How are dividends and interest income taxed?

15% of dividends from listed companies is tax-exempt, and the rest is taxable capital income.

As a rule, OP deducts a 25.5% withholding tax from dividends from companies listed in Finland. Information about the dividends paid to OP's book-entry accounts goes directly to the tax authorities.

Account interests paid by OP to personal customers are subject to a 30% tax at source, which OP pays directly to the tax authorities. This reduces the amount of interest accumulating in the account.

Do I need to do something myself?

The pre-completed tax return available in MyTax in the spring must be checked, and any incorrect or incomplete information corrected.

The responsibility for the accuracy of information lies with the investor, meaning the taxpayer.

How are dividends and capital income from abroad taxed in Finland? When should I claim adjustment of double taxation?

Regarding dividends received from abroad, the Tax Administration abides by the tax treaties signed by Finland. If a paying country under the tax treaty levies 15% tax at source on the dividend, Finland will levy a further 10.5% tax. In that case, the total tax rate will be 25.5%, which corresponds to the taxation of dividends received from a listed company in Finland.

Unfortunately, many countries withhold tax at source that is higher than that established by the tax treaty. Even in these cases, Finland will tax the amount specified in the tax treaty. Countries that withhold too high a tax at source are currently Norway, Denmark, Germany and Switzerland, to name a few. The above does not apply to countries outside the tax treaties, the EU, or the EEA.

Excess withheld tax can be reclaimed from the tax authorities of the country where the tax is levied. But this may mean bureaucratic obstacles, a language barrier and a long process. You might consider whether the possible refund is worth the effort.

The profits from the sale of listed shares are usually taxed only in Finland.

How are capital gains or losses from the sale of shares or mutual fund units taxed? 

Many companies listed on Nasdaq Helsinki have lost value this year. If you sell investments below the acquisition price, this may result in a tax-deductible loss. The loss is deducted from the capital gains for the same year. If there are not enough capital gains, the losses can be deducted from other capital income such as dividends.

If tax has already been withheld from dividends at the time of payment, you may get a tax refund the following year for those loss-making sales.

If the losses cannot be fully deducted this year, the remaining amount will be deductible next year. The losses are deductible in the ongoing year and the following five years.

How soon must the tax authorities be notified of shares purchased and sold?

At the latest, in the tax return to be filed in the spring. The pre-completed tax return usually contains information about the transactions made, because the bank sends this data to the tax authorities. It's therefore advisable to always check that the acquisition price of shares is correct in the pre-completed tax return. For example, share issues during the holding period may result in the bank not submitting the acquisition price to the Tax Administration. In this case, it's the investor's responsibility to report it to the Tax Administration.

If the sales make a profit, you can avoid possible late-payment interest with relief by filing a capital gains tax return in advance and by making a prepayment if necessary. Late-payment interest with relief is paid for back taxes. To avoid paying such interest, make sure that the withholding taxes are sufficiently high in relation to your income during the tax year. You may compensate for any possible shortfall by requesting an additional prepayment, which can be done starting from December. The additional prepayment can be paid without late-payment interest by the end of January the next year.

No interest on back taxes will be charged if the interest would not have exceeded EUR 20.

How are the returns from mutual funds taxed?

As for mutual funds, returns are taxed only when the investor receives a payment from the fund. The returns may result either from selling a fund unit or from dividends. Mutual funds do not pay tax to Finland on the dividend and interest income they receive, so the gains can be reinvested in full, which strengthens the interest-to-interest effect.

If mutual fund investments were made through a unit-linked insurance, it's possible to change the investment product within the insurance without tax consequences. The returns are taxed only when money is withdrawn from the unit-linked insurance to one's own account.

When can I avoid tax on capital gains from the sale of shares? Are expenses tax-deductible?

If the total price of sales throughout the year remains under EUR 1,000, no capital gains tax is levied on them. On the other hand, in those cases, losses aren't deductible either.

It's good to remember, however, that companies are occasionally bought off the stock exchange. That's when the EUR 1,000 limit may be exceeded, even if the investor does not actively place a sales order. So it's a good idea at the end of the year to check whether the sales of the current year will remain below the taxable limit.

You can make tax deductions from investment expenses. Interest and other expenses on a loan taken for the generation of income such as investments are deductible.

 How is the interest income on Profit Shares taxed?

The taxation on the returns of OP's Profit Shares is relatively light. For a private person, the tax rate is usually 7.5% up to a return of 5,000 euros and thereafter 25.5%, as long as the person's capital income doesn't exceed 30,000 euros a year.

For companies, too, the taxation of Profit Shares is generally speaking advantageous.

Read more about our investement services at OP Uusimaa.