FinlandFinland

Legal ReferenceAct on Assessment Procedure, Section 31

Legal ReferenceGovernment Bill , (107/2006 vp.); Government Bill , (142/2016 vp.); Government Bill , (188/2021 vp.); KHO 2013:36; The FTA's Statement on the OECD TPG as a source of interpretation

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation. The OECD TPG have been referred to in the Government Bill (107/2006 vp.) updating transfer pricing legislation and introducing transfer pricing documentation requirements as an interpretation guidance in applying the domestic legislation (Act on Assessment Procedure, § 31). The reference has been made also in the Government Bill (142/2016 vp.) updating transfer pricing documentation requirements and in the Government Bill (188/2021 vp.) updating transfer pricing legislation. In addition, the Supreme Administrative Court has referred to OECD TPG as an interpretation source in several decisions (e.g. KHO 2013:36). Furthermore, The Finnish Tax Administration has given a statement on the OECD TPG as a source of interpretation.

Legal ReferenceAct on Assessment Procedure, Section 31.4

Parties to a transaction are related according to the Act on Assessment Procedure, § 31.4, if a party has a direct or indirect ownership interest exceeding 50% of either the shares or votes of the other party, or has direct or indirect rights to nominate more than half of the members of the board of directors of another enterprise, or is jointly controlled with another party or is otherwise able to factually control another party.

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

• CUP (not provided)
• Resale Price (not provided)
• Cost Plus (not provided)
• TNMM (not provided)
• Profit Split (not provided)
• Other (not provided)

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

• Hierarchy of methods (not selected)
• Most appropriate method (selected)

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

Legal ReferenceThe FTA's Guidance on Transfer Pricing Documentation

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation. The Finnish Tax Administration’s Guidance on Transfer Pricing Documentation includes guidance on the use of statistical tools that narrow the range where comparability defects remain, as outlined as well in the OECD TPG.

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation. Finland’s legislation does not contain specific legal reference on HTVI and the Finnish Tax Administration has not issued any recommendations or guidance specific to the matter.

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation. Please also see the answer to question 24.

Legal ReferenceThe FTA's Guidance on Transfer Pricing Documentation

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation. The Finnish Tax Administration’s Guidance on Transfer Pricing Documentation refers to the simplified low value-adding services approach in Chapter VII of the TPG.

Legal ReferenceThe FTA's Statement on the OECD guidance on financial transactions

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation. Regarding domestic case law, the Finnish Tax Administration has given a statement on the OECD guidance on financial transactions.

Legal ReferenceFor interest deductions: Sections 18a-18b of Act on the Taxation of Business Income; For hybrid mismatch arrangements: Act on Taxation of Certain Cross Border Hybrid Mismatch Arrangements

Finland’s legislation contains provisions that restrict the deductibility of interest payments in specific circumstances. There are also provisions related to hybrid mismatch arrangements that may, among other things, apply to financial transactions. All of the mentioned rules are outside transfer pricing rules.

There is no specific legislation on cost contribution agreements and the Finnish Tax Administration has not issued any recommendations or guidance specific to the matter. The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

Legal ReferenceFor transfer pricing documentation: Act on Assessment Procedure, Sections 14a-14c; For CbCR: Act on Assessment Procedure, Sections 14d-14e; The FTA's Guidance on Transfer Pricing Documentation; The FTA's Guidance on Country-by-Country reporting; Form 78, Explanation of Transfer Prices

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (selected)
• Other (specify): (not selected)

Legal ReferenceMaster file, local file and CbCR: Act on Assessment Procedure, Sections 14a 14e; The FTA's Guidance on Transfer Pricing Documentation; The FTA's Guidance on Country-by-Country reporting; Form 78, Explanation of Transfer Prices

The taxpayer should present master file and local file within 60 days of the request by the tax authorities. However, the annual set of documentation for the tax year is not required earlier than 6 months after the end of the accounting period. Documentation in English, Finnish or Swedish is accepted. Finland's legislation follows the OECD model legislation for CbC reporting. The qualifying taxpayer has to file the CbC report within one year after the closing of the fiscal year that is covered in the CbC report, and the CbC notification no later than on the last day of the fiscal year that is covered in the CbC report. CbC reports and notifications may be filed in English, Finnish or Swedish. Explanation of Transfer Prices (form 78) is filed as an annex of the corporate income tax return which must be filed within 4 months from the end of the accounting period. The form 78 may be filed in English, Finnish or Swedish.

Legal ReferenceAct on Assessment Procedure, Section 32 and 32a

Penalty for non-compliance with the requirement to submit documentation is charged and could be up to EUR 25.000.

Legal ReferenceAct on Assessment Procedure, Sections 14a and 14b; The FTA's Guidance on Transfer Pricing Documentation

Small companies and SMEs (in accordance with the definition of the recommendation of the Commission of 6 May 2003, 2003/361/EC) are not required to prepare transfer pricing documentation. In addition, if the total arm’s length amount of the taxpayer’s controlled transactions in relation to any of its related parties does not exceed EUR 500.000 during a fiscal year, there is no requirement to submit a master file. In addition, if the arm’s length amount of the taxpayer’s controlled transactions with a related counterparty does not exceed EUR 500.000 during a fiscal year, there is no requirement to submit a functional analysis, a comparability analysis, and data on comparables available or a description of the transfer pricing method and its application for those transactions.

Legal ReferenceAct on International Tax Dispute Resolution Procedure; Act on Assessment Procedure, Sections 85 and 85a; Finnish Government Decree on the International Tax Dispute Resolution Procedure; The FTA's Guidance on international dispute resolution; Finland's MAP Profile; The FTA's information on Pre-emptive Discussion and Cross-Border Dialogue

There is no separate legislation regarding APA in Finland. Finland can conclude an advance pricing agreement with its tax treaty partners (a treaty for the avoidance of double taxation with respect to taxes on income and capital gains). An APA is based on the mutual agreement procedure laid down in the tax treaties between Finland and other states under which international double taxation can be eliminated between the parties to the treaty. With regard to “Rulings” and “Unilateral APAs”, Finland offers advance tax rulings on how a particular tax law will be applied in the described situation concerning a taxpayer’s taxation. The legal framework is laid down in the Act on Assessment Procedure, § 85 and § 85a. The decisions can be appealed by both the taxpayer and the Tax Recipients’ Legal Services Unit. Finland also provides for published guidance regarding specific issues. With regard to “Mutual Agreement Procedures”, in transfer pricing cases the mutual agreement procedure can either be based on the articles of an applicable tax treaty (corresponding Article 25 of the OECD model tax treaty), or on the provisions of the EU Arbitration Convention (90/436/EEC), or on the tax dispute resolution mechanisms in the European Union under Directive EU 2017/1852. The Finnish Act on International Tax Dispute Resolution Procedure (Laki kansainvälisten veroriitojen ratkaisumenettelystä (530/2019)), effective as of 30 June 2019, sets out rules on the MAP both in relation to the competent authority and the taxpayer. The Finnish Tax Administration has also issued guidance on tax disputes which is also applicable to transfer pricing cases. The MAP profile of Finland also includes further information. With regard to “Other” mechanisms available, the Finnish Tax Administration may also engage taxpayers with Pre-emptive Discussion or with Cross-Border Dialogue. The Pre-emptive Discussion aims to provide the taxpayer with guidance to comply with the tax legislation. The Pre-emptive Discussion is a part of Finnish Tax Administration's preliminary guidance and is based on authority's obligation to guide the taxpayers. In international tax matters, taxpayer may request for a Cross-Border Dialogue, which is also a pre-emptive measure. The goal of the Cross-Border Dialogue is to solve the taxpayers' tax matter cross-border. When a Cross-Border Dialogue is launched, the participants of such discussions and those solving the matter would be the tax authorities of two or more countries, the taxpayer itself and/or its representatives. The positions of the tax authorities would be based on the interpretation of each country´s domestic tax legislation.

• Rulings (selected)
• Enhanced engagement or cooperative compliance programmes (selected)
• Advance Pricing Agreements (APA) (selected)
• Unilateral APAs (selected)
• Bilateral APAs (selected)
• Multilateral APAs (selected)
• International Compliance Assurance Programme (ICAP) (selected)
• Mutual Agreement Procedures (selected)
• Other (please specify): (selected)

Legal ReferenceFor further information, please visit the FTA's webpage on OECD Pillar One

Legal ReferenceSection 75.2 of Act on Assessment Procedure

The Finnish Tax Administration may grant a downward adjustment under Act on Assessment Procedure, § 75.2, if after examination the FTA considers the primary adjustment to be justified and only in an amount that the FTA considers to result in an arm’s length outcome.

The OECD Transfer Pricing Guidelines are a source of interpretation with respect to tax treaties and domestic legislation.

Under Act on Taxation of Non-residents Income, § 3.2, the amount of upward adjustment under Act on Assessment Procedure, § 31 (transfer pricing adjustment) will be treated as dividend in very limited circumstances and taxed accordingly under the provisions of the Act (e.g. tax at source).

The wording of Article 7 in most of Finland’s double tax treaties corresponds to the pre-2010 version of Article 7 in the OECD Model Tax Convention. Currently, none of Finland’s tax treaties contain Article 7 as it reads after 2010.

• Article 7 as it read before 2010. (selected)
• Article 7 as it reads after 2010. (not selected)
• Other (please provide additional details) (not selected)

Currently, none of Finland's tax treaties contain Article 7 as it reads after 2010. Finland applies the OECD Commentary and the Report on the Attribution of Profits to Permanent Establishments published in 2008, provided that they do not conflict with Article 7 of the applicable tax treaty.

Legal ReferenceThe FTA's Guidance on Attribution of Income to Permanent Establishment

The Finnish Tax Administration’s guidance on the attribution of profits to permanent establishments follows the AOA as described in the 2008 Report on the Attribution of Profits to Permanent Establishments.