FINLAND Trends and Developments Contributed by: Petteri Rapo, Markku Renko, Henri Becker and Jaakko Niskala, Svalner Atlas Finland
clients, it raises the importance of consistent reporting and internal record quality. 5. Pillar Two in Finland: Policy Refinement and Administrative Tools Amendments and safe harbours are now part of the policy story Finland’s Pillar Two framework is already in place, but 2026 is notable because of the pace of refinement. Law No 187/2026 introduces amendments aligning Finland’s Pillar Two rules with the latest OECD admin - istrative guidance and incorporates elements from the Inclusive Framework’s side‑by‑side package, includ - ing safe harbour elements. For clients, the point is that Pillar Two is now poli - cy‑driven as well as technical. Safe harbour availabil - ity, advance ruling scope and anti‑avoidance elements influence real‑world risk management, not only com - putational outcomes. Advance rulings and integrity measures The Tax Administration can issue advance rulings regarding the minimum tax for accounting periods that started on or after 1 January 2024. Additionally, a new provision on tax evasion was added to prevent arrangements seeking to evade the minimum tax, applying to accounting periods starting on or after 1 January 2027. This is important because it shows how Finland is building a domestic administrative “layer” around Pil - lar Two. The policy intent is to support compliance (through advance rulings) while protecting the integrity of the regime (through targeted anti‑avoidance). 6. Corporate Residence and Governance: POEM Remains a Live Policy and Practice Topic Updated guidance reinforces the policy approach Finland’s corporate residence policy has been strengthened through guidance emphasising the “place of effective management” concept for foreign entities. The Tax Administration’s detailed guidance (dated 10 February 2026) discusses tax residency and non‑residency of corporate entities and focuses on foreign corporate entities and the “place of effective management” (POEM) concept.
The guidance states that resident corporate entities include domestic entities and foreign entities that have their POEM in Finland, and it links resident status to worldwide tax liability. It also states that foreign enti - ties without POEM in Finland are non‑resident and taxed on Finnish‑source income, including income attributable to a permanent establishment where rel - evant. Why this is topical now For clients, POEM is increasingly relevant because governance models have become more dispersed. Groups may have key decision‑makers working across borders, and decision‑making may not align neatly with where the entity is incorporated. Finland’s policy and guidance underscore that the “where decisions are made” question can have tax consequences. This is not a reason to avoid Finland. It is a reason to manage governance deliberately and ensure that operating reality matches the intended tax profile. For many groups, that means being clear about decision processes and keeping appropriate records. 7. Practical Takeaways: What to Do Now Focus on the policy items that change real decisions Clients operating in Finland in 2026 typically benefit from prioritising the policy changes that affect com - mercial choices. Rate direction, loss usage, transac - tion rule reform, VAT changes and data transparency regimes each influence different business functions. The goal is to avoid treating these as “tax department only” topics. • Corporate tax modelling: Reflect the proposed 18% rate from 2027 and the proposed 25‑year loss carryforward (from 2026 losses) in scenario mod - els, without assuming enactment until confirmed. • Transactions and reorganisations: Track develop - ments on share exchange and rollover reforms if you anticipate Finnish M&A or management incen - tive structures. • VAT and pricing: Ensure systems and contracts are applying the 13.5% reduced rate correctly, includ - ing delivery/performance date logic and advance payments.
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