Finland: Interest expenses allocated to Finnish branch held non-deductible

Finland: Interest expenses allocated to Finnish branch

The Supreme Administrative Court of Finland held that a branch has no right to deduct the interest expenses in a debt-funded acquisition structure, when the shares in a Finnish group company were acquired in the name of a foreign company’s branch registered in Finland.

Related content

The cases were issued on 19 May 2016.

KPMG observation

Taxpayers need to take these decisions into account when planning corporate restructurings and structuring acquisitions. For example, the effect of the rulings on using holding company structures in acquisitions remains to be evaluated, even when holding company structures have previously been accepted in established case law. In any event, prudent taxpayers would determine that the structure is commercially justified for tax purposes. The tax administration announced that it will issue further guidance on the effect of the decisions. 

 

Read a June 2016 report prepared by the KPMG member firm in Finland: The Supreme Administrative Court: Interest expenses allocated to a Finnish branch were non-deductible

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.