The Finnish Ministry of Finance in January 2018 released a draft of a proposal for new interest deduction limitation rules based on the Anti-Tax Avoidance Directive (2016/1164/EU). The proposed amendments would expand the scope of the current rules significantly, and if enacted, would be effective beginning in 2019.
A considerable part of the proposed changes to the interest deduction limitation rules is based on certain minimum requirements under the Anti-Tax Avoidance Directive. The proposal would aim to implement the directive’s measures as part of the Finnish national legislation, as follows:
The Anti-Tax Avoidance Directive provides several possible exceptions to the scope of interest deduction limitation rules. However, most of these exceptions are not included in the draft proposal. Some of the proposed rules in the Finnish draft are as follows:
Tax professionals have observed that the proposed amendments would have significant implications for the interest deduction limitation rules in Finland. The scope of application of the rules would be substantially expanded—and in particular, the proposed changes would affect certain entities that currently are not subject to the interest deduction limitation rules (for example, real estate companies and companies that have been able to apply the balance sheet test exemption). Companies therefore need to consider evaluating their existing capital structure and whether recapitalization might be warranted.
For more information, contact a tax professional with the KPMG member firm in Finland:
Hanna Höglund | +358 20 760 3278 | firstname.lastname@example.org
Antti Leppänen | +358 20 760 3247 | email@example.com
Jussi Järvinen | +358 20 760 3077 | firstname.lastname@example.org
Jyrki Holla | +358 20 760 3242 | email@example.com
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