Tax Treaty Case Law around the Globe 2013

S. 317 Finland: The Permanent Establishment Non-Discrimination Provision and Transfer of Assets

Marjaana Helminen

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 Finlan...