Legal Updates

Legal updates covering current topics.

Legal Updates / 29.11.2018

A new Data Protection Act to enter into force soon

Somewhat belated, but on 13 November 2018 the Finnish Parliament approved of the new Data Protection Act (DPA), repealing the old Personal Data Act from 1999. The aim was to have the DPA approved already in May 2018, but the government proposal for the DPA was passed to the Constitutional and Administrative Committees for examination and their final statements were given in October. This led to the DPA being approved by the Finnish Parliament only in November 2018. As soon as ratified by the President of Finland the DPA will enter into force (probably still during 2018). Read more

Legal Updates / 01.10.2018

Broader new limitation on interest deductions

The deductibility of interest expenses has been limited since 2014, but only in relation to related party debt. Currently, interest expense is always deductible up to the amount of interest income. Further, interest expense exceeding interest income (“net interest expense”) is deductible provided that the amount does not exceed EUR 500,000. If the said EUR 500,000 threshold is exceeded, Finland applies a fixed ratio rule limiting a Finnish company’s tax deductions for net interest expenses on related party debt to 25% of its EBITD (as adjusted for tax purposes). For calculation purposes, however, both related party and third party debt are taken into account and in case the net interest expenses exceed EUR 500,000 even with 1 EUR, the entire amount is subject to the fixed ratio rule. The rules apply on a company-by-company basis, although, for example, amounts of group contributions are added back or deducted, as applicable, from the EBITD figure. Further, the restrictions on interest deductibility are not applied if the borrower company’s equity ratio (equity vs total balance) is equal to or higher than the same ratio calculated on the basis of a consolidated group balance sheet of the ultimate parent (the “balance sheet test”). In addition, certain industry sectors, such as banking, insurance and most real estate businesses, are currently also excluded from the application of the rules. Read more

Legal Updates / 25.06.2018

Finnish FSA issues new rules on governance under MiFID II

New guidelines on organisational requirements and operating procedures for investment firms, banks and other investment service providers were issued by the Finnish FSA with effect from 1 September 2019. The new guidelines provide updated requirements on investor protection, including detailed rules on safeguarding of client assets, product approval process and governance in general as well as more stringent rules on inducements. The guidelines follow the implementation of the Delegated Directive (EU) 2017/593 on safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees. Read more

Legal Updates / 29.05.2018

Government Bill 175/2017 regarding amendments to the subsidy scheme for renewable energy approved by the Finnish Parliament

The Finnish Parliament has on 23 May 2018 approved the amendments to the Act on Production Subsidy for Electricity Produced from Renewable Energy Sources (1396/2010) according to which a new technology-neutral production subsidy scheme for renewable energy sources based on a bidding process will be implemented. The new subsidy scheme will apply to wind power, biomass gas, wood fuels, solar power and wave power investments. Only new projects will be allowed to participate in the bidding process. Read more

Legal Updates / 23.01.2018

Government proposal promotes broader base for limitations on interest deductions

The deductibility of interest expenses has been limited since 2014, but only in relation to related party debt. Currently, interest expense is always deductible up the amount of interest income. Further, interest expense exceeding interest income (“net interest expense”) is deductible provided that the amount does not exceed EUR 500,000. If the said EUR 500,000 threshold is exceeded, Finland applies a fixed ratio rule limiting a Finnish company’s tax deductions for net interest expenses on related party debt to 25% of its EBITDA (as adjusted for tax purposes). For calculation purposes, however, both related party and third party debt are taken into account and to the extent that the interest expenses exceed EUR 500,000, the entire amount is subject to the fixed ratio rule. The rules apply on a company-by-company basis, although, for example, amounts of group contributions are added back or deducted, as applicable, from the EBITDA figure. Further, the restrictions on interest deductibility are not applied if the borrower company’s equity ratio (equity vs total balance) is equal to or higher than the same ratio calculated on the basis of a consolidated group balance sheet of the ultimate parent (the “balance sheet test”). In addition, certain industry sectors, such as banking, insurance and most real estate businesses, are currently also excluded from the application of the rules. Read more

Legal Updates / 05.01.2018

Finnish FSA issues guidelines on national language and filing requirements for KIDs under the PRIIPs Regulation

The PRIIPs Regulation (EU Regulation 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs)) entered into force on 1 January 2018. The objective of the PRIIPs Regulation and the corresponding delegated regulation is to provide retail investors with clear and summarised information on packaged retail and insurance-based investment products, presented in a uniform and harmonised manner in a Key Information Document (KID). The KID provides information on the key characteristics and complexity of the investment product as well as the related risks and costs. The purpose of the KID is to enable retail investors to compare and choose financial products based on clear, reliable and comparable information. Read more

Legal Updates / 27.10.2017

Government Bill on implementation of MiFID II presented before Finnish Parliament

The Government Bill, including draft legislation on the implementation of MiFID II (Directive 2014/65/EU on markets in financial instruments), was presented before Finnish Parliament on 26 October 2017. The purpose of the proposed legislation is to implement the provisions of the MiFID II and make necessary adjustments to the currently applicable Finnish legislation as required by the MiFIR (Regulation 600/2014 on markets in financial instruments). Read more

Legal Updates / 13.10.2017

Finnish Tax Administration adheres to precedents on transfer pricing

The Finnish Tax Administration informed last week that it will follow the guidelines established by the Finnish Supreme Administrative Court (“SAC”) in two recent rulings dealing with transfer pricing arrangements between entities of the same corporate group. Read more

Legal Updates / 29.09.2017

Finland to apply the ”establishment only” VAT grouping approach

Historically, charges between a head office and its overseas branches have been ignored for VAT purposes. The CJEU has in the FCE Bank case (C-210/04) held that where services are supplied between a head office and a branch, there is no supply for VAT purposes because the branch and the head office are the same legal person. Generally, this still remains the position. Read more

Legal Updates / 13.07.2017

Proposed changes to the Finnish merger control regime – increased scrutiny in the social and healthcare sector

A Government Bill issued on 15 June 2017 proposes a temporary amendment to the Finnish merger control regime. According to the proposal, the merger control regime would, subject to certain exceptions, be applicable to all concentrations where at least one party provides social or healthcare services, or imaging or laboratory services related to healthcare services, in Finland regardless of the turnover of the parties concerned.

The proposal is related to the overall reform of the Finnish social and health care system, which is currently being considered by the Finnish Parliament. The proposal seeks to limit further consolidation in the sector and maintain a competitive landscape with a sufficient number of competing service providers. Read more

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