Hannes Snellman Advised a Taxpayer in a Supreme Administrative Court Case on the Right to Obtain an Advance Ruling

Hannes Snellman acted as counsel in a dispute concerning the transfer tax implications of a novel home purchase opportunity campaign designed to promote apartment sales in a challenging domestic housing market.

Before launching the campaign, the construction company sought clarity on the transfer tax consequences for its customers. As the company, in its capacity as seller, would not itself be liable for the transfer tax arising from the apartment purchases, an employee of the company (“A”) applied for an advance ruling as a private individual, acting in the role of a prospective buyer. The Finnish Tax Administration (“FTA”) issued an advance ruling in June 2024, finding that rents paid during the rental period preceding the sale of the apartment would be included in the transfer tax base, forming part of the share purchase price subject to transfer tax.

A appealed the advance ruling to the Helsinki Administrative Court, seeking a ruling that the rent payments should be excluded from the transfer tax base. The Administrative Court, however, did not rule on the substance of the matter. Instead, it annulled the FTA’s advance ruling on procedural grounds, opining that the application was of a general and hypothetical nature because the description of how the final purchase price was determined was imprecise, the object of the transfer had not been identified (i.e. which specific apartment would be the subject of the sale), and the ruling had been sought in the company’s interest rather than to clarify the applicant’s own tax liability.

A appealed to the Supreme Administrative Court, which annulled the Administrative Court’s decision. The Supreme Administrative Court found that the advance ruling application was not general or hypothetical with respect to the determination of the transfer tax base. It was clear from the application that the purchase price would be reduced by the total amount of lease payments made prior to the sale and that the discounted amount would be recorded as the purchase price in the deed of sale. The Supreme Administrative Court further held that the advance ruling should not have been annulled on the grounds that it had been sought in the company’s interest, given that A was a person who could have acted as the apartment buyer and was therefore a proper applicant. The Court concluded that both the company and A had a genuine interest in legal protection through an advance ruling and remitted the matter to the Administrative Court for reconsideration of the substantive issue.

This Supreme Administrative Court decision is an important precedent concerning the taxpayers’ right to obtain advance rulings in tax matters. It confirms that an advance ruling application need not identify a specific property or be made solely in the interest of the ultimate taxpayer in order to be admissible, provided that the question posed and the facts presented are sufficiently specific. The ruling also confirms that a genuine commercial plan can constitute a sufficient basis for a need for legal protection and, consequently, for an advance ruling, even where the ruling is sought to clarify the tax consequences for customers at large by using a pilot applicant.

Hannes Snellman’s core advisory team comprised Partner Heikki Vesikansa and Specialist Partner Harri Vehviläinen.