Finnish Government May Cut Inheritance Tax

by Ulrika Lomas, Tax-News.com, Brussels

20 November 2008

The Finnish government, unable to design an appropriate system to apply concessions to intergenerational transfers to farms and businesses, has sent a proposal to parliament to slash inheritance and gift tax by 3%.

The government initially proposed that existing tax concessions for intergenerational transfers would be increased by an additional 20% but has since deemed the move as ‘constitutionally complicated or not very feasible’. The government has subsequently decided to pursue the line of easing the base rate of inheritance taxation instead.

Many experts were consulted on the issue by the Committee for Constitutional Law, but they were of the opinion that to raise the tax concession from 60% to 80% would be problematic from the viewpoint of constitutional equality. They also warned that the proposals would make the system more complex and might result in worse situations for companies than at present.

The 60% tax concessions for intergenerational transfer, applied in 2004, will remain in force.

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