The Supreme Administrative Court has recently in its decision (KHO:2010:9) upheld the ruling of the Finnish Central Board of Taxation, according to which shares in a subsidiary may qualify as an independent business unit in connection with a partial demerger of the parent entity. Accordingly, the decision facilitates a tax-neutral transfer of shares in a subsidiary to another entity by way of a partial demerger. In the decision, importance was especially given to the fact the business purpose of the subsidiary was different from that of the parent entity and that the subsidiary also otherwise was able to operate on its own both from an organizational and from a financial perspective.
A partial demerger may therefore prove to be a very useful tool to restructure, for example, group holdings without any immediate tax consequences.
For further information, please contact Mr. Niklas Thibblin.