Tax and legal news, March 2020

Corporate Taxation

The Finnish Supreme Administrative Court approves ‘mutual plot company’

In the recent yearbook decision KHO 2020:15, the Finnish Supreme Administrative Court (‘KHO’) assessed the tax treatment in a situation where a mutual real estate company owned only a plot of land and where shares in the company entitled the shareholder to possession of the plot in accordance with the company’s articles of association. The shareholders paid less than arm’s length maintenance fees to the company.

KHO outlined that the tax treatment of such company should be similar to that of a mutual real estate company owning e.g. a building. Therefore, the benefit that the shareholder of the company receives is not considered as taxable income of the mutual real estate company.

Changes in real estate tax procedure in 2020

The Finnish Tax Administration has implemented certain changes in the procedure related to real estate taxation due to recent changes in legislation. For example, companies should no longer use paper forms to correct the property information, but the corrections must be filed electronically in MyTax by 30th of April 2020. Tax Administration may, however, accept paper forms for exceptional reasons. Furthermore, the due dates for payment of the tax may vary between taxpayers. For most companies, the due dates are on 6th of July (1st instalment) and 7th of September (2nd instalment).

Lastly, late-filing penalty fee (for companies 100€) or punitive tax increase (for companies at minimum 150€) may be imposed if the taxpayer fails to make corrections to the real estate tax return or files the corrections late. Corrections should generally be filed if there are any errors in the real estate tax return that the taxpayer is expected to be aware of.

Cayman Islands added to the EU blacklist

In February 2020, the European Union (Ecofin) confirmed that the Cayman Islands has been added to the list of non-cooperative jurisdictions for tax purposes, or the ‘’EU blacklist’’. The purpose of the list is to help the Union to take a firm approach towards tax systems that facilitate abuse or evasion. In Finland the list is directly relevant for the application of the rules on controlled foreign companies and certain additional reporting requirements under DAC 6.

Finnish Tax Authorities’ actions to support companies during the COVID-19 epidemic

The Finnish Tax Authorities have published actions to support companies with challenges they might face during the COVID-19 epidemic.

E-invoicing scope extends to B2B transactions in Finland from April 2020

Starting from 1 April 2020 private companies have a statutory right to request their suppliers to provide electronic invoice in a format compliant with European and Finnish (Finvoice 3.0 and TEAPPSXML 3.0) standards. E-invoicing users can benefit from quicker and cheaper information processing, reduced system development costs and smoother preparation of financial reporting.

Trends overview: Digitalisation of tax reporting

Tax Technology Team analyses news related to digitalisation of tax reporting: European Commission assessed the overall impact of invoicing rules modernisation, Greece defined requirements for mandatory e-invoicing, OECD released IT guidance to facilitate implementation of TRACE (Treaty Relief and Compliance Enhancement), EU to fight VAT fraud using payment data.

Have you incorporated Incoterms 2020 to your ERP?

New version of Incoterms came into force on 1 January 2020. The Incoterms rules are the world’s essential terms of trade for the sale of goods. Companies can extract information on used Incoterms from ERP and leverage data analytics to gain insights into the customs declaration and movement of goods.

Coronavirus and its effects on employees

Exceptional circumstances prevail in Finland due to the coronavirus situation. Issues for employers include quarantine of employees, sick leave, remote working and possible layoffs and dismissals. What options do employers have in such an exceptional situation?

The Trade Secrets Act protects your company’s confidential information

The Trade Secrets Act entered into force on 15 August 2018 strengthens the legal status and protection of trade secrets. One of the most significant changes that followed the entry into force of the Act was that it made civil law remedies available to the injured party in the event of unlawful use or disclosure of a trade secret.

How does the COVID-19 situation and limitations to public gatherings affect organising the General Meeting of a non-listed limited liability company in Finland?

Limitations to gatherings and necessary general cautiousness due to the COVID-19 situation affects holding the annual general meeting in companies other than listed companies as well. Now that the public gathering limitation is ten people, it takes exceptional arrangements to organize the annual general meeting if there are more than ten shareholders.

Options include organizing the meeting in multiple rooms or locations, taking part remotely, deciding on matters with a unanimous decision of the shareholders without holding the meeting, or postponing the meeting.

People and organisation

Finland declares state of emergency and restrictions on entry into the country have been imposed

Due to Covid-19, the Finnish government has declared a state of emergency at least until April 13. The effects of the current situation are still taking form but what we see already is that authorities are closing down and limiting gatherings, the availability of flights is limited and restrictions on entry into the country have been imposed.