As you may have heard, Finland imposes both inheritance and gift taxes. What might come as a surprise to you is the wide personal scope of these taxes. A tax might be imposed on your loved ones even if they are not living in Finland. Tax treaties will not help you either in most cases – there are only few inheritance and/or gift tax treaties in force. The income and capital tax treaties usually do not cover gifts and/or inheritances. Furthermore, taxes are not harmonized within the EU (only VAT is).
International Scope of Inheritance and Gift Taxes
Finland imposes tax separately on each beneficiary in respect of his share of the estate or on each donee, respectively. The scope includes:
- All assets located in Finland or abroad if the deceased/donor or the beneficiary/done was a resident of Finland at the time of the death/gift, and
- Immovable property located in Finland, and on shares in any company whose assets consist for 50% or more of immovable property located in Finland (even if neither the deceased/donor nor the beneficiary/done was a resident of Finland).
What can you do?
First of all, you should find out what your tax position is. Preparation for the future is the key. Questions to look into:
- Where do you live (tax residence, treaty residence)?
- What is your family situation (married/cohabiting/children)?
- What kind of assets you have?
- Who do you want to leave them to? What consequences this might have?
- Possibilities to optimize your tax position?
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