Finland: Conditions for tax exemption from withholding tax for investment funds defined by law


Clearstream Banking1  informs customers that the Finnish Parliament has recently enacted a new law that will, effective

1 January 2020

define the conditions, that must be met, by non-resident investment funds, in order to be considered as comparable to a domestic investment fund and hereby qualify for tax exemption from withholding tax on Finnish dividend payments.

Previously, there were no exact guidance issued and the eligibility was determined by the Finnish Tax Authorities (FTA) on a case-by-case basis.

Conditions for tax exemption

The newly enacted law states that a non-resident investment fund must fulfil the following requirements, in order to be eligible for full tax exemption on Finnish dividends paid as of 1 January 2020:

Foreign investment fund located in a European Economic Area (EEA)

  • be established on a contractual basis; and
  • have at least 30 unit holders; and
  • be an open fund (meaning it is both open to the public and open-ended).

Foreign investment fund located in a non-EEA 

A non-EEA foreign investment fund must, in addition to the above stated requirements, also meet the following conditions:

  • be an undertaking for collective investment under the local legislation; and
  • have a treaty in place between Finland and the country of registration of the fund, which includes provisions regarding exchange of information in tax matters; and
  • that it is in practice possible to obtain information from the country of registration of the foreign investment fund, in order to evaluate whether the conditions for tax exemption, are met by the fund.

Alternative investment fund established in accordance with the European Union Directive 2011/61/EU (AIF)

  • must be established on a contractual basis; and
  • have at least 30 unit holders; and
  • be an open fund.

If the AIF has either less than 30 unit holders or is not an open fund, then all of the below requirements must be met in order for the investment fund to be eligible for tax exemption:

  • must distribute at least three quarters of their annual profits; and
  • must have at least 2 million Euros as minimum fund capital; and
  • all of the unit holders must be professional clients or comparable to professional clients.

Impact on customers

In accordance with the amended legislation, customers are, from the above effective date,  requested, whenever submitting reclaim request for investment funds eligible for full tax exemption, to provide, in addition to the normal reclaim documentation, any supporting documentation, that  confirms the investment fund meets the required conditions for tax exemption.
Clearstream Banking reminds customers that the FTA may, at any time, request additional information to support the reclaim, should they deem that the provided documentation is not sufficient, in order to determine the beneficial owner’s eligibility for full tax exemption, as per the above requirements. 

Further information

For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.