Proposal for exit tax on individuals by the Finnish government

D&I Alert

Posted on

31 Aug


Dittmar & Indrenius > Insight > Proposal for exit tax on individuals by the Finnish government

The Finnish government has published a draft of a proposal for exit tax on private individuals that is intended to come into force from the beginning of 2023.

According to the proposal, the increase in value of movable assets while residing in Finland would be subject to exit tax upon the transfer of tax domicile from Finland. To the extent the appreciation in value of such asset has occurred before moving out from Finland, Finland would levy capital gains tax on the computed gain even if the asset is only realized when the individual already resides abroad.

Individuals subject to proposed exit tax

Under the draft proposal, individuals who either change their tax treaty residence or become non-tax residents in Finland under domestic law would can become subject to an exit tax. The exit tax would be applicable to any individual who has been tax resident in Finland under a tax treaty or domestic law for at least four (4) years during the previous ten (10) years. As such, the exit tax can be applicable to foreign citizens as well.

Taxable assets

Most movable (non-real estate) assets held either directly or indirectly would be subject to the exit tax. These would include, for instance, company shares, shares in investment funds, options, futures, capital redemption policies, endowment insurance, pension insurances and virtual currencies.

However, the exit tax rules would only apply where (i) the value of taxable assets is at least EUR 500,000 and (ii) the imputed capital gain is at least EUR 100,000 on the date immediately preceding the day an individual’s tax residency status changes.

Exit tax would be imposed based on the aggregate increase in value of assets while residing in Finland and the standard capital income tax rates (30-34%) would be applied.

The imputed income would be considered as income of the tax year during which the individual moves away from Finland for tax purposes (i.e. tax individual’s tax residency status under domestic law or a tax treaty changes to a non-resident). However, upon a separate request by the taxpayer, the payment of exit tax is deferred until the assets are actually assigned in a sale or as a gift, and the capital gain is treated as income of the tax year the assignment actually occurred. Finally, if the assets are not assigned before the eighth (8th) tax year following the tax year when the individual moved abroad for tax purposes, the assets are exempted from the exit tax in Finland. However, the exemption would be subject to the individual filing annual notifications to the Tax Administration in Finland.

Our insights

The Ministry of Finance has called for comments from multiple interest groups and experts on the draft proposal, which is expected to receive intensive opposition due to the contemplated expansion of Finland’s taxation rights with respect to assets held by private individuals, and the negative effects on Finland’s competitiveness and foreign workforce attraction. From a tax technical perspective, the draft proposal is problematic as seems to give rise to potential juridical and/or economic double taxation in a number of ways.

Wealthy private individuals contemplating to move away from Finland should be aware of the planned new exit tax rules as these could potentially have significant impact on their individual taxation. Further, employers are encouraged to examine the possible implications caused by the planned rules e.g. when relocating employees to or from Finland.


We will closely follow the developments concerning the new legislation and its implications. When considering the possible effects of the exit tax legislation and changes to your tax position in Finland, we are happy to discuss the matter with you and provide assistance.



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