On 1 November 2018, the Ministry of Finance submitted a bill to Parliament proposing changes to the CFC rules. Under the proposed rules, the control threshold setting the CFC status would be reduced from 50% to 25%, and the direct or indirect shareholdings of resident and non-resident related parties would be taken into account in assessing the threshold, which could bring additional entities within the scope of the CFC provisions.
The threshold of ownership in the existing provisions for the inclusion of CFC’s income in the taxable income of the resident of Finland would be abolished. The bill includes a change in the taxation of profits from the sale of shares in a CFC, according to which the income taxed as CFC income in the hands of the taxpayer during previous years could be taken into account when determining tax consequences of the taxable disposal. The CFC rules also apply to taxpayers who are subject to a limited tax liability when the CFC revenue relates to the taxpayer’s PE in Finland.
The new rules will be entered into force as of 1 January 2019 and will be applied for the first time in the 2019 tax assessment.
