Accounting Act reform to help determine tax liability of foreign companies in Finland

The Government proposes that the President of the Republic approve the amendment to the Accounting Act. The legislative amendment will make it easier for the authorities to determine whether foreign companies should pay taxes in Finland. The reform of the Accounting Act is one of the Government’s measures to combat the grey economy. 

Parliament adopted the Government’s proposal on the amendment on 10 March 2022. Subsequently, the Act will be submitted for approval by the President of the Republic and it will enter into force on 1 April 2022.

Finnish authorities will be able to determine more easily whether foreign companies have business activities in Finland and whether they are liable to pay taxes here. In practice, the amendment will improve the Finnish tax and customs authorities’ access to accounting records of foreign companies. The legislative reform puts foreign companies in the same position as Finnish companies in terms of the authorities’ access to information. 

A foreign company is obliged to keep accounts, if it carries out business activities in Finland or its business activities abroad are in fact managed from Finland. The accounting information can be used as a basis for the company’s taxation in Finland. The Act does not impose any new obligations on companies established and registered in Finland.

Amended Act to combat the grey economy

Government tackles the grey economy with a comprehensive action plan. The reform of the Accounting Act is one of the measures taken to combat the grey economy.

“Following the amendment, Finnish and foreign companies will be treated equally in terms of both accounting obligations and taxation. This is an important reform to combat the grey economy and tax avoidance,” says Minister of Employment Tuula Haatainen.

A number of stakeholders and experts were consulted during the preparation of the legislative reform. The legislative reform was widely considered good and necessary.

Inquiries: 
Mikko Heinikoski, Special Adviser to the Minister of Employment, tel. +358 295 047 175 Mika Björklund, Ministerial Adviser, Ministry of Economic Affairs and Employment, +358 295 063 586 
Timo Kaisanlahti, Chief Specialist, Ministry of Economic Affairs and Employment, +358 295 047 139