FINLAND Law and Practice Contributed by: Tarja Wist, Wist Attorneys
rity interest were not taken within a reasonable time after the indebtedness had been incurred.
insurance companies or other companies oper- ating in the financial industry or, subject to cer- tain prerequisites, to interest on loans financing long-term public infrastructure projects.
8. Tax Issues 8.1 Stamp Taxes
9. Takeover Finance 9.1 Regulated Targets
No stamp tax or duty is levied on finance trans- actions or on any security, including mortgages. In the event of enforcement, the sale of shares is subject to transfer tax at the rate of 1.5% of the sales price. The sale of real estate is subject to transfer tax at the rate of 3% of the sales price. 8.2 Withholding Tax/Qualifying Lender Concepts Interest paid to non-residents of Finland is exempted from withholding and source tax. To qualify for this exemption, the recipient of the interest must provide sufficient proof of non- residency. 8.3 Thin-Capitalisation Rules There are no express thin-capitalisation rules in Finland, but the deductibility of interest expens- es is limited under a different regime. Under this regime, interest expenses are fully deductible from interest income, whereas the exceeding amount (the net interest expense) is fully deductible only up to EUR3 million for a fiscal year, or EUR500,000 if paid within a group of companies. To the extent that the group inter- nal net interest expense exceeds the cap of EUR500,000, the net interest expense is deduct- ible only to the extent that it does not exceed 25% of the company’s taxable income before interest and depreciation for the fiscal year. The above regime does not apply to so-called independent entities, or banks, investment firms,
No specific regulatory or other requirements apply for the financing of acquisitions of regu- lated entities. The conditions of the financing should, howev- er, make reference to the applicable ownership control filings with the competent authorities and other similar requirements. Also, the security structure should be designed to cater for any specific restrictions that may apply with respect to the types of security available or otherwise. 9.2 Listed Targets Under the Finnish Takeover Code, a certain funds requirement applies, and the bidder is under an obligation to ensure, before the announcement of the takeover bid, that the bidder has certain funds available to pay the cash offer price and that it can reasonably undertake any requisite measures to disburse any other type of consid- eration, such as shares or other securities. In practice, this means that the facility agree- ment for the financing of the acquisition must be agreed upon before the takeover bid may be announced. The finance agreement may, howev- er, include regular conditions for draw down. Any such conditions must be appropriately reflected upon in the conditions of the takeover bid.
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