Finland

As a main rule, a company is deemed to be resident on the basis of incorporation. Consequently, a company is deemed to be resident in Finland if it is incorporated (registered) in Finland. 

Additionally, due to a change in legislation, starting from 1 January 2021, foreign corporate entities that are not incorporated in Finland may still be deemed to be tax residents in Finland. Entities that have been incorporated in a foreign country may be deemed to be tax residents based on their place of effective management (see below).

Place of effective management

Due to a change in legislation, corporate entities whose place of effective management is located in Finland are also considered to be resident taxpayers in Finland starting from 1 January 2021. According to the Finnish Tax Administration, the place of effective management is a place where the corporation’s highest-level decisions concerning the daily management are made.

The Finnish Tax Administration has provided detailed guidance on this matter, and the Income Tax Act defines the concept of effective management. A corporate entity’s place of effective management is considered to be in Finland if its board of directors or other body making top-level decisions on daily management is located in Finland. However, when determining whether a place of management exists in Finland, other circumstances relevant to the company’s organisation and business operations are also taken into account.

Permanent establishment (PE)

A PE is, in general, formed in line with the OECD Model Convention.