that residence is regarded as still being valid if it can be concluded from the circumstances that the taxpayer still resides in Finland. Therefore, case-by-case consideration needs to be made.

Communication between immigration and taxation authorities

Do the immigration authorities in Finland provide information to the local taxation authorities regarding when a person enters or leaves Finland?

Normally the travel dates are not informed by the customs officials to the tax authorities. However, the tax authorities may have access also to this information upon request. The company and employee should also be aware that the information regarding work permits, visas, and social security is available to the tax authorities by the labor administration, immigration authorities, and social security authorities. In addition, the tax authorities have access to the information in the Population Information Register in which the moving dates informed by the person are recorded (every person moving to, from or within Finland must make a notification of moving to the post office/Population Information Register).

Filing requirements

Will an assignee have a filing requirement in the host country/territory after they leave the country/territory and repatriate?

If an assignee has been resident in Finland during the tax year, they shall file a tax return for the tax year in question on their taxable income. The taxpayer should inform their home address to the Finnish tax authorities so that they can send them a pre-completed tax return.

Economic employer approach

Do the taxation authorities in Finland adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Finland considering the adoption of this interpretation of economic employer in the future?

No. The Finnish tax authorities normally look at who is the legal employer (that is, with whom the employment contract is concluded) and normally have not deemed that there would be an economic employer in Finland in case there is a recharge of costs (which could make the income taxable in Finland), especially if the costs are not charged directly as salary costs but for example, as a part of management fee. Please note, however, that as there are no written guidelines regarding this issue, there is some level of risk that an economic employer could be deemed to exist in Finland, especially if the amount charged consists directly of the employee’s salary and social security (or other associated) costs. This issue could come up for example, in connection with a tax inspection of the Finnish company and could affect also the employee’s taxation. We also have a recent case from Helsinki administrative court, where the economic employer concept was adopted, but no changes to Finnish legislation or tax authorities´ guidance exist, so far.

Please note that the tax administration’s interpretation of the employer concept has lately been become closer to economic employer approach also in relation to temporary business trip rules.

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

Not applicable.

Types of taxable compensation

What categories are subject to income tax in general situations?

Taxable income includes all compensation received by an employee, including amounts derived directly or indirectly from the work performed for the employer.

These include the following:

  • base salaries
  • expatriation premiums
  • bonuses
  • indemnities with some exceptionspension contributions (unless certain provisions are met)
  • cost-of-living allowance
  • housing allowances/reimbursements
  • fringe benefits
  • reimbursements of foreign and/or home country/territory taxes
  • home leave reimbursements
  • representation and entertainment allowance
  • travel expenses (excluding transportation, hotels, and meals up to a certain amount)
  • entertainment expenses
  • profit sharing schemes
  • incentive compensation
  • sunder certain conditions the taxation of pension benefits can be deferred until benefits are receive
  • dunder certain conditions employment related stock options are taxable at the time that the option is exercised
  • professional and business activities; taxable income includes profits shown in the statutory accounts required for self-employed individualsa tax payment made on behalf of the employee by the employer is taxable earned income to the employee if a greater amount of money has been used for such payment than what has been withheld from the employee’s pay
  • The benefit is attributed to the tax year during which it has been earned.
The taxable income of an individual is divided into two categories: investment income and earned income. Taxable investment income includes yield from property, capital gains, and other income, which can be judged to be derived from assets.
All income other than investment income is regarded as earned income.
Intra-group statutory directors
Will a non-resident of Finland who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Finland) trigger a personal tax liability in Finland, even though no separate director's fee/remuneration is paid for their duties as a board member?
Simply the appointment as a statutory director for a group situated in Finland does not trigger any specific personal tax liability in Finland. However, there are special rules on taxation of fees/remuneration paid for duties as board member or equal (see below).

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Finland?

According to the general rule, non-residents, who have not been residents during the tax year, do not need to file a tax return on their wage income. But director's fees or remuneration paid for duties as a member of a board of directors or other corresponding governing body of a Finnish legal entity, are regarded as income earned in Finland, even though the meeting or work for which the fee or remuneration is paid has been executed abroad. This triggers taxation in Finland regardless of physical presence.
b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Finland (i.e. as a general management fee where the duties rendered as a board member is included)?

No. Director's fees or remuneration paid for duties as a member of a board of directors or other corresponding governing body of a Finnish legal entity, are always regarded as income earned in Finland (wherever it is charged).
c) In the case that a tax liability is triggered, how will the taxable income be determined?
According to normal rules. The fee or the remuneration for a non-resident is tax at a flat 35 percent tax rate (tax-at-source tax rate). For remuneration to the CEO a monthly tax at source deduction (EUR510) can be made, or if the income has been earned in less than a month, EUR17 per day can be deducted, before assessing the taxable income.

Tax-exempt income

Are there any areas of income that are exempt from taxation in Finland? If so, please provide a general definition of these areas.

All employment income is taxable except for certain pensions and social security benefits. In addition, income attributable to continuous work abroad by a Finnish resident for a period of at least 6 months may under certain preconditions be exempt from Finnish income tax.

Expatriate concessions

Are there any concessions made for expatriates in Finland?

Finnish-source employment income earned by a foreign employee is taxed at a flat rate of 35 percent for a maximum period of 48 months if:

  • the employee becomes resident in Finland when the work in Finland begins
  • the cash salary of the expert is at least EUR5,800 per month they work in Finland excluding fringe benefits
  • the work demands special expertise
  • the expatriate is not a Finnish citizen nor have they been tax resident in Finland for the preceding 5 years
  • the salary is regarded as Finnish-source income and paid by a Finnish entity.

This is regulated in a temporary act that is in force for employments commencing at the latest on 31 December 2019. The foreign expert is not allowed any deductions or allowances on the income to which the 35 percent flat rate tax applies. Before beginning work in Finland or, at the latest, within 90 days from beginning the work in Finland an application must be filed with the Regional Tax Office in order to qualify for the special tax regime.

Salary earned from working abroad

Is salary earned from working abroad taxed in Finland? If so, how?

Non-residents, who are not members of a board of directors or other corresponding governing body of a Finnish legal entity, are not subject to Finnish income tax on compensation attributable to services mainly performed outside Finland for a Finnish private sector employer.

Salary earned by a resident from working abroad is subject to income tax in Finland except where the provisions of the 6-month rule are met. However, foreign income tax paid on the same income is credited against Finnish taxation.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Finland? If so, how?

A progressive tax schedule for investment income has been in force since 1 January 2012. Investment income up to EUR30,000 is taxed at 30 percent, whereas investment income exceeding EUR30,000 is taxed at 34 percent. These percentages apply unless otherwise stated in an applicable tax treaty. Taxable investment income includes the following:

  • interest income on bank deposits and bonds
  • dividends paid to residents
  • capital gains

In the computation of taxable capital gains, the taxpayer has an option to deduct either the acquisition cost of the asset (reduced by any depreciation), or 20 percent of the sales proceeds for assets that have been owned for a period of less than 10 years, or 40 percent if the period is at least 10 years.

Capital gains on the sale of the taxpayer’s own dwelling are exempt if they or their family members have occupied it as an owner for at least 2 years before the sale. Capital losses may be deducted only from capital gains for the same tax year and the following 5 years.

Dividends, interest, and rental income

Dividends from publicly listed companies

In the case of dividends from publicly listed companies 85 percent is taxed as investment income and 15 percent is tax exempt (as from 2014). Until 2013 only 70 percent was taxable and 30 percent tax-free.

Dividends received from non-listed companies

As from 2014 an annual return of 8 percent is calculated on the mathematical value of the shares in non-listed companies. 25 percent of dividends are taxable until EUR150,000 within 8 percent return. 75 percent of dividends exceeding EUR150,000 will be taxable and 15 percent tax exempt (within 8 percent annual return) and 85 percent taxed as capital income. Of the amounts of dividends exceeding the annual return of 8 percent 75 percent will be taxed as earned income and 25 percent is tax exempt.

Dividends from non-listed companies where the dividends are paid based on work performed by the receiver of the dividends or a person in their sphere of interest, is taxed as earned income of the person who has performed the work.


According to the general rule in the Income Tax Act, interest is taxable as income from capital. For interest income on bank deposits and bonds see Taxation of Investment Income and Capital Gains.

Rental income

Rental income is taxed as an investment income. The tax rates are 30 percent or 34 percent.

Gains from stock option exercises

Gains from stock option exercises are taxable as earned income if it concerns employment stock options. Sale of shares received through exercise of employment stock options are taxed as investment income at 30 or 34 percent.

Foreign exchange gains and losses

Exchange rate gains constitute taxable income in Finland also in relation to other than business activities. An exchange rate gain based on an outstanding exchange credit is taxable investment income. Also an exchange rate gain based on a loan for the stabilization of exchange is taxable investment income if the loan was taken for the purposes of acquiring income. The gain realizes for taxation in the year during which the currency is changed to Euros. An exchange rate gain of an individual, which is not connected with income acquisition activities, however, is tax exempt up to EUR500 in a year.

The Income Tax Act includes a special provision on the deductibility of exchange rate losses. An exchange rate loss, which relates to a loan that was raised for income acquisition purposes, is deductible from the taxpayer’s investment income. The loss cannot be deducted from capital gains. The loss is deductible in the tax year during which the payment was made.

Principal residence gains and losses

A capital gain derived from sale of an apartment or from sale of a house, which has served as the owner’s or their family’s permanent home for an uninterrupted period of at least 2 years during the period of ownership, is exempt. In other cases, the capital gain of a principal residence will be taxed at a tax rate of 30 or 34 percent.

Capital losses may only be deducted from capital gains arising in the same year and the following 5 years. Losses arising from the disposal of the permanent home are not deductible if the capital gain from such a disposal has been tax exempt.

Capital losses

See Principal Residence Gains and Losses.

Personal use items

Capital gains are not regarded as taxable income if the total value of the sold property is no more than EUR1,000. Capital gains on sales of habitual household effects, as well as other personal items, are tax exempt.


Gift tax is levied on the following property received as a gift.

  • Any property, if the donor or the beneficiary was resident in Finland at the time of donation.
  • Real property situated in Finland and shares or other rights in a corporate body where more than 50 percent of the total gross assets of that corporate body consist of real property situated in Finland.

No gift tax is levied on household effects received as gifts and intended for the beneficiary’s (or their family’s) personal use and for which the value does not equal or exceed EUR5000. No gift tax is levied on gifts received solely for the beneficiary’s education or maintenance.

Gifts are also non-taxable, in addition to the above mentioned, to the extent a person receives such gifts from the same donor within a period of 3 years, the gifts are aggregated for the purpose of computing the EUR5000 limit and the gift tax liability.

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Finland? If so, please discuss?

Capital gains of specified transfers of businesses and farms to descendants may be tax exempt if certain conditions specified by the income tax act are fulfilled.

Pre-CGT assets

Not applicable.

Deemed disposal and acquisition

See above section Are Investment Income and Capital Gains Taxable in Finland.

General deductions for income

What are the general deductions from income allowed in Finland?

In general, the taxpayer is allowed to deduct for income tax purposes all expenses incurred in acquiring and maintaining chargeable income in the computation of the taxable income in each category. No deduction is allowed for expenses related to exempt income and domestic expenses (except expenses of certain domestic work).

The following items are considered as allowed:

  • A work-related standard expense deduction of EUR750.
  • Union membership fees and unemployment fund payments.
  • Commuting costs from the place of residence to the place of employment using the cheapest means of transportation (only costs between EUR750 and EUR7,000).
  • Interest expense on loan for educational purposes or for the purposes of deriving taxable income and 25 percent (35 percent in 2018) of the interest expenses on loans taken to purchase a home are deductible from investment income. If investment income is negative after these deductions, one can get a tax credit for capital loss from taxes on earned income. The deduction is 30 or 34 percent, but the maximum amount of this deduction is EUR1,400 for each person. This amount is increased by EUR400 for one child and by EUR800 for two or more minor children, supported by the taxpayer or a married couple during the tax year.
  • Voluntary pension insurance payments paid to a Finnish insurance company or to a Finnish branch of a foreign insurance company are deductible from investment income, but certain ceilings apply. Also foreign voluntary pension payments are deductible if certain conditions are met.
  • The medical treatment premiums are not deductible from taxable income. However, the employee’s statutory pension and unemployment insurance payments as well as daily allowance premiums are deductible items.
  • Deduction for work related secondary apartment

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Finland?

  • Relating to assignees whose salaries are paid by Finnish companies there is no guidance or case law from the tax authorities on how tax reimbursement should be handled. Generally, income becomes taxable for an individual based on the cash principle (that is, the moment when the income is paid or is available to the employee).

From 2008 onwards, the tax authorities have adopted new rules regarding net salary agreements when the salary is paid from abroad. Under these circumstances, a gross-up is required in the year the work is completed and the salary is paid.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Finland? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

The employer is required to make a withholding on all salaries paid to the employee. The applicable withholding tax percentage is stated in the employee's tax card. The tax percentage is progressive, and it is determined by the tax authorities based on the amount of the annual salary including fringe benefits.


Pay-as-you-go (PAYG) withholding

When the employee is regarded to be a resident, the employer shall withhold the payroll taxes according to the rates stated in the employee’s tax card in every payroll period. However, if the salary is paid by such a non-resident employer that does not have a permanent establishment in Finland for income tax purposes and that is not registered as an employer with the tax authorities and if the payment of wages only takes place as a direct electronic transfer of funds from a foreign bank, the said employer does not have to withhold any tax from the wages paid out. In these cases a resident employee working in Finland has to contact the local tax office for instructions on how to pay the withholding tax themselves monthly to the regional tax office’s account. Nevertheless, if the salary is paid in Finland by a so called substitute payer, it is the payer that has the withholding tax obligations.

If the employee is regarded to be non-resident in Finland and has a tax-at-source card, the employer makes a 35 percent withholding. However, before calculating the 35 percent tax, the employer may first make a standard monthly deduction of EUR510 or EUR17 per day (if this is mentioned on the tax card).

If the non-resident has applied for a progressive tax rate the taxes are withheld by the employer according to the tax card rates.

If the employee does not provide their employer a tax card or a tax-at-source card, the employer has to levy a withholding tax of 60 percent on the wages including any fringe benefits.

PAYG installments

When are estimates/prepayments/withholding of tax due in Finland? For example: monthly, annually, both, and so on.

The withheld taxes are remitted monthly to tax authorities on employer’s own initiative. The due date for remitting is the 12th of the month following the payment month. New rules apply to the late-payment penalty charges of self-assessed taxes.

For late filing the following applies. If the first return for the tax period is filed late, a day-based charge of EUR3 per day is imposed for the first 45 days. The maximum amount of this late penalty charge is EUR135.00. If the first tax return for the tax period is filed late by more than 45 days, the day-based part equals EUR135.00 in total. Two percent of the tax to be paid and filed late is added to it. However, the maximum charge is EUR15,000 for each tax.

Filing a replacement return (a correction return) is a procedure for correcting the errors in a previously filed return. No late penalty is imposed on such a return if it is filed before 45 days have elapsed after the filing deadline of the original return. However, late filing by more than 45 days additionally causes two percent to be imposed of the tax that is filed late; the maximum amount is EUR15,000 for each tax.

Late remittance of withheld payroll tax is subject to an annual late payment interest. For 2019 it is 7 percent.

It is also under certain circumstances possible to agree with the tax administration on reporting and remitting taxes on a quarter year or annual basis.

In case the employee is responsible for the advance tax themselves, the amount of annual installments varies from one to twelve depending on the payable amount. The taxpayer will be sent an advance tax demand note, as well as transfer slips. The due date is the 23rd of each month.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Finland? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

In order to avoid double taxation, Finnish residents are upon a written request entitled to a tax credit for income subject to foreign tax. Foreign national taxes may be credited against the Finnish national income taxes, as well as the municipal income tax and the church tax. The maximum amount of foreign tax credit is the Finnish tax payable on the foreign income. Any residual credit may be carried forward to the following 5 tax years.

If provided for by a tax treaty, an exemption from Finnish tax is applied instead of a tax credit.

General tax credits

What are the general tax credits that may be claimed in Finland? Please list below.

There are several credits that may be claimed.

General income

Deduction from state tax varies depending on taxable income, maximum EUR1,630 per year (in 2019).

Household deduction

The deduction is 50 percent if the service is purchased from a company that is registered in the prepayment register and 20 percent if the taxpayer has hired an employee to perform the service. The maximum amount of deduction in 2019 is EUR2,400 per person. The taxpayer’s own responsibility of the costs is EUR100/year.

Maintenance liability (child support payments)

The taxpayer who is liable for maintenance is entitled to a maximum EUR80 deduction per each minor aged child.

Sample tax calculation

This calculation3 assumes a married taxpayer resident in Finland with two children whose 3-year assignment begins 1 January 2017 and ends 31 December 2019. The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years.

Salary 100,000 100,000 100,000
Bonus 20,000 20,000 20,000
Cost-of-living allowance 10,000 10,000 10,000
Housing allowance 12,000 12,000 12,000
Company car 6,000 6,000 6,000
Moving expense reimbursement 20,000 0 20,000
Home leave 0 5,000 0
Education allowance 3,000 3,000 3,000
Interest income from non-local sources 6,000 6,000 6,000

Exchange rate used for calculation: USD1.00 = EUR0.90.

Other assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year, and accrue evenly throughout the year.
  • Interest income is not remitted to Finland.
  • The company car is used for business and private purposes (employee pays for gas/petrol) with an estimated taxable value EUR580 per month.
  • The employee does not belong to the Finnish church.
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.
  • Assumption lives in Helsinki and is under 53 years old.
  • The employee is covered by the Finnish social security scheme.

Calculation of taxable income

Year-ended 2017
Days in Finland during year 365 365 365
Earned income subject to income tax      
Salary 90,000
Bonus 18,000
Cost-of-living allowance 9,000
Net housing allowance 10,800
Company car 6,960
6,960 6,960
Moving expense reimbursement 18,000
0 18,000
Home leave 0 4,500
Education allowance 2,700
Total earned income 155,460
Other income 5,400
Total income 160,860
Deductions 15,254 14,634 15,970
Total taxable income 145,606 132,726 144,890

Calculation of tax liability


Year-ended 2017
Taxable income as above 145,606 132,726 144,890
Finnish tax thereon (including sickness insurance contribution 1.54 percent for 2019. varied between 1.53 – 1.58 percent)
61,470 53,632 59,508
Mandatory Finnish pension and Unemployment contributions 12,048 11,712 12,825

Please note that the tax calculation takes into account employee’s social security contributions which are paid by an employee who belongs to the Finnish social security scheme and are deductible for tax purposes. These social security payment amounts are not separately shown earlier. Also note that other income has been taxed as investment income at a rate of 30 percent.


1Certain tax authorities adopt an ‘economic employer’ approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country/territory for a period of less than 183 days in the fiscal year (or a calendar year of a 12-month period), the employee remains employed by the home country/territory employer but the employee's salary and costs are recharged to the host entity, then the host country/territory tax authority will treat the host entity as being the ‘economic employer’ and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country/territory.

2For example, an employee can be physically present in the country/territory for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.

3Sample calculation generated by KPMG Oy Ab, the Finnish member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Finnish tax legislation, which is in force in January 2019.

© 2019 KPMG Oy Ab, a Finnish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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