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13.3.4. APAs and Dispute Resolution Mechanisms

Advance Pricing Agreement

An APA is based on the mutual agreement procedure laid down in the tax treaties between Finland and other states under which international double taxation can be eliminated between the parties to the treaty.

There is no separate legislation regarding APA in Finland. However, Finland can conclude an advance pricing agreement with its tax treaty partners. A unilateral advance ruling regime is in place. The filing fee for a unilateral advance ruling ranges from EUR 1,480 to EUR 2,200, depending on the complexity of the case. Bilateral and multilateral APAs are possible in theory, but there is no formal guidance or experience in this regard.

Dispute Resolution Mechanisms

Most tax treaties which Finland has with OECD countries contain MAPs if the adjustment assessed by the tax authorities results, or is likely to result, in double taxation. MAPs are generally handled by the Finnish Tax Administration. Another Competent Authority is the Ministry of Finance.

Furthermore, the EU Arbitration Convention, to which Finland is a party, provides for dispute resolution mechanisms between the Contracting Parties. In this regard, Finland has published a law to transpose the EU Council Directive on dispute resolution. The law includes rules to ensure effective resolution of disputes concerning the interpretation and application of bilateral tax treaties between Finland and the EU Member States, particularly, disputes leading to double taxation. Effective 1 July 2019, taxpayers resident in either Finland or other EU Member States may apply to the Competent Authority in relation to tax years beginning on or after 1 January 2018 for the initiation of an EU dispute settlement procedure in cases concerning a taxation or interpretation issue.

Other Mechanisms

The Finnish tax administration also provides other mechanisms such as pre-emptive discussions and cross-border dialogue. A pre-emptive discussion is a preliminary guidance to the taxpayer to comply with the domestic tax law. A cross-border dialogue may be requested by the taxpayer to solve international tax issues wherein tax authorities of two or more countries participate and their positions depend on the interpretation of each country´s domestic tax legislation.