The law bringing about the proposed changes to the taxation of Finnish-source dividends from nominee registered share have been approved by the parliament. The law (970/2005), which was signed by the President on 9 December 2005, will apply to dividends received as of 1 January 2006.

The new regime is as follows:

(a) Basic rules. New stricter compliance rules for applying reduced treaty withholding tax rates for nominee-registered shares are proposed. Accordingly, a reduced withholding tax of 15% will be withheld from dividends paid on nominee registered shares, provided that the payer has diligently ensured that the recipient has a residence in a state with which Finland has an effective tax treaty. If the tax treaty provides for a rate higher than 15%, then that …