On 30 April 2018, the tax administration published a guideline no.A72/200/2018 on profit distribution for a permanent establishment (PE). The guidelines clarify that, upon request, a foreign company has to specify how it has allocated profits to a Finnish PE.
If the tax administration considers that income distribution to the PE is not on arm’s length, the allocation may be adjusted on the basis of a functional and factual analysis, a comparability analysis or both. The amendments came into effect on May 1, 2018 and will be applied to assessments for the tax year 2018.
