Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Finland

Finland has met all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review) and no recommendations are made. In the prior year peer review report, Finland was recommended to ensure that information on all past and future rulings is exchanged as soon as possible. Finland has now exchanged all past and future rulings by 31 December 2017, and the recommendation is removed.

Finland can legally issue four types of rulings within the scope of the transparency framework.

In practice, Finland has issued 42 past rulings; for the period 1 April 2016 - 31 December 2016, Finland issued 13 future ruling; and for the year in review, Finland issued 19 future rulings within the scope of the transparency framework.

No peer input was received in respect of the exchanges of information on rulings received from Finland.

Introduction

399.  This peer review covers Finland’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

400.  Finland can legally issue the four following types of rulings within the scope of the transparency framework: (i) rulings related to preferential regimes (shipping regime); (ii) cross-border unilateral advance pricing arrangements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (iii) permanent establishment rulings and (iv) conduit rulings. In Finland, rulings within the scope of the transparency framework are issued mainly by the Corporate Taxation Unit. Rulings are also issued by the Central Tax Board, which is an autonomous body within the tax administration, except for rulings relating to transfer pricing (that can be issued only by the Corporate Taxation Unit). Rulings issued by the Corporate Taxation Unit are issued either nationally by the large taxpayers’ office or locally by one of the six regional corporate tax offices. Some rulings are published on the tax administration’s website, at the discretion of the Central Tax Board.1

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

401.  For Finland, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2014 but before 1 April 2016; or (ii) on or after 1 January 2010 but before 1 January 2014, provided they were still in effect as at 1 January 2014.

402.  In the prior year peer review report, it was determined that the Finnish tax administration’s undertakings to identify past rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. The Finnish tax administration’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

403.  For Finland, future rulings are any tax rulings within scope that are issued on or after 1 April 2016.

404.  In the prior year peer review report, it was determined that the Finnish tax administration’s implementation of a new system to identify future rulings and all potential exchange jurisdictions was sufficient to meet the minimum standard. The Finnish tax administration’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Review and supervision mechanism (ToR I.4.3)

405.  In the prior year peer review report, it was determined that the Finnish tax administration’s review and supervision mechanism was sufficient to meet the minimum standard. The Finnish tax administration’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Conclusion on section A

406.  Finland has met all of the ToR for the information gathering process and no recommendations are made.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

407.  Finland has the necessary domestic legal basis to exchange information spontaneously. Finland notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

408.  Finland is a party to international agreements permitting spontaneous exchange of information, including (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”), (ii) the Directive 2011/16/EU with all other European Union Member States and (iii) double tax agreements in force with 85 jurisdictions.2

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

409.  In the prior year peer review report, it was determined that Finland had met all of the ToR for the exchange of information process except for the timely exchange of information on future rulings (ToR II.5.6) and Finland is recommended to ensure that information on all past and future rulings is exchanged as soon as possible. In the year in review, since Finland has exchanged all past and future rulings by 31 December 2017, the recommendation is removed.

410.  With respect to the completion of the summary section of the templates, Finland has guided the officials who are working with advance rulings to summarise the main content and the actual decision of the ruling. The officials are instructed that these summaries should provide all the necessary information in order for the receiving tax administration to risk-assess the issues raised by the ruling.

411.  For the year in review, the timeliness of exchanges is as follows:

 

Past rulings in the scope of the transparency framework	Number of exchanges transmitted by 31 December 2017	Delayed exchanges
		Number of exchanges not transmitted by 31 December 2017	Reasons for the delays	Any other comments
	42	0	N/A	These 42 exchanges relate to the delayed exchanges reported in the prior year peer review report.
Future rulings in the scope of the transparency framework	Number of exchanges transmitted within three months of the information becoming available to the competent authority or immediately after legal impediments have been lifted	Delayed exchanges
		Number of exchanges transmitted later than three months of the information on rulings becoming available to the competent authority	Reasons for the delays	Any other comments
	14	18		The 18 delayed exchanges are the delayed exchanges reported in the prior year peer review report and which were exchanged in 2017.
Total	56	18

 

Follow up requests received for exchange of the ruling	Number	Average time to provide response	Number of requests not answered
	0	N/A	N/A

Conclusion on section B

412.  Finland has the necessary legal basis for spontaneous exchange of information, a process for completing the templates in a timely way and has completed all exchanges on future rulings. Finland has met all of the ToR for the exchange of information process and no recommendations are made.

C. Statistics (ToR IV)

413.  The statistics for the year in review are as follows:

 

Category of ruling	Number of exchanges	Jurisdictions exchanged with
Rulings related to preferential regimes	0
Cross-border unilateral advance pricing arrangements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles	29	China (People’s Republic of), Denmark, Estonia, Germany, India, Latvia, Luxembourg, Norway, Poland, Sweden, United Kingdom, United States
Cross-border rulings providing for a unilateral downward adjustment to the taxpayer’s taxable profits that is not directly reflected in the taxpayer’s financial / commercial accounts	N/A	N/A
Permanent establishment rulings	45	Croatia, Estonia, Germany, Italy, Luxembourg, Netherlands, Poland, Sweden, United Kingdom
Related party conduit rulings	0	N/A
De minimis rule	0	N/A
IP regimes: total exchanges on taxpayers benefitting from the third category of IP assets, new entrants benefitting from grandfathered IP regimes; and taxpayers making use of the option to treat the nexus ratio as a rebuttable presumption	N/A	N/A
Total	74

D. Matters related to intellectual property regimes (ToR I.4.1.3)

414.  Finland does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015) were imposed.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
	No recommendations are made.

References

OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.

OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.

Notes

← 1. Available at: www.vero.fi/syventavat-vero-ohjeet/ennakkoratkaisut/ (accessed 20 November 2018).

← 2.  Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. Finland also has bilateral agreements in force with Argentina, Armenia, Aruba, Australia, Austria, Azerbaijan, Bailiwick of Jersey, Barbados, Belarus, Belgium, Bermuda, Bosnia and Herzegovina, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, China (People’s Republic of), Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Faroe Islands, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Guernsey, Hungary, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Kazakhstan, Korea, Kosovo, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova, Montenegro, Morocco, Netherlands, Netherlands Antilles, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Tanzania, Thailand, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Uzbekistan, Viet Nam and Zambia.

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