In accordance with the EC Directive 2009/133/EC on mergers, divisions, partial divisions, transfers of assets, and exchanges of shares concerning companies of different EU member states, it is possible to carry out the said restructurings tax neutral if statutory conditions are met. In cross-border situations, both parties should be resident in the European Union. The principle of going concern is applied in taxation (i.e. the receiving company receives the assets with the values the transferring company had for those assets in its taxation).
EU state aid investigations
There are no current state aid investigations going on in Finland.
Notification duty for construction businesses
A monthly notification duty of the employee and contract information to the Tax Administration applies to construction work subscribers and the main contractor of a joint construction site.
Foreign Account Tax Compliance Act (FATCA)
On 5 March 2014, Finland signed an intergovernmental agreement (IGA) concerning FATCA with the United States. On the basis of the agreement, Finland agreed to bring into force legislation according to which Finnish financial institutions are required to carry out specific due diligence procedures in order to identify their customers subject to tax in the United States and to report information relating to these customers’ income and wealth to the Finnish Tax Administration. The information to be reported includes, for example, interest income, income from dividends and derivatives, life insurance payments, and gross sales prices of shares and bonds. The Finnish Tax Administration shall forward the information to the US Internal Revenue Service (IRS).
The domestic law regarding the FATCA agreement was approved by the Finnish President on 20 February 2015. The financial sector began recognising their customers in accordance with FATCA as of 1 July 2014. The first FATCA reports (for year 2014) were required to be submitted to the Finnish Tax Administration by 30 April 2015.
The Finnish Tax Administration published tax technical guidance on the interpretation of the Finland-US FATCA IGA on 15 April 2015. The guidance in the circular can be used to interpret the FATCA-related customer due diligence and reporting obligations faced by Reporting Finnish Financial Institutions.
Common Reporting Standard (CRS)
On 29 October 2014, Finland signed an international agreement on automatic exchange of information, which requires Finland to apply the CRS for Automatic Information Exchange published by the OECD.
Finland has implemented the CRS into domestic law as of 15 April 2016. The amendment requires Finnish financial institutions (as defined in the CRS) to identify their financial account holders and to annually report to the Finnish Tax Administration certain income and asset information with respect to account holders that have been identified to be tax resident in the countries outside of Finland.
Finland has agreed to exchange information automatically in accordance with CRS for the first time in 2017 regarding certain financial information collected from the beginning of 2016.
Information exchange within the European Union
Starting from 2016, the amended EU Directive of Administrative Co-operation in Tax Matters (Council Directive 2014/107/EU, the so called ‘DAC 2’ or ‘EU FATCA’) was implemented into domestic legislation. Under DAC 2, EU member states have to require their financial institutions to implement reporting and due diligence rules that are fully consistent with those set out in the CRS.