Finland - Estonia tax treaty

You live in Finland and own an Estonian OÜ, or plan to found one. This page shows how the Estonia - Finland tax treaty splits the right to tax between the two countries, and what Finnish and Estonian law add. The Finnish law parts cite the statutes on Finlex and the guidance of the Finnish Tax Administration (Vero); only the Finnish and Swedish texts of those statutes are authentic. Finnish law depends on your facts, so confirm each Finnish point with a Finnish tax adviser before you act.

Treaty facts

In short

• e-Residency and an Estonian OÜ do not make you resident in Estonia. If you live in Finland, Finland taxes your worldwide income.
• If you run the OÜ from Finland, Finland can treat it as a Finnish company. The treaty has no automatic tie-breaker for companies.
• Estonia taxes your board member fee, and Finland credits that tax. A salary for work you do in Finland is taxed only in Finland.
• Estonia withholds no tax from your dividend. Finland taxes it like a dividend from a Finnish unlisted company, and you cannot credit the Estonian 22/78 company tax.
• The Finnish CFC act can tax the profit the OÜ keeps, unless the OÜ has real premises and staff in Estonia.
• If you are a Finnish citizen and move to Estonia, Finland can keep taxing you for three more years, with a credit for Estonian tax.

Does e-Residency or an Estonian company make me tax resident in Estonia?

No. You are resident in Estonia only if you have your place of residence there or stay there 183 days in 12 months (TuMS § 6 lg 1). e-Residency and company ownership count for neither. The Estonian side is explained in our guide on founder residency, permanent establishment and CFC rules.

Finland treats you as resident if you have a permanent home in Finland or stay there continuously for more than six months (TVL 11 § 1 mom). A Finnish resident pays Finnish tax on worldwide income. In the year of a move, you are taxed as a resident for the part of the year you lived in Finland and as a non-resident for the rest (TVL 9 § 4 mom).

If both countries treat you as resident, the treaty decides in this order: permanent home, centre of vital interests, habitual abode, nationality, and finally agreement between the two tax authorities (Art. 4(2) of the treaty). This treaty has an unusual extra rule for Finnish citizens: winning the tie-breaker for Estonia does not always stop Finnish tax (Art. 23(1)(c)). See the three-year rule.

Confirm with a local adviser: keep proof of the date your permanent home changed (lease, population register, family), because the domestic tests and the tie-breaker both turn on it.

Can Finland treat my Estonian company as a Finnish company?

Yes. Since 2021, a company founded abroad whose place of effective management (tosiasiallinen johtopaikka) is in Finland is liable to Finnish tax on its worldwide income (TVL 9 § 1 mom 1 kohta and 9 § 8 mom). It is treated like a Finnish company for all income tax purposes (TVL 9 § 9 mom), from the moment its place of effective management arises in Finland. The corporate rate is 20 percent (TVL 124 §). Estonia still treats the OÜ as resident, because it was founded under Estonian law (TuMS § 6 lg 2).

Vero gives this exact case as an example: an Estonian OÜ whose sole board member takes all decisions at home in Finland has its place of effective management in Finland (Vero, illustration 6).

The treaty does not settle this by the place of effective management. The two tax authorities "shall endeavour" to agree. Without an agreement, each state deems the company not to be a resident of the other state (Art. 4(3) of the treaty). The MLI does not change this. In practice, Finland can tax the yearly profit at 20 percent, and Estonia taxes distributions at 22/78 (TuMS § 50 lg 1). The way out is the mutual agreement procedure (see below). Vero uses an Estonian OÜ in this position as its own example of that route (illustration 12).

A foreign company that is liable to tax in Finland registers with form Y1 and attachment 6204, and files the Finnish company return 6B within four months of the end of its financial year, even without activity. It also has the same employer duties as a Finnish company (Vero).

EMTA says the same from the Estonian side: "Income of Estonian companies is also taxed abroad when the management of Estonian companies occurs outside of Estonia" (EMTA).

Confirm with a local adviser: whether Finland credits the Estonian distribution tax of a dual-resident OÜ while there is no mutual agreement. Ask for a mutual agreement early, because the three years run from the first notice of the Finnish assessment (Art. 25(1)).

What does Finland look at to decide where my company is managed?

Finland asks where the board, or another decision-making body, takes the most important decisions on the top-level day-to-day management. It also looks at the other circumstances of the company's organisation and business (TVL 9 § 8 mom). Vero adds that for a board meeting held online, the test looks at where the participants joined from. The location of the head office and of the executive managers also count. The countries of residence of the board members do not decide it by themselves (Vero, sections 5.1.3 and 5.1.4).

An Estonian nominee board member who signs what you send from Finland does not move the decisions. Vero's illustration 2 is an OÜ whose Estonian board members follow e-mailed orders from the Finnish owner: it is managed from Finland.

To keep management in Estonia, the facts must change, not only the paperwork:

• a board member who lives in Estonia and takes the decisions there;
• board meetings with the decisive members physically in Estonia, with minutes that record the place;
• the executive management, staff and office in Estonia;
• contracts negotiated and signed from Estonia.

The Estonian evidence list is in our guide on founder residency, permanent establishment and CFC rules. A home office in Finland can still be a permanent establishment even when the place of effective management is in Estonia.

Confirm with a local adviser: the case law and rulings (KHO, Keskusverolautakunta) that apply TVL 9 § 8 mom since 2021. The facts must hold for the whole year and be documented when the decisions are taken.

Does my work from home in Finland create a permanent establishment?

It can. A permanent establishment is a fixed place of business through which the OÜ carries on its business, including a place of management or an office (Art. 5(1) and 5(2)(a) and (c) of the treaty). A person who habitually concludes contracts in the name of the OÜ in Finland also creates one (Art. 5(5)). Purely preparatory or auxiliary work does not (Art. 5(4)). The MLI does not change Art. 5. Finnish law lists the place of management and an office as a kiinteä toimipaikka too (TVL 13 a §).

Finland can then tax the profit that belongs to the permanent establishment (Art. 7(1) and (2) of the treaty). This treaty goes further: Finland may also tax profit from sales in Finland of goods of the same or similar kind, and from other business activities in Finland of the same or similar kind, unless the OÜ shows that the permanent establishment could not reasonably have done them (Art. 7(1)(b) and (c)). Vero taxes a permanent establishment by assessment at the 20 percent corporate rate (Vero, section 4.1). A company that has only a permanent establishment in Finland files return 6U (Vero).

On the Estonian side, a dividend paid out of the profit of a permanent establishment in an EEA state bears no Estonian distribution tax (TuMS § 50 lg 1^1 p 2; EMTA). The treaty lets Estonia use this better domestic rule instead of a credit (Art. 23(2)(a)). Keep separate accounts for the permanent establishment from the start.

Confirm with a local adviser: how Vero applies the permanent establishment rules to a home office used by a sole owner, and the Finnish registration of the permanent establishment. Document which sales and activities the OÜ carries out outside Finland, because of the force-of-attraction rule.

How is my board member fee taxed?

Estonia may tax the fee, because the treaty gives directors' fees of an Estonian company to Estonia (Art. 16 of the treaty). The management board of an OÜ manages and represents the company (ÄS § 180 lg 1), so it is at least an "other similar organ of a company" in the authentic English text.

The OÜ withholds 22 percent income tax (TuMS § 29 lg 2, § 41 p 2, § 4 lg 1). It also pays 33 percent social tax, unless you give it an A1 certificate (SMS § 2 lg 1 p 4, § 7 lg 1). EMTA confirms that the company pays both in Estonia "regardless of the location where work is carried on" (EMTA).

Finland is an EEA state, so on your written application the OÜ first deducts up to one twelfth of the basic exemption each month: 700 euros a month in 2026, 8,400 euros a year (TuMS § 42 lg 1, § 23 lg 1, § 11 lg 3). You can apply at one payer only (TuMS § 42 lg 2). If you did not apply, you can claim it in an Estonian annual return (TuMS § 31^1 lg 2).

Finland taxes the fee as your earned income (Vero, section 12.1). It credits the Estonian 22 percent, up to the Finnish tax on that fee (Art. 23(1)(a) of the treaty). The Estonian 33 percent social tax is not a tax covered by the treaty (Art. 2(1)(b)), so Finland does not credit it. The A1 certificate is the way to avoid it.

Confirm with a local adviser: how the credit is computed when the fee is small and you have other earned income, and whether Finland asks for a prepayment on a fee from a foreign payer. Ask also whether Finland still credits the Estonian tax if it treats the OÜ as managed from Finland, because Art. 16 then may not apply. Keep the TSD data or a statement from the OÜ as proof for the Finnish credit. More on the Estonian side: founder remuneration.

Where is a salary for work I do in Finland taxed?

Only in Finland. A salary for an employment exercised in Finland by a Finnish resident is taxable only there (Art. 15(1) of the treaty). Estonia taxes a non-resident's salary only for work done in Estonia (TuMS § 29 lg 1). It charges no social tax on a salary or a fee for services paid to a non-resident for work done abroad, with or without an A1 (SMS § 3 p 7).

Days you work in Estonia are different. The short-stay exemption does not apply, because the employer is resident in Estonia (Art. 15(2)(b)). Estonia may tax the pay for those days, and Finland credits that tax (Art. 23(1)(a)).

A board member fee is different: it stays taxable in Estonia under Art. 16 (see the section above). Calling the payment a salary works only with a genuine employment, separate from the board role, under an employment contract. For a foreign employer whose employee works in Finland, the Finnish Centre for Pensions says the employer takes out the Finnish statutory pension insurance (TyEL), pays the contributions and reports the pay to the Incomes Register (Finnish Centre for Pensions).

Confirm with a local adviser: whether a foreign employer with no permanent establishment in Finland must withhold Finnish tax from the pay. Keep a count of the days you work in each country. More on cross-border work: contractors and cross-border workers.

Which social security applies to me, and do I need an A1 certificate?

The tax treaty does not decide this. It covers income taxes only, and the Estonian social tax is not among them (Art. 2(1) of the treaty). EU Regulation 883/2004 decides which one state's social security applies (Regulation (EC) No 883/2004).

Estonia charges 33 percent social tax on a board fee (SMS § 2 lg 1 p 4, § 7 lg 1). EMTA removes it only if you have "a certificate of social security coverage valid in such foreign country on Form A1" from your home country (EMTA). A salary or a fee for services for work done in Finland needs no A1, because it is outside Estonian social tax altogether (SMS § 3 p 7).

In Finland, the Finnish Centre for Pensions (Eläketurvakeskus) issues the A1. It says that work done in Finland is insured in Finland, whatever the country of the employer (Finnish Centre for Pensions). For a person who works in two or more EU states, it issues the A1 through its e-services, and for remote work it uses a threshold of at least 25 percent of working time in the state of residence (Finnish Centre for Pensions). A Finnish resident who does the board work from Finland will therefore usually be covered in Finland.

Apply for the A1 before the first fee. Without it in the OÜ's file, the OÜ must pay the Estonian social tax, and a later refund needs a corrected TSD.

Confirm with a local adviser: the exact rule of the Regulation for your mix of board work and other work, and the decision of the Finnish Centre for Pensions.

Must I take YEL insurance for work in my own company?

Often yes, if Finnish social security applies to you. Under the Finnish self-employed persons' pension act, a person in a leading position (board member, managing director or actual control) of a company in which he holds more than 30 percent alone, or more than 50 percent with family, is an entrepreneur (YEL 3 § 3 and 4 mom). Indirect holdings count (YEL 3 § 6 mom). He must insure himself if his work income reaches the minimum, which the Finnish Centre for Pensions gives as 9,423.09 euros a year in 2026 (YEL 4 §; Finnish Centre for Pensions). The amount changes every January.

YEL also covers work abroad when the EU Regulation makes Finnish law apply (YEL 6 §), and it does not apply to a person to whom Finnish law does not apply under the Regulation (YEL 4 §). When it is unclear, the Finnish Centre for Pensions decides on application (YEL 7 §). This is not a treaty question, because the treaty covers only income taxes (Art. 2(1) of the treaty).

On the tax side, Vero treats pay for the work of a managing director or board member as the salary of the person appointed (Vero). A foreign company managed from Finland has the same employer duties as a Finnish employer (Vero).

Confirm with a local adviser: the YEL text speaks of an "osakeyhtiö", so ask the Finnish Centre for Pensions whether it treats an OÜ the same way. Ask also about employer contributions of a foreign company that is not managed from Finland.

How does Finland tax a dividend from my company?

Like a dividend from a Finnish unlisted company. A dividend from a company covered by the EU Parent-Subsidiary Directive is taxed under the Finnish dividend rules (TVL 33 c § 1 mom), and Vero treats an Estonian OÜ as such a company (Vero, example 2). The dividend is split (TVL 33 b § 1 and 2 mom):

• up to an 8 percent yearly return on the mathematical value of your shares, 25 percent is taxable capital income and 75 percent is tax-free; above 150,000 euros of such dividends, 85 percent is taxable capital income;
• the part above the 8 percent return is 75 percent taxable earned income, at progressive rates, and 25 percent tax-free.

Capital income is taxed at 30 percent, and at 34 percent on the part above 30,000 euros (TVL 124 §). Vero's example: a dividend of 100,000 euros on shares with a mathematical value of 800,000 euros gives 64,000 euros in the capital income band (16,000 taxable) and 36,000 euros in the earned income band (27,000 taxable) (Vero). A dividend based on your own work input is earned income in full (TVL 33 b § 3 mom). You report a foreign dividend in OmaVero (MyTax).

The mathematical value is the OÜ's net assets per share at the end of the previous year, computed under the Finnish valuation act (TVL 33 c § 4 mom; VArvL 2 §, 3 §, 9 §). Without that information, Vero uses the fair value of the shares at the end of the year before the distribution. So restate the OÜ's balance sheet under Finnish rules every year.

Estonia withholds nothing from a dividend paid to you. The OÜ pays the corporate income tax of 22/78 on the distribution (TuMS § 50 lg 1, § 41). EMTA: "no further income tax withholding will apply for the dividend distribution to a natural (e-resident) person" (EMTA). The treaty would allow Estonia to withhold up to 15 percent (Art. 10(1)(b)), but Estonian law does not use it. The special Finnish regime of Art. 10(2) no longer applies, because the Finnish imputation credit it depends on was repealed from 01.01.2005 (Finlex). See how the distribution tax works, how to pay a dividend and the dividend tax calculator.

Confirm with a local adviser: the deadline and the exact form for a foreign unlisted dividend, the rule of TVL 33 b § 1 mom from 2028 (the current wording runs to 31.12.2027), and the computation if Finland treats the OÜ as a Finnish company.

Can I credit the Estonian 22/78 company tax against my Finnish tax?

No, not under the treaty. Finland credits "the tax on income paid in Estonia" against the tax of the person who receives the income (Art. 23(1)(a)(i) of the treaty). The 22/78 is paid by the OÜ, and the dividend article "shall not affect the taxation of the company in respect of the profits out of which the dividends are paid" (Art. 10(3)). Estonia withholds nothing from you (TuMS § 41), so there is nothing to credit.

The treaty rates of 5 and 15 percent only cap an Estonian withholding tax that Estonia does not levy. Three other rules do not help an individual: the exemption of Art. 23(1)(b) is only for a Finnish company with at least 10 percent of the votes, the underlying-tax credit of Art. 23(2)(c) runs only in Estonia, and the tax sparing of Art. 23(1)(e) was limited to the first ten years of the treaty (Art. 23(1)(f)). The only relief is the Finnish partial exemption of dividends (TVL 33 b § 1 mom).

Confirm with a local adviser: that no domestic credit for the OÜ's distribution tax exists for an individual under the Finnish act on the elimination of double taxation (menetelmälaki). Compare the total burden with a board fee or a salary before you choose how to pay yourself.

What if my company lends me money or pays my private costs?

In Estonia, the OÜ pays 22/78 on private expenses it pays for you (TuMS § 51 lg 1 and 2), on a transaction with you below market value (TuMS § 50 lg 4), and on a loan to you when the circumstances suggest a hidden profit distribution (TuMS § 50^2 lg 1). A benefit to you as board member or employee is a fringe benefit (TuMS § 48 lg 1), which also bears 33 percent social tax (SMS § 2 lg 1 p 7, § 7 lg 1). You pay no Estonian tax yourself, so Finland has nothing to credit.

The treaty sorts the item for Finland: income treated as income from shares is a dividend (Art. 10(4)), a benefit for the board role falls under Art. 16, and a benefit of an employee under Art. 15(1). Genuine loan interest falls under Art. 11.

Finland has its own rules. A hidden dividend is taxable earned income (TVL 33 d §). A money loan from an "osakeyhtiö" to a shareholder who holds at least 10 percent with family is taxable capital income to the extent it is unpaid at the end of the tax year (TVL 53 a §); a repayment by the fifth tax year after the year of the loan is deductible (TVL 54 c §). Such a loan also reduces the share value used for the 8 percent dividend split (TVL 33 b §).

The same euro can be taxed in the OÜ in Estonia and in your hands in Finland, with no treaty credit. A loan needs written terms, a market interest rate and real repayment.

Confirm with a local adviser: whether TVL 53 a § and the hidden-dividend rule reach a loan or a benefit from a foreign company such as an OÜ.

How is interest between Finland and my company taxed?

The treaty lets the source state tax interest at up to 10 percent (Art. 11(2) of the treaty), with exemptions for some state bodies and for credit sales between unrelated enterprises (Art. 11(3)). In practice neither state taxes ordinary loan interest at source. Estonia taxes a non-resident's interest only from certain real estate funds (TuMS § 29 lg 7, § 41 p 4). Finland does not tax a non-resident on interest on a loan taken from abroad that is not equity-like (TVL 9 § 2 mom; Vero, section 5.3).

The lender's state of residence taxes the interest. You pay Finnish tax on interest as capital income, at 30 or 34 percent (TVL 33 §, 124 §). An OÜ lender pays Estonian tax only when it distributes the profit (TuMS § 50 lg 1).

Between related parties the rate must be at arm's length (Art. 9(1) of the treaty). An excess is not interest for the treaty (Art. 11(7)), and Estonia taxes it at 22/78 in the OÜ (TuMS § 50 lg 4). Since 01.01.2022, the treaty rates are also subject to the principal purpose test of the MLI.

Confirm with a local adviser: the Finnish interest deduction limits and transfer pricing documentation for a Finnish borrower, and whether Finland sees a loan as equity-like.

Does Finland withhold tax on royalties or service fees paid to my company?

Royalties: yes. Finland withholds 20 percent from royalties paid to a non-resident company (lähdeverolaki 7 §). The treaty caps it at 10 percent (Art. 12(2)(b) of the treaty), and between associated EU companies it can be nil under the Interest and Royalties Directive (lähdeverolaki 3 b §). Tax withheld beyond the treaty can be reclaimed from Vero within three years from the end of the year of withholding (lähdeverolaki 11 §; Vero, chapter 8).

The most-favoured-nation clause of Art. 12(7) changed this article from 01.01.2016. On its wording, the narrower definition of the Estonia - Switzerland treaty applies, so payments for the use of equipment and for broadcasting films or tapes are no longer royalties in either direction. They are business profits, taxable in Finland only through a permanent establishment (Art. 7(1)).

Service fees: they are business profits, not royalties (Art. 12(3) and 7(1)). But for work done in Finland, a Finnish payer may have to withhold 13 percent tax at source on work compensation paid to a non-resident company (lähdeverolaki 7 §). Without a Finnish permanent establishment, the OÜ then reclaims it under the treaty.

If your OÜ pays royalties to Finland, it withholds 10 percent in Estonia unless it holds the recipient's residence certificate (TuMS § 41 p 8, § 43 lg 1 p 2 and lg 2). With the certificate, the treaty result applies, which is nil since 01.01.2016 under Art. 12(7).

Confirm with a local adviser: how Vero applies the narrowed definition to equipment leasing paid from Finland, and when the 13 percent on work compensation applies or can be avoided.

What if my company owns a Finnish company?

Finland withholds 20 percent on dividends paid to a non-resident company (lähdeverolaki 7 §). The relief:

• 0 percent under the EU Parent-Subsidiary Directive, if the OÜ owns directly at least 10 percent of the capital (lähdeverolaki 3 § 6 mom). Vero's own example is an Estonian OÜ that owns a Finnish Oy (Vero, section 3.4.4.1, example 2);
• below 10 percent, possibly 0 percent for a dividend from an unlisted Finnish company on shares that are not investment assets, if the OÜ declares that the Finnish tax cannot in fact be credited in full in Estonia (lähdeverolaki 3 § 5 mom; Vero, section 3.4.4.2);
• else 5 percent under the treaty, with at least 25 percent of the capital held directly (Art. 10(1)(a) of the treaty);
• else 15 percent (Art. 10(1)(b)).

The treaty rate is subject to the principal purpose test of the MLI since 01.01.2022.

In Estonia, with at least 10 percent at receipt, the OÜ can pass the Finnish dividend on without Estonian income tax (TuMS § 50 lg 1^1 p 1), if the Finnish company could not deduct the dividend from its profit (TuMS § 50 lg 1^3). Below 10 percent, the OÜ pays 22/78 when it distributes and deducts the Finnish tax withheld (TuMS § 54 lg 5). You then pay Finnish tax on the dividend you receive.

For an owner who lives in Finland, the structure is circular: Finnish profit leaves Finland and comes back as a Finnish-taxed dividend, with the questions of effective management and the CFC act. A holding OÜ with no substance in Estonia is exactly the case the anti-abuse rules target.

Confirm with a local adviser: whether an OÜ can make the declaration of 3 § 5 mom when it can later deduct the Finnish tax in Estonia, and what the Finnish payer needs from the OÜ before the payment.

Who taxes the gain when I sell my company shares?

Finland alone, while you live there. The treaty gives a gain on shares that are not land-rich only to the seller's state of residence (Art. 13(4) of the treaty). Estonia taxes a non-resident's share gain only for a holding of at least 10 percent in a company whose assets, at the sale or at any time in the two years before, were more than 50 percent Estonian real estate (TuMS § 29 lg 4 p 5). For such a land-rich OÜ, the treaty also lets Estonia tax (Art. 13(1)), and Finland credits the Estonian tax (Art. 23(1)(a); menetelmälaki 2 § and 4 §).

In Finland, the gain is capital income (TVL 45 § 1 mom), taxed at 30 percent, and at 34 percent on capital income above 30,000 euros (TVL 124 §).

A payment from the OÜ itself on a buy-back, a capital reduction or a liquidation is different. Estonia taxes the part above your acquisition cost, except the part already taxed, normally by the OÜ's own tax on the part above the contributions to its equity (TuMS § 29 lg 5 with § 15 lg 2 and 3, § 50 lg 2). The treaty may treat part of it as a dividend (Art. 10(4)). A Finnish citizen who has just moved to Estonia can still be taxed in Finland on a sale (see the three-year rule).

Confirm with a local adviser: how the Finnish acquisition cost is computed (actual cost or the deemed cost of TVL 46 §), and the treatment of a sale back to the OÜ or a liquidation before you sign.

How are rent and real estate gains taxed?

The state where the property is may tax the rent and the gain on a sale (Art. 6(1), 6(3) and 13(1) of the treaty), and the gain on shares of a company whose assets consist mainly of that property (Art. 13(1)). It may also tax the use of a flat held through shares of a housing company (Art. 6(4)). The residence state taxes too, and relieves double tax by credit (Art. 23(1)(a) and 23(2)(a)). The treaty has no look-back period for land-rich shares: the 365-day test of the MLI is agreed by both states but, as far as the published sources show, not yet in effect for this treaty.

A Finnish resident with property in Estonia: Estonia taxes a non-resident's rent from registered property, the gain on Estonian real estate and on land-rich shares of 10 percent or more, at 22 percent (TuMS § 29 lg 4 p 1 and 5, lg 6 p 2, § 4 lg 1). Finland taxes the same income and credits the Estonian tax. You report foreign rent in MyTax or on form 16B (Vero).

An Estonian resident with property in Finland: Finland taxes rent from Finnish property at the capital income rate (Vero), and gains on Finnish real estate and on shares of companies whose assets were more than 50 percent Finnish real estate on the sale date or at any time in the 365 days before (TVL 10 § 10 and 10 a kohta). Estonia credits the Finnish tax (Art. 23(2)(a)).

Confirm with a local adviser: Finnish transfer tax and Estonian notary fees, which are outside the treaty, and whether Estonia treats a Finnish housing-company flat as real estate or as shares.

Can the Finnish CFC rules tax the profit my company keeps?

Yes, they can. The Finnish CFC act (väliyhteisölaki) taxes a Finnish resident who, alone or with related persons, holds at least 25 percent of the votes, the capital or the profits of a foreign company whose actual tax level is lower than 3/5 of the Finnish corporate tax (VYL 2 § 1 and 4 mom). With the Finnish rate of 20 percent (TVL 124 §), the threshold is 12 percent. Vero compares the tax actually paid with the Finnish tax on the same profit, year by year, and tests control at the end of the company's financial year (Vero, chapters 3.2 and 3.3). An OÜ that keeps its profit pays no Estonian tax that year (TuMS § 50 lg 1), so it meets the low-tax test.

An OÜ escapes only if it has really established itself in Estonia and actually carries on business there (VYL 3 § 1 mom). That needs all three: premises, equipment and funds in Estonia; enough staff there to run the business independently; and staff who take the day-to-day decisions (VYL 3 § 3 mom). Vero looks at objective evidence such as rent, payroll and contracts (chapter 4.2). An OÜ run by its owner from Finland, with no premises or staff in Estonia, does not meet this test.

If the act applies, your share of the OÜ's profit, computed under Finnish rules, is your taxable income (VYL 4 § 1 mom). It keeps its income type, capital or earned income (VYL 4 § 4 mom), and is taxed in the year the OÜ's financial year ends (VYL 4 § 5 mom). You report it on form 74 with your return (VYL 7 §). Holdings of family members count towards the 25 percent.

The treaty has no CFC article. Art. 10(6) bars Finland from taxing the company's undistributed profits, but the CFC act taxes the Finnish shareholder, not the OÜ, so on its wording Art. 10(6) does not stop it.

Confirm with a local adviser: how a distribution in the same year, which triggers Estonian tax, enters the 3/5 test. Map the OÜ's activity against the three conditions before you rely on the exception. The Estonian view of CFC rules is in our guide on founder residency, permanent establishment and CFC rules.

Is a later dividend taxed again after a CFC charge?

Partly no. A later dividend is taxable in Finland only to the extent it exceeds the CFC income taxed in the same year or the five previous years (VYL 4 § 2 mom). Vero applies this oldest year first, and the excess is split under the ordinary dividend rules (Vero, chapter 5). A dividend paid more than five years after the CFC charge is not sheltered.

Taxes the OÜ paid on the same income are credited against the Finnish tax on the CFC income, up to that tax, with a five-year carry-forward of any excess (VYL 6 §). The Estonian 22/78 is paid only when the OÜ distributes, often years after the CFC charge.

The other direction gives nothing: Estonia does not credit your Finnish CFC tax against the OÜ's distribution tax, because only foreign tax paid or withheld on the company's own income counts (TuMS § 54 lg 5).

Confirm with a local adviser, or ask Vero for an advance ruling: whether and when the Estonian 22/78 on a later distribution is credited under VYL 6 §. Keep the TSD and payment records of each distribution as proof of the Estonian tax.

Does Finland charge exit tax if I move to Estonia?

Not as a general rule. Vero's guidance on capital gains in cross-border situations describes no general Finnish exit tax on an individual's shares. The one charge it describes is the claw-back of a gain deferred in a share-for-share exchange (EVL 52 f §; Vero, section 6.2): the gain becomes taxable if, after moving to another EEA state, you sell the shares received within five years of the end of the year of the exchange, or move outside the EEA in that period. Estonia taxes a gain only when you sell or exchange the asset (TuMS § 15 lg 1), so it has no exit tax on individuals.

After the move, the treaty gives a later sale of your OÜ shares to Estonia as your new state of residence (Art. 13(4) of the treaty). Estonia taxes the gain in the year of sale, from your historic acquisition cost (TuMS § 15 lg 1, § 37 lg 1). Once you are no longer generally liable in Finland, Finland does not tax that gain (TVL 10 §). But a Finnish citizen can stay liable in Finland for three more years (next section).

Confirm with a local adviser: whether any other departure charge applies to your facts, and the claw-back if you received shares in a tax-free exchange in the last five years.

How long does Finland keep taxing me after I move to Estonia?

If you are a Finnish citizen, Finland treats you as resident until three years have passed from the end of the year you left, unless you show that you had no essential ties to Finland in the tax year (TVL 11 § 1 mom). Vero sees essential ties in a home, a spouse, real property other than a summer cottage, Finnish residence-based social security, or business or work in Finland. A summer cottage and holidays alone are not an essential tie (Vero, chapter 3.3 and example 15, a move to Estonia).

The treaty tie-breaker usually makes you an Estonian resident (Art. 4(2) of the treaty). But this treaty lets Finland tax a Finnish national who is resident in Estonia and still resident under Finnish law, with a credit for Estonian tax (Art. 23(1)(c)). Vero applies it even to a share gain that Art. 13(4) alone would give to Estonia (Vero, example 6). So dividends and share gains in the year of the move and the three following years can be taxed in Finland. Estonia has the mirror rule for Estonian nationals (Art. 23(2)(b)).

You claim non-residency in the return for the first year concerned, in MyTax or on form 50A, with evidence such as the end of the Finnish home, a certificate from Kela and a residence certificate from Estonia (Vero, chapter 6.1). After the three years, Finland can keep you resident only on exceptionally strong ties.

Cut the essential ties at the move, and time OÜ dividends and share sales after Finnish residence ends. A move abroad before the OÜ's year end can also take that year's CFC income outside Finland (KHO 2021:115, summarised in Vero's CFC guidance), but a move within the three-year rule may not.

What changes when I move to Finland with an existing company?

From the day you have a home in Finland, or stay there more than six months, you are taxed on worldwide income (TVL 9 § 1 mom 1 kohta, 11 § 1 mom), with a split year in the year of arrival (TVL 9 § 4 mom). Your shares keep their original cost: a later gain is computed from the acquisition cost (TVL 46 §), and Vero's own example of a person who moved to Finland computes the gain from the original purchase price (Vero, example 4). Under the treaty, that gain then belongs to Finland (Art. 13(4) of the treaty), including the growth in value from before the move. Leaving Estonia triggers no Estonian exit tax, because Estonia taxes a gain only on a sale or exchange (TuMS § 15 lg 1).

The Finnish CFC act applies from arrival if the OÜ is low-taxed and not genuinely established in Estonia (VYL 2 § and 3 §). If you run the OÜ from your Finnish home, it can become liable in Finland from the moment its effective management arises there (TVL 9 § 8 mom). Decide before you arrive where and by whom the OÜ will be managed.

Confirm with a local adviser: whether the Finnish tax-at-source regime for key employees can apply to work for your own foreign company, and whether a dividend or a restructuring before arrival makes sense.

Which country taxes my pension?

It depends on the kind of pension:

• A pension under the social security law of a state is taxable only in that state (Art. 18(2)(a) of the treaty). Vero counts TyEL, YEL, MYEL and the national pension in this group (Vero, chapter 4.2.1). So an Estonian state pension paid to you in Finland is taxed only in Estonia, and Finland may take it into account for the rate on your other income (Art. 23(1)(d)).
• A private pension for past employment is taxed in your state of residence (Art. 18(1)). After a move, the old state may still tax a pension arising there at up to 15 percent of the gross payment, unless you are a national only of the new state (Art. 18(3)).
• A pension for government service is taxed only in the paying state (Art. 19(2)(a)), unless you are a resident and a national of the other state (Art. 19(2)(b)).

For a Finnish resident, the Estonian Social Insurance Board withholds 22 percent from the Estonian state pension, after deducting each month one twelfth of the 9,312 euro exemption for EEA residents of pension age (TuMS § 29 lg 9, § 41 p 6, § 42 lg 1^3, § 23^5 lg 1, § 4 lg 1). Where the treaty caps the Estonian tax at 15 percent, give the payer proof of your residence (TuMS § 43 lg 2).

Confirm with a local adviser: whether an Estonian second pillar pension is a social security pension or a private one under this treaty. Classify each pension before you move.

What must I report in Finland about my company?

On the sources we read, these are the Finnish reports:

• CFC income: form 74 with your return (VYL 7 §; Vero).
• Dividends and other foreign capital income: in MyTax, or on form 16B (Vero).
• The OÜ itself, if it is managed from Finland: form Y1 and return 6B within four months of its year end (Vero). With only a permanent establishment: return 6U, with a late-filing fee of 100 euros (Vero).

Income left out of the return costs a tax increase (veronkorotus) (VML 32 §). As a rule it is 2 percent of the income added; 3 to 10 percent if the failure is repeated or shows manifest disregard; 1 percent for foreign income on which Finland relieves double taxation under a treaty; and at least 75 euros for an individual (VML 32 a §).

Finland learns about you through the treaty's exchange of information (Art. 26(1) of the treaty) and automatic exchange: it "receives such information from other countries on Finnish residents' assets abroad" (Vero). If your OÜ is a passive company for these rules, its bank reports you as its controlling person.

Confirm with a local adviser: whether Finland requires any separate report of foreign shareholdings or accounts, and late-payment interest.

How do I prove residence to get the treaty rates?

Your OÜ compiles a "certificate of residence and tax liability" in e-MTA and selects Finland as the treaty country, so that the certificate "provides grounds for avoiding double taxation" (EMTA). EMTA issues it for a past date, period or year, never for the future. For your own Estonian income, Estonia applies treaty relief only on a residence certificate confirmed by the Finnish tax office (EMTA). As an individual you ask Vero for it (Vero); a company requests a certificate of fiscal residence in MyTax (Vero).

A Finnish payer may apply the treaty rate at payment if the OÜ gives it, before the payment, a tax-at-source card or a declaration of its residence with its name, identifier and address. Otherwise the OÜ claims a refund from Vero within three years of the end of the year of withholding (Vero, chapters 1.2 and 8).

An Estonian certificate does not cure a place-of-management problem: an OÜ managed from Finland may not get treaty residence that Finland accepts. Ask the Finnish payer which form it wants before the first payment.

Can Finland deny my company treaty benefits as abusive?

Yes, on three grounds:

• Since the MLI applies, the treaty has a principal purpose test: no benefit if getting it was one of the principal purposes of the arrangement, unless it fits the object and purpose of the treaty. It applies to withholding taxes from 01.01.2022 and to other taxes from 01.01.2023. The treaty has no limitation-on-benefits clause.
• The treaty limits the dividend, interest and royalty rates to the "beneficial owner" (for example Art. 10(1) of the treaty), which lets Finland challenge a conduit.
• Finland can tax by the true nature of an arrangement, and estimate income where a step was taken evidently to avoid tax (VML 28 §). It treats hidden profit distributions as hidden dividends (VML 29 §).

Estonia has its own substance-over-form rule (MKS § 84). A holding OÜ with one asset, set up so that Finnish dividends or a gain pass through Estonia, is the kind of case these rules target. Write down the business reasons and the substance of the OÜ (management, financing, staff in Estonia) when you set it up.

Confirm with a local adviser: the Finnish case law on VML 28 § and on beneficial ownership, and how Finland applies the anti-abuse clause of the Parent-Subsidiary Directive.

What can I do if both countries tax the same income?

You can start a mutual agreement procedure. Since the MLI, you present the case to the tax authority of either state, within three years from the first notice of the action that taxes you against the treaty, whatever domestic remedies you use (Art. 25(1) of the treaty, first sentence as replaced by the MLI). An agreement is carried out whatever the domestic time limits (Art. 25(2)).

There is no set form in either country. EMTA lists what a written request must contain: who you and the related persons are, the other country, the facts with copies of assessments or audit reports, the treaty rule misapplied, what has been done so far, any appeals, your proposal, and whether you also filed abroad (EMTA). In Finland, a MAP request and a domestic appeal can run at the same time, and an appeal does not stop the MAP deadline. A MAP result binds only if you accept it and drop the appeals, and MAP alone does not suspend the payment of Finnish tax (Vero, chapters 2 and 3). Vero advises asking the other state for a correction first, because MAP can take years (Vero).

For tax years from 01.01.2018, you can instead use the EU dispute resolution procedure of Directive (EU) 2017/1852, and you must choose one procedure (Vero). The MLI brings no arbitration to this treaty, because Estonia did not opt in.

A dual-resident OÜ is a typical MAP case. File a protective request early: the three years run from the first notice, not from the end of an appeal.

Confirm with a local adviser: the Finnish appeal deadlines and the suspension of payment in an appeal.

Does the MLI change this treaty?

Yes. The MLI applies to this treaty for taxes withheld at source from 01.01.2022 and for other taxes for periods from 01.01.2023. The Ministry of Finance publishes a synthesised text prepared with Finland (fin.ee). It:

• adds a new preamble against tax avoidance and treaty shopping;
• adds the principal purpose test;
• replaces the first sentence of Art. 25(1), so a case can go to the tax authority of either state; the three-year limit stays.

It does not change residence (Art. 4), permanent establishment (Art. 5), the relief article (Art. 23) or corresponding adjustments (Art. 9(2)). It adds no general saving clause and no arbitration. The 365-day test for land-rich shares is agreed by both states, but as far as the published sources show it is not yet in effect for this treaty. The fin.ee table gives 01.01.2022 for the whole treaty.

Confirm with a local adviser: the date from which the new MAP rule applies, and whether the land-rich test has come into effect before a planned sale.

General information, not advice for your situation. The law as in force on 01.10.2026.