Finland has enacted Law 187/2026, amending its Minimum Tax Act for Large Groups to align with OECD and EU standards — introducing new rules on hybrid entities, deferred tax tracking, anti-avoidance measures, and safe harbours for multinational corporations operating across jurisdictions.
Finland has gazetted Law 187/2026 of 20 March 2026, introducing several amendments to the Minimum Tax Act for Large Groups, aligning national law with European Union directives on global tax standards. The changes align domestic legislation with the latest guidance issued by the OECD/G20 Inclusive Framework in 2024 and 2025, ensuring ongoing compliance with the EU Minimum Tax Directive (2022/2523).
The regulations define how to calculate supplementary taxes for multinational corporations, specifically addressing complex structures like hybrid entities and securitisation units. A significant portion of the text details the accounting methods for deferred tax liabilities, including the application of FIFO and LIFO principles to track tax payments over time. It also introduces anti-avoidance measures to prevent the artificial circumvention of tax obligations through deceptive arrangements.
Furthermore, the statutes establish a framework for advance rulings by the Tax Administration and provide transitional relief for groups during their initial years of international operation. These updates overall ensure that large corporate entities maintain a minimum effective tax rate across different jurisdictions.
Special entity definitions
The law clarifies the treatment of specific entities to ensure they are captured correctly within the minimum tax framework:
- Hybrid entities: An entity is treated as a hybrid if its jurisdiction has no income tax, provided it is treated as tax-transparent (flow-through) in its owner’s jurisdiction but not as a transparent unit under specific Finnish definitions.
- Securitisation entities: To qualify, an entity must participate in securitisation transactions, engage exclusively in related activities, provide asset-based collateral to creditors, and distribute all income streams annually to creditors. The return belonging to equity investors must be insignificant compared to the unit’s total income.
Management of deferred tax liabilities (DTL)
A significant portion of the amendment focuses on how groups must track and account for deferred taxes to determine their effective tax rate:
- Tracking and grouping: Groups can choose to track DTLs by ledger accounts or by grouping them. However, certain items—such as those related to non-depreciable intangibles (including goodwill) or assets with a lifespan exceeding five years—cannot be grouped and must be followed at the ledger level.
- The 5-year rule (recapture): If a deferred tax liability is not paid within a “testing period” (the five years following the fiscal year it was recorded), it must be adjusted.
- FIFO and LIFO principles: Groups can apply the FIFO (First-In-First-Out) principle to assume the oldest tax liabilities are paid first, provided they meet certain criteria, such as having similar payment times. If FIFO is not applied, the group must use LIFO (Last-In-First-Out), assuming the newest recorded liability is the first to be reversed.
Allocation of taxes in special situations
The law provides a specific four-step methodology for allocating taxes when a parent unit is in a jurisdiction that uses a credit system for foreign taxes:
- Identify foreign income amounts for the parent or owning unit.
- Calculate the domestic taxes arising from that foreign income.
- Determine an allocation key for each subsidiary or permanent establishment based on their taxable income and the applicable tax rate, minus creditable taxes.
- Distribute the total taxes to each unit by multiplying the total allocable tax by the specific unit’s allocation key divided by the sum of all keys.
Similar multi-step processes are defined for allocating deferred taxes, classifying income into categories like “defined income,” “passive income,” and “other income”.
Safe harbours
The amendments introduce several “safe harbour” rules where the top-up tax is considered zero:
- Substance-based incentives: A group can elect to set the top-up tax to zero for a portion corresponding to qualified tax incentives. This is calculated by adding either the amount of the qualified incentive or a “substance limit” to the adjusted taxes. The substance limit is generally 5.5% of personnel costs or depreciation of tangible assets, or optionally 1% of the accounting acquisition cost of tangible assets (excluding land).
- Transitional CbC safe harbour: During a transition period (fiscal years starting on or before 31 December 2027), groups may use simplified calculations based on Country-by-Country (CbC) reporting. The transitional tax rate for these years is set at 17%.
Administration and anti-avoidance
- Anti-avoidance rule: The law includes a general provision against tax circumvention. If a group enters an arrangement that contradicts the purpose of the law to avoid taxes or qualify for safe harbours, the law is applied as if the arrangement had not occurred. Authorities are directed to consider OECD and G20 commentaries and examples when evaluating such cases.
- Advance rulings: Units can apply to the Tax Administration for binding advance rulings on matters like the amount of top-up tax, tax rate calculations, or their status as a group unit. These applications must be detailed, include views on relevant tax rules, and disclose any similar rulings from other jurisdictions.
- Timeline: The law generally applies to fiscal years starting 1 January 2024, or later. The official effective date of this specific amendment act is 31 March 2026. For the first transition year, the deadline for filing the top-up tax information return is extended to 18 months after the end of the fiscal year.
Earlier, Finland submitted draft law HE 6/2026 to parliament on 12 February 2026, supplementing proposal HE 196/2025 with additional amendments to its Minimum Tax rules for large groups implementing the Pillar 2 global minimum tax.
