Finland: Changes to CFC rules are expected

BEPS news

Finland - Changes to CFC Rules are Expected ​
On 6 August 2018 it was announced that interested parties may submit their comments on a draft law amending CFC legislation. The purpose of amendments is to align current rules with the EU Anti-Tax Avoidance Directive 2016/1164. The main features of the proposal are listed below.
 
A CFC would be established:

​(i) if the taxpayer by itself, or together with its associated enterprises holds directly or indirectly at least 25% of the voting power, or owns directly or indirectly at least 25% of the capital, or is entitled to receive at least 25% of the profits, or of the yield of the entity's assets (currently 50%); and

(ii) if the effective rate of tax in the entity's state of residence is less than 3/5 of the Finnish CIT rate.
 
The regime would not include CFCs resident in an EEA state provided that the CFC carries on a substantive economic activity. The same would apply also to CFCs resident in non-EEA states provided that the CFC is not resident in a jurisdiction listed in the EU list of non-cooperative jurisdictions or if there is an agreement in place allowing exchange of information for tax purposes.

If these subjects are something which you find interesting and would like to discuss further we are happy to be at your service. Contact us at [email protected].