lähdeverotuksen

Lähdeverotus, also known as withholding tax, refers to taxes deducted at the source of income before the income reaches the recipient. In Finland, it primarily applies to dividends, interest, and royalties paid to foreign persons, as well as to certain payments to domestic residents in specific circumstances. The purpose of lähdeverotus is to ensure compliance with Finnish tax laws and to simplify the tax collection process for cross-border payments.

The rates for withholding tax are set by Finnish domestic law and are often reduced or eliminated under double‑taxation agreements (DTA). For example, dividends paid to foreign shareholders are generally taxed at a 20 % rate, but a DTA may reduce this to 15 % or even 0 % depending on the recipient’s country of residence. Interest payments are subject to a standard 15 % withholding tax, while royalties are typically taxed at 15 % as well. Some payments, such as certain employee reimbursements or certain service fees, may also be subject to withholding, but these are less common.

Foreign recipients have a few options to avoid or reduce withholding tax. They can apply for a treaty-based reduction by providing the appropriate identification documents or form, or they may submit a claim for refund to the Finnish tax authorities. For domestic residents, the withholding at the source is usually automatically recovered through the regular income tax filing.

Legally, lähdeverotus is governed by the Finnish Income Tax Act and the related rules on withholding taxes. The tax authority (Verohallinto) processes the deduction and claims, and it is responsible for monitoring compliance. The system helps secure a stable tax base, particularly for cross‑border revenue streams, while offering mechanisms to prevent double taxation through international agreements.