Hannes Snellman Counsel in Supreme Administrative Court Case Confirming That Share Transfer Tax Is Not Due on Purchase Price of Shareholder Loans
Hannes Snellman’s tax team successfully represented a client in a Supreme Administrative Court (SAC) case resolving that Finnish share transfer tax should not be levied on the purchase price of shareholder loans. In previous stages of the trial, the Finnish Tax Administration and the Administrative Court had concluded that transfer tax should be levied on the purchase price of shareholder loans if they are acquired simultaneously with the borrower’s parent company’s shares.
The SAC’s decision was based on the general principle of legality, i.e. that the state cannot impose taxes that are arbitrary or that are not based on a law passed by the Parliament. The Tax Administration tried to defend its position on the basis that the government bill for amending the Transfer Tax Act mentions in passing that a separate purchase price for shareholder loans should be assimilated to the purchase price of the shares. The SAC – upholding the legality principle – overruled this argument and stated that the tax basis cannot be determined on the basis of the government bill to be more extensive than that set forth in the law.