Private Credit 2025

FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius

The EU’s Anti-Hybrid Rules While rarely applicable, attention should be drawn to the EU’s anti-hybrid rules when debt investments are carried out for Finnish tax-res - ident borrowers. 4.3 Tax Concerns for Foreign Lenders In typical private credit/non-bank lending trans - actions, foreign lenders do not generally face any particular Finnish tax concerns when pro - viding loans to Finnish borrowers, notably due to Finnish-sourced interest payments being largely exempt from Finnish withholding tax and the non-applicability of Finnish transfer tax. Notwithstanding the above, it is still customary to include standard tax gross-up clauses in loan agreements, for example. 4.4 Tax Incentives No specific tax incentives are available to foreign private credit lenders in Finland. 4.5 Non-Bank Status There are no additional tax considerations for non-bank lenders as such. In Finland, a common market-practice security package in private equity sponsor-backed deals consists of pledges over shares, bank accounts and intra-group receivables, as well as floating charges. Shares Security over shares of a private limited liability company (which are typically in non-dematerial - ised form) is created by the parties entering into a share pledge agreement. If share certificates 5. Guarantees and Security 5.1 Assets and Forms of Security

• the loan is transferred in connection with a share deal. In addition, if a Finnish tax resident borrower has placed Finnish shares or real estate located in Finland as collateral for the loan, and where the collateral would be enforced due to a default, it is possible that a non-Finnish tax resident lender would have to pay transfer tax on the shares or real estate received due to the enforcement of the collateral (with Finnish real estate being sub - ject to transfer taxation at a rate of 3%). Thin Capitalisation and Interest Deductibility Limitation Rules While Finland does not have any thin capitalisa - tion rules per se, the general interest deductibility limitation rules may effectively limit the deduct - ibility of interest on loans if certain thresholds are exceeded. This could potentially restrict the debt servicing capability of a Finnish borrower. VAT Certain goods and services are excluded from VAT, such as financial and insurance services. The issuance and transfer of loans generally qualifies for this exemption. However, servicing and debt collection may be subject to Finnish VAT at the standard rate of 25.5%. That said, services that are not deemed to be supplied in Finland for VAT purposes are not subject to Finn - ish VAT. Tax-Reporting Obligations Non-Finnish lenders that provide loans to Finnish borrowers, and which do not operate in Finland through a branch or permanent establishment, are, at the outset, not subject to Finnish domes - tic tax-reporting rules or obligations. Foreign lenders may, nonetheless, be required to provide certain information to the Finnish tax authorities upon request (eg, for tax audit purposes).

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