Tax Advantages and Disadvantages of Setting Up a Branch or Daughter Company (Subsidiary) in Finland
Kruskopf Pomar, Shawnie (2016)
Kruskopf Pomar, Shawnie
Haaga-Helia ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2016112417323
https://urn.fi/URN:NBN:fi:amk-2016112417323
Tiivistelmä
Due to recent developments in the global tax sphere countries, especially in Europe have been focusing more on how companies are using tax planning to their own advantage. This has raised a large amount of suspicion and has made it harder for companies to avoid taxes or find other alternatives to lower taxes when doing business. In light of this development, this thesis topic was chosen to focus on how companies will be taxed in Finland when they enter as a branch or daughter company and what kind of tax consequences they will face.
The object of this thesis is to find out what kind of tax advantages and disadvantages will be faced when entering Finland to do business. As tax is a broad concept, this thesis will only focus on taxes that affect businesses in Finland. There is also a wide range of business tax-es, which is why this thesis focuses on the most common and burdensome taxes that most companies that are doing business in Finland will come across. These include taxes on employment, corporate income, royalties, and dividends. A comparison of these taxes in Finland versus how they are levied in Utah, the headquarter state of the commissioning company is also provided.
To properly explain each part of this thesis, the theory has been broken down into Finnish tax legislation covering the topics mentioned above, international tax legislation on the stated business taxes, tax planning, and permanent establishment status. To research this topic a combination of desktop research and interviews was used. The desktop research was mainly on tax acts, treaties, and laws pertaining to the subject at hand. The interviews were used to obtain comments on the tax situation in Finland and how the interviewees see Finland in terms of taxes levied on companies.
The timespan of this thesis was approximately half a year. The first part of the process was mainly researching relevant theories. During the rest of the process a mixture of researching and writing was done. Finally interviews were performed to give the thesis a different perspective.
The results found were that when entering Finland as a business there are not very many ways to lower taxes, if any. Whether entering as a branch or daughter company, there will be high taxes imposed on the company. The implications of these high taxes are that the taxes will discourage companies from potentially entering the Finnish market. Instead they will choose countries where they can operate while being taxed less. This has lead to the recommendation of properly researching the Finnish market before expanding to analyze whether there will be enough demand to cover the high cost of doing business in Finland.
The object of this thesis is to find out what kind of tax advantages and disadvantages will be faced when entering Finland to do business. As tax is a broad concept, this thesis will only focus on taxes that affect businesses in Finland. There is also a wide range of business tax-es, which is why this thesis focuses on the most common and burdensome taxes that most companies that are doing business in Finland will come across. These include taxes on employment, corporate income, royalties, and dividends. A comparison of these taxes in Finland versus how they are levied in Utah, the headquarter state of the commissioning company is also provided.
To properly explain each part of this thesis, the theory has been broken down into Finnish tax legislation covering the topics mentioned above, international tax legislation on the stated business taxes, tax planning, and permanent establishment status. To research this topic a combination of desktop research and interviews was used. The desktop research was mainly on tax acts, treaties, and laws pertaining to the subject at hand. The interviews were used to obtain comments on the tax situation in Finland and how the interviewees see Finland in terms of taxes levied on companies.
The timespan of this thesis was approximately half a year. The first part of the process was mainly researching relevant theories. During the rest of the process a mixture of researching and writing was done. Finally interviews were performed to give the thesis a different perspective.
The results found were that when entering Finland as a business there are not very many ways to lower taxes, if any. Whether entering as a branch or daughter company, there will be high taxes imposed on the company. The implications of these high taxes are that the taxes will discourage companies from potentially entering the Finnish market. Instead they will choose countries where they can operate while being taxed less. This has lead to the recommendation of properly researching the Finnish market before expanding to analyze whether there will be enough demand to cover the high cost of doing business in Finland.