On January 19, 2018, the Finnish Ministry of Finance published a draft government bill containing proposed changes on the deduction of interest paid to related parties. The Ministry of Finance has requested comments from interested parties by the end of February.
The amended regulations would apply to all Finnish tax resident corporate entities, i.e. not only entities doing business activities. Interest paid on loans from third parties, e.g. bank loans and bonds would also become subject to regulation.
The current “safe haven” rule would remain at EUR 500,000 for net inter-company loan expenditure, but a safe haven of EUR 3 million would be introduced for net interest expense on loans from independent companies. The exemption from a balance sheet test would no longer be available; and the definition of interest would become broader covering finance leases, derivative instruments, guarantee fees and bank contract fees.
