The updated definition of a permanent establishment means above all that a permanent establishment can in the future be formed in such business models based on decentralization of functions, which have previously been able to avoid the creation of a permanent establishment for an individual company.
Furthermore, the company’s tax liability to Finland may arise in the future on lighter grounds than before in all kinds of agency activities.
It is good to evaluate local operations from the point of view of the creation of a permanent establishment before the new tax agreement enters into force, because the creation of a permanent establishment causes various local compliance obligations.
In addition to a permanent establishment, the change in the tax treaty also affects the taxation of pensions and dividends.
The new tax treaty will enter into force after approval by the parliament.