Finnish tax law provides for the elimination of economic double taxation of profits derived by resident companies by entitling resident shareholders to a tax credit in respect of dividends paid by such companies equal to one-third of the dividends paid to the shareholders. Where, such dividends have not borne corporate income tax at an amount not less than one-third of the profits distributed, inter alia, as a result of foreign dividends derived by the distributing company and being exempt from that tax, the company is liable to a compensatory tax (täydennysvero; kompletteringsskatt) corresponding to the amount by which the above-mentioned amount exceeds the actually payable amount of corporate income tax. Notwithstanding this general rule, compensatory tax is not payable to the extent that the company for the tax year concerned re-distributes foreign dividends and the recipient of the dividends is a company resident in the Netherlands not directly or indirectly controlled by persons resident in Finland that has at the end of the same tax year directly owned not less than 25 per cent of the capital of the company paying the dividends.
