On 13 January 2015 the Finnish Supreme Administrative Court (SAC) rendered two rulings according to which dividends received by regulated US investment funds (RICs) from Finnish listed companies should be exempt from withholding tax. According to the SAC, the current Finnish dividend withholding tax regime violates the principle of free movement of capital under Article 63 of the TFEU (Treaty on the Functioning of the European Union) to the extent that the rules provide for an unequal tax treatment of Finnish resident corporate shareholders and comparable corporate shareholders resident outside the EEA.
In the first ruling, the RIC was a closed-ended Delaware Statutory Trust, whose shares were listed on the New York Stock Exchange. According to the SAC, the RIC was, due to its characteristic features, deemed comparable to a Finnish listed limited liability company. Since dividends received by a Finnish listed limited liability company from another Finnish listed limited liability company are tax exempt, the same tax treatment had to be applied to the RIC in question.
In the latter ruling, the RIC was an open-ended sub fund within a Massachusetts Business Trust. The SAC concluded that when taking into consideration the specific characteristic features of the RIC, the fund can objectively be held comparable to a Finnish mutual fund. Since Finnish mutual funds are exempt from income tax under domestic tax rules, an equivalent tax treatment had to be applied to the RIC in question.
Prior to the SAC’s rulings, Waselius & Wist has filed several protective claims on behalf of US investment funds. Based on the rulings, US investment funds obviously have the opportunity to claim a refund on the Finnish withholding tax by which they have been charged. Waselius & Wist can undertake an initial feasibility study and can assist US investment funds throughout the process.
Due to the statute of limitations, claims can be made from the 2010 tax year onwards and any claims for 2010 must be filed by the end of 2015.
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