Finland: Cross-border mergers

The Finnish Supreme Administrative Court applied to the Court of Justice for the European Union’s Marks & Spencer doctrine to a cross-border merger involving tax deductible losses. The final losses were determined in accordance with the Finnish Business Income Tax Act. 

On 4 October 2013, following a verdict by the Court of Justice for the European Union (CJEU), the Finnish Supreme Administrative Court (SAC) ruled in the A Oy case. In the A Oy case, a Swedish company which had accumulated tax deductible losses ceased all its activities and was merged into its Finnish parent company. The question at hand was whether or not these Swedish accumulated losses could be transferred to the Finnish parent company to be deducted from Finnish profits.

The CJEU ruled in line with the Marks & Spencer doctrine: losses that cannot be deducted from previous future profits of the Swedish company (final losses) should be deductible from the profits of the Finnish parent company. The CJEU left determining the final losses to the national court, the SAC. However, the CJEU did state that the method of determining the final losses of the Swedish company may not lead to an unequal treatment of this cross-border merger compared with the determination of the final losses in a national merger case. Therefore, the SAC decided to determine the final losses in accordance with the Finnish Business Income Tax Act.


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