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11.1. Acquisition and Exit Strategies

Effective 1 January 2020, Finland has introduced exit tax rules in line with the EU Anti-Tax Avoidance Directive (ATAD1). Under the exit tax rules, the unrealized value of assets will be considered taxable income on transactions such as:

  • where the taxpayer transfers funds from a permanent establishment in Finland to the head office or to a permanent establishment in another State, and such assets are not subject to tax in Finland; or
  • where the tax residence of a company subject to tax in Finland is transferred to another country, except in cases where the assets remain connected to a permanent establishment in Finland.

However, the exit tax rules will not be applicable to assets transferred abroad pertaining to securities financing, financial collateral, or in compliance with solvency requirements or for liquidity risk management, if such assets are expected to be returned to Finland within 12 months.  

Further, the payment of exit tax may be deferred and paid in installments over five years if the transfer is to another EU Member State or EEA state with which Finland has an agreement for mutual assistance in the recovery of taxes. The rules also entail situations where deferral payment ceases, and exit tax is fully payable, such as:

  • the transfer of assets or of the business of a permanent establishment;
  • where a transfer of assets, tax base or permanent establishment of taxable person is made to a State other than a Member State of the European Union or a qualifying EEA member state;
  • where a taxable person goes bankrupt or is in the process of winding up; or
  • where a taxable person fails to fulfill his payment obligations and remedy the situation within a period of 12 months or where the taxable person fails to comply with the obligations for the second year in a row within a period of 6 months.