Hannes Snellman Advised on Landmark VAT Ruling for Wind Power Project Transfer

Hannes Snellman assisted a client in an advance ruling application process concerning whether the transfer of a wind power project at the development stage meets the conditions for the transfer of a business or part thereof under Section 19 c of the Finnish VAT Act. The Central Tax Board issued a positive decision, stating that the transaction constitutes a transfer of a business as defined in the VAT Act, and therefore, no VAT is added to the purchase price of the project at the development stage.

The Tax Recipients’ Legal Services Unit appealed the decision, but the Supreme Administrative Court confirmed that the transfer of our client’s wind power project meets the criteria for a transfer of business. The Supreme Administrative Court ruled, among other things, that it is irrelevant whether the transfer includes a completed wind power plant or whether personnel are transferred or not. The Supreme Administrative Court confirmed that a development project inherently involves acquiring additional resources as the project progresses, and this does not affect the VAT assessment.

The Supreme Administrative Court ruling has significant positive implications for the wind power sector and any other industry where assets acquired up to a certain point are transferred to a buyer who continues to develop the business before actual VAT liable operations begin. Going forward, it is no longer necessary for wind power projects to have reached the so-called “ready-to-build” stage for the transfer to qualify as transfer of business.

Our client was advised by Hannes Snellman’s tax team: Piia Ahonen, Marika Sorsa, and Harri Vehviläinen.