Inheritance tax in Finland
In Finland inheritance tax is levied on an acquisition due to death and gift tax is levied on a gratuitous gift between living people. Due to a reform in 2008, the inheritance tax rates were significantly reduced, especially for distant relatives and third parties, and the tax exemptions were generally increased.
Objective and personal tax liability
The Finnish inheritance tax is subject to inheritance tax on the entire estate (including world assets) in the event of an acquisition due to death, provided the testator or heir was or is resident in Finland. In the case of foreign testators and heirs who do not live in Finland, the Inheritance Tax Act only applies to real estate located in Finland and to company investments if more than 50% of their assets are Finnish property. The same applies to free gifts among the living for gift tax.
Estate
The objects of the estate are valued at market value, 80% of the usual prices being taken as a basis. Debts and also the costs incurred on the occasion of the death of the testator, provided they are not disproportionate, are deducted. The tax rates, which differ according to the amount and tax group, are levied on the net value. Gifts made by the testator within the last three years before his death will be added to the estate, but the gift tax already paid will be offset against the inheritance tax.
Tax classes and tax rates
Since the reform of 2008, only two tax classes have been distinguished:
- Class I: Spouses, ancestors and descendants (parents and forefathers, children and grandchildren) in direct line, who lived with the testator and was either married to him or who has or had a child together
- Class II: all other relatives and third parties
The tax rates applied are shown in the table below. The rates stated there apply to inheritance and gifts from January 1, 2009.
| Taxable assets | Tax class I | Tax class II |
|---|---|---|
| € 20,000 - € 40,000 | 7% | 20% |
| € 40,000 - € 60,000 | 10% | 26% |
| over € 60,000 | 13% | 32% |
With the tax reform of 2008, the tax rates of class I were reduced by 3% each, those of class II (siblings and half-siblings according to the old law) remained the same, and tax class III (according to old law all other relatives and strangers with tax rates of 30, 39 and 48%) have been abolished. The value classes have been raised.
Allowances
In 2008, the previously very low exemptions were also increased as follows:
- Spouses: 60,000 euros
- Children under 18 years: 40,000 euros
- All others: 20,000 euros
Insurance benefits on the occasion of death are tax-free in class I up to 35,000 euros, and their value goes beyond that into the estate. The other heirs have to pay tax on such benefits as income. The surviving spouse only has to pay tax on half of such benefits. He also receives a household allowance of 4,000 euros.
Tax breaks
The transfer of companies and agricultural and forestry operations is particularly favorable provided that the operations are maintained.
State and municipal institutions as well as non-profit organizations are exempt from inheritance tax.
Procedure
Inheritance tax returns must be submitted to the tax authorities within three months of the death of the testator. With regard to future inheritance cases, heirs can obtain binding information on tax treatment. Heirs who are not financially able to pay the inheritance tax promptly or at all can apply for partial or full exemption from inheritance tax.
Gift tax
Gift tax is levied on free gifts among living people under the same conditions as for inheritance tax. However, there are no other special allowances for close relatives beyond the general allowance of 4000 euros. Donations made by the same donor are added together within three years. Insurance benefits for which someone else has paid the premiums are considered gifts, but the benefits remain tax-free if they do not exceed 8,500 euros within three years. The persons who intend to make a donation can first obtain binding information from the tax authorities about the treatment of the intended donation, to which the tax authorities are bound for six months.
International tax law and double taxation
Insofar as double taxation occurs because estate assets located abroad are also taxed there, Finland will offset the foreign tax paid against the tax payable in Finland for tax residents. Special contracts to avoid double taxation in the area of inheritance tax exist based on the Nordic Convention with Sweden , Norway , Denmark and Iceland (also for gift tax). Further corresponding double taxation agreements have been concluded with France , the Netherlands , Switzerland and the USA . An agreement negotiated in draft with Germany (dated June 6, 1997) has not yet been pursued.
See also
Individual evidence
- ↑ Karl-Friedrich von Knorre and Wolfgang Mincke: Inheritance law in Finland , in: Rembert Süß: Inheritance law in Europe , 2nd edition Zerb Verlag 2008, ISBN 978-3-935079-57-0 , page 608
- ↑ a b Karl-Friedrich von Knorre and Wolfgang Mincke: Inheritance law in Finland , in: Rembert Süß: Inheritance law in Europe , 2nd edition, Zerb Verlag 2008, ISBN 978-3-935079-57-0 , page 610
- ↑ a b c d Based on: Publication of the Finnish Tax Administration 35e.09, Inheritance Tax, 1 January 2009 (English) ( page no longer available , search in web archives ) Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.
- ↑ Troll-Gebel-Jülicher: Inheritance Tax and Gift Tax Act , loose-leaf commentary, 37th edition 2009, Vahlen, ISBN 978-3-8006-2402-7 , § 21 ErbStG marginal no. 99 (Finland)
- ↑ Publication of the Finnish Tax Administration 36e.09, GiftTax, January 1, 2009 (English) ( Memento of the original from June 9, 2007 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ Finnish Finance Administration: List of DBAs, (English) ( Memento of the original from November 25, 2011 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF; 75 kB)
literature
- Karl-Friedrich von Knorre and Wolfgang Mincke: Inheritance law in Finland , in: Rembert Suss: Inheritance law in Europe , 2nd edition Zerb Verlag 2008, ISBN 978-3-935079-57-0 , pages 585–610
- Troll-Gebel-Jülicher: Inheritance Tax and Gift Tax Act , loose-leaf commentary, 37th edition 2009, Vahlen, ISBN 978-3-8006-2402-7 , § 21 ErbStG marginal no. 99 (Finland)
