On 17 December 2021, the Finnish Tax Administration issued Guidance No. VH/5755/00.01.00/2021, on the application of OECD transfer pricing guidelines to domestic transfer pricing rules, effective from 31 December 2021.
On 11 February 2020, the OECD published an update to the transfer pricing guidelines for financial transactions in a new Chapter 10. The purpose of the update is to provide guidance on determining whether the terms, conditions and pricing of a transaction in certain financial transactions between related companies are in line with the arm’s length principle. The new chapter provides guidance on identifying financial transactions and assessing the market conditionality of pricing. Intra-group loans, cash pool arrangements, hedges, intra-group guarantee schemes and captive insurance companies in particular are considered.
The purpose of the guidance published by Finnish tax administration is to set out the tax administration’s views on the following update of the OECD Transfer Pricing Guidelines on Financial Transactions, published on 11 February 2020:
- From where can the guidelines be used as a source of interpretation?
- How does domestic case law affect the interpretation of the guidelines?
- Does the guidance include new guidance that cannot be used as a source of interpretation for tax years prior to the publication of the guidance?
In addition, the statement briefly discusses the documentation of financial transactions and proactive guidance.
