Tax Treaty Case Law around the Globe 2013

1. S. 319 Introduction

In case KVL 14/2012 the Central Tax Board of Finland (KVL) was required to give an advance ruling on the applicability of the tax treaty permanent establishment non-discrimination provision in the case of a transfer of assets. The KVL had to consider whether such a company reorganization was protected by the non-discrimination provision.

2. Facts of the case

The case was initiated by a US resident company (A Inc.), which planned to transfer all of the assets, liabilities and reserves connected with its permanent establishment in Finland to a new Finnish subsidiary. In exchange for the transfer, the transferring US company would receive all of the shares in the Finnish subsidiary. If the transferring company was considered as a domestic or an EU resident company covered by the EU Merger Directive, the Finnish domestic law provisions implementing the EU Merger Directive provisions concerning a tax neutral transfer of assets would apply to the company reorganization. Against this background the company asked for an advance ruling from the Central Tax Board of Finland (KVL) to ascertain whether, on the basis of the permanent establishment non-discrimination provision of ...