Finland’s Ministry of Finance is consulting on amendments to restrict the tax exemption for listed-entity interests in indirect transfers of Finnish real estate, following a Supreme Administrative Court interpretation that broadened the exemption to certain unlisted fund units.

Finland’s Ministry of Finance has initiated a public consultation on a draft proposal to amend Section 10 of the Income Tax Act as of 14 September 2026.

This legislative change focuses on the taxation of indirect real estate transfers, specifically targeting unlisted shares or holdings in publicly traded entities. The goal is to classify profits from such transactions as taxable income earned within Finland.

The tax framework and recent court challenge

Finland’s income tax system, under Section 10 (amended in 2023), treats capital gains from transferring real property in Finland and shares or interests in entities as taxable Finnish-source income. The rule applies when more than 50% of an entity’s assets consist directly or indirectly of Finnish real property. This 50% threshold is measured either on the transfer date or at any point during the 365 days preceding the transfer.

The law exempts shares and units in publicly listed entities from this tax treatment. However, the country’s Supreme Administrative Court recently interpreted this exemption more broadly, extending it to include unlisted fund units of listed funds. The court’s interpretation went beyond what legislators originally intended when drafting the rules.

Narrowing the exemption

The proposed amendment would restrict the exemption to shares and units that are both listed and actively traded on a public regulated market. This change would eliminate the blanket protection that unlisted interests currently receive if they belong to a listed parent company.

The revision affects comparable interests as well. Under subparagraph 10a of Section 10, interests in partnerships and trusts derive taxable income from real property when those interests pull more than 50% of their value from Finnish immovable property. The same 365-day lookback applies. The amendment would apply the narrowed exemption here too, restricting protection to only those interests actively traded on public regulated markets.

The deadline for submitting comments is 18 October 2026.