When moving abroad it is important to review the tax consequences of the move. Moving abroad may change person’s tax status and it may affect taxation of certain income. On the other hand, even though there were no changes in the tax status and the income was taxed the same way as before, the taxpayer will have at least notification and registration liabilities. It’s important to take care of these liabilities to ensure that the tax process goes as fluently as possible.
The reasons for moving and consequences in taxation
From the tax point of view, it’s essential to go through the reasons for moving. Tax status of a person is always determined based on the actual situation. It’s important to know e.g. is the move temporary or permanent and what is the reason to stay abroad.
A temporary move from Finland doesn’t usually change person’s tax status in Finland but it may change tax status in the other country. In addition, moving may impact which country has right to tax certain income.
A permanent move from Finland usually changes person’s tax status in Finland and/or in the other country. According to Finnish legislation a resident national who leaves Finland permanently is considered to be resident in Finland until three years have elapsed from the end of the year in which he left the country. Tax residency can only end earlier if the taxpayer can produce evidence that he has not maintained substantial ties with Finland. In comparison, a person without Finnish nationality is considered to be non-resident immediately after moving permanently away from Finland.
It’s advisable to review tax effects as early as possible and preferably already before moving. Especially, Finnish nationals have often tax difficulties during the year when leaving Finland and the following three years, because they’re normally considered being tax resident in both countries.
Things to consider when moving abroad
Here is an example list of things that should be considered when moving abroad.
- What’s the nature and the reasons for the move?
- What are the registrations and notifications that need to be done in Finland and in the other country?
- What happens to tax residency in Finland and in the other country?
- Are there substantial ties with Finland during a three-year period counted from the end of the year in which Finland was left – should non-residency status be applied for in Finland?
- How is income taxed in Finland and the other country after leaving Finland?
- How and in what extent does the tax return need to be filed in Finland and the other country?
- How does the social security go on?
It’s significantly easier and safer to settle in a new country when the tax questions are under control already before moving. We have many years of experience of international personal taxation and excellent contacts to other countries through our Nexia International network. The best advice is to contact us – we’re here to help you.
