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Finland To Implement EU Exit Tax

by Ulrika Lomas, Tax-News.com, Brussels

15 November 2019


On November 7, 2019, the Finnish Ministry of Finance issued a proposal to implement a corporate exit tax, which is based largely on the European Union Anti-Tax Avoidance Directive.

The EU's exit tax is intended to prevent companies from avoiding tax on gains on assets such as intellectual property that is moved from a member state's territory, typically to a lower tax territory and will enable that member state to tax the value of the product before the assets are shifted elsewhere.

Under the proposal, the exit tax will apply in the following situations:

  • a taxpayer transfers assets from its head office to its permanent establishment in another member state or in a third country in so far as the member state of the head office no longer has the right to tax the transferred assets due to the transfer;
  • a taxpayer transfers assets from its permanent establishment in a member state to its head office or another permanent establishment in another member state or in a third country in so far as the member state of the permanent establishment no longer has the right to tax the transferred assets due to the transfer;
  • a taxpayer transfers its tax residence to another member state or to a third country, except for those assets which remain effectively connected with a permanent establishment in the first member state; and
  • a taxpayer transfers the business carried on by its permanent establishment from a member state to another member state or to a third country in so far as the member state of the permanent establishment no longer has the right to tax the transferred assets due to the transfer.

The Ministry of Finance held a consultation on the proposals from June 14, 2019, until August 8, 2019, and the measures are intended to enter into force on January 1, 2020.

TAGS: Finance | tax | business | intellectual property | transfer pricing | Finland | exit tax | European Union (EU) | Europe | Tax | BEPS

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