Revenue and taxes Dividend income of Finns fell in the interest rate year 2020, due to a decline in banks’ dividend distributions – Graphs show how dividend income is distributed in the Helsinki metropolitan area

Whereas in 2019 dividends were distributed for approximately EUR 5.6 billion, in 2020 the corresponding figure was just under EUR 5.1 billion.

Finns Dividend income of income recipients decreased in the tax year 2020 from that of 2019, according to the Tax Administration’s income tax statistics.

Whereas in 2019 dividends were distributed for approximately EUR 5.6 billion, in 2020 the corresponding figure was just under EUR 5.1 billion. Dividend income thus fell to the level of 2018, when slightly more dividends were distributed than in 2020.

In particular, there was a drop in dividends paid from listed companies, which fell from 1.7 billion to just over 1.1 billion euros. Dividends from unlisted companies were less affected by the interest rate year. On the contrary, they rose from just over 3.7 billion to almost 3.8 billion euros.

Listed the fall in corporate dividends is due in particular to the decision of the European Central Bank (ECB) in 2020 to urge European banks to refrain from distributing dividends. In addition to banks, the ECB also called for a moratorium on dividends from insurance companies.

At the end of July this year, the ECB decided to amend its recommendation so that, from the beginning of October, dividends could be paid again as usual.

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For example, Nordea announced as soon as the decision is made, in the autumn of 2021, it will pay almost record dividends, practically for two years, almost in full.

On the first day of October, Nordea distributed a total of EUR 2.9 billion in dividends to Finland.

Read more: The biggest dividend pot in the history of Finnish stock exchanges is being distributed these days: “Nordea’s dividends will continue to be very high.”

Sari Lounasmeri, CEO of the Stock Exchange Foundation.

Stock Exchange Foundation managing director Sari Southwest says that in addition to the deferred dividend distribution by banks and insurance companies, the decline is also due to the situation in the restaurant, services and tourism sectors in the first interest year, for example. At the time, many companies postponed their plans to pay dividends as prospects deteriorated rapidly.

In addition, several traditional dividend payers, such as Nokia, chose not to pay any dividends in 2020.

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“So that’s the sum of many factors. At the level of the national economy, however, the banks’ dividend decision is definitely the biggest reason, ”says Lounasmeri.

According to the Southwest Sea, dividends paid in the tax year 2021 are expected to peak. For example, Nordea is a good example of how dividends were paid in 2021 for 2020 as well.

“In the future, therefore, it is not possible to draw far-reaching conclusions from the 2021 figures, but to understand that this will be an exceptional year. After that, we will probably return more to my previous career, ”says Lounasmeri.

Unlisted there have been no similar obstacles imposed by the central bank on the distribution of dividends by companies. The Southwest Sea also reminds that the dividend decisions made in 2020 have been made largely on the basis of the 2019 result.

“In that way, the coronavirus may not yet show up in them. Maybe in unlisted companies, faith in the future has also been stronger. ”

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According to him, the increase in dividend distribution in unlisted companies may also be due in part to the fact that entrepreneurs have had to obtain an income stream by paying dividends that would not normally have been paid.

“Surely that, too, has been a component in some cases.”

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