Tax and Legal News, March 2021

Corporate taxation

Transfer of a commercial property to a mutual real estate company was considered a tax neutral transfer of business even though lease agreements were not transferred

According to Finnish tax legislation, a business transfer is tax neutral if the transferred unit constitutes an independent economic unit and the transferring company receives shares of the receiving company in exchange. The Finnish Supreme Administrative Court ruled in January 2021 that a commercial property constituted an independent economic unit even though lease agreements were not transferred together with the property, due to the fact that the receiving company was a mutual real estate company (where the lease agreements are held by the shareholder). The transfer was considered tax neutral.

Information on the real estate tax decision to be checked by 30.4.

Owners and occupiers of buildings and land have an obligation to pay real estate tax. Real estate tax is based on the information that the Tax Administration has derived from other authorities or that has been declared to the Tax Administration by the taxpayer. The information may be incorrect or insufficient, which makes real estate taxation prone to material errors.

Therefore, we urge you to review at least the basic information of the tax decision, such as the number and basic characteristics of buildings. We are happy to help if you have any questions while reviewing the real estate tax decision.

CJEU: The French tax credit calculation method is in line with EU law

In the Société Générale judgment (C-403/19) 25 February 2021, the Court of Justice of the European Union ruled that the French method of crediting foreign withholding tax on dividends was not discriminatory and the potential double taxation resulting from Member States applying differing tax bases could not be considered contrary to the principle of free movement of capital within the EU.

What is tax technology?

Digitalisation disrupts the tax function. Now we can talk about the tax function of the future, which benefits from automation, better integration between systems and processes, and strengthened tax data analytics capabilities. It enhances tax transparency, improves collaboration with tax authorities and in the end saves time and money. That is how tax technology comes to the horizon.

Denmark adopts new rules for mandatory submission of transfer pricing documentation

The Danish Parliament has adopted amendments that further tighten its transfer pricing documentation regulations. The new rules are effective for income years starting on or after 1 January 2021. Historically, transfer pricing documentation had to be submitted only upon the tax authority’s request. As a result of the amendment, all companies, required to prepare transfer pricing documentation, should prepare their documentation by the income tax return due date and submit it to the Danish Tax Authority within 60 days from that date. The income tax return due date is 30 June 2021 for companies with a calendar year as their financial year.