Dottir Attorneys Ltd
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Foreigners can own and occupy real estate in Finland, as well as hold shares in companies that own property. There are certain regulations and permit requirements in place relating to national security in Finland, including a permit system under which non-EU and non-EEA entities must obtain a permit from the Ministry of Defence to purchase real estate, and the Finnish state has a pre-emption right for real estate transactions relating to border areas or areas critical to defense. Additionally, the autonomous and demilitarized region of Åland imposes specific restrictions on foreign ownership of real estate.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There are no specific legal restrictions on lending for real estate purchases by foreign companies in Finland. Finnish lenders must conduct customer due diligence (KYC) and comply with Finnish and EU anti-money laundering (AML) regulations to ensure that the borrower, its representative or its beneficial owners are not on sanctions lists. Under Finnish AML law, lenders must identify the owners and beneficial owners of corporate customers, including determining whether the borrower is a politically exposed person (PEP) or connected to one. While non-EU/EEA companies face additional regulatory requirements for acquisitions, lending is subject to standard financial and AML rules.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Transfer of real estate or shares in a real estate company is subject to transfer tax. The purchaser is ultimately liable for payment of the transfer tax, except in situations where the buyer is a non-resident for Finnish tax purposes – then the seller is liable to collect and pay the transfer tax. Transfer tax for real estate is 3% and the transfer tax for shares in real estate company is 1.5%. In addition to the transfer tax, (nominal) notary and registration fees must be paid to the National Land Survey of Finland to officially register the ownership and any mortgages.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Real estate owners pay an annual real estate tax, which is based on the municipality's tax rate. The amount of real estate tax payable is based on the taxation value of the real property, determined on a yearly basis by the local authorities. While the real estate tax is legally the owner's responsibility, it can be passed to a tenant through a lease agreement. Additionally, capital income tax is levied on, for example, interests, rental income, dividend, and sales profits.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
Finland does not offer specific tax breaks or incentives for foreign real estate buyers. However, the transfer of securities is exempt from tax if the transaction occurs through a stock exchange or if both the seller and purchaser are non-residents. It’s important to note that the transfer of shares in real estate companies is always subject to transfer tax.
How is the ownership of Real Estate evidenced in your jurisdiction?
Real estate ownership is officially recorded in the Title and Mortgage Register, which is maintained by the National Land Survey of Finland (“Maanmittauslaitos”). This register serves as a public record of property ownership and any related mortgages or encumbrances. However, indirect ownership through the purchase of shares in a real estate company cannot be registered in the Title and Mortgage Register. Instead, such acquisitions are recorded in the shareholders' register of the respective real estate company.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
In the case of direct ownership, the ownership details of real estate in Finland are public. The Title and Mortgage Register is a public record, and the information it contains, including the identity of property owners, is generally accessible to the public. In the case of indirect ownership through a real estate company, the identity of the owners is more difficult to identify.