The deadline to submit comments is 30 June 2025.
Finland’s Ministry of Finance has opened a public consultation to amend three key tax laws: the Income Tax Act, the Act on Taxation of Business Income, and the Act on the Elimination of International Double Taxation.
The proposal aims to align national regulations with the 2010 OECD Model Tax Convention on Business Income, emphasising the arm’s length principle and the separate enterprise principle for allocating income to permanent establishments (PEs).
The proposal suggests adding more detailed provisions to the Income Tax Act regarding the allocation of income to a permanent establishment (PE). The proposal suggests allocating income to a permanent establishment under the business income article outlined in the OECD Model Tax Convention since 2010, provided the relevant tax treaty includes a corresponding business income article.
Furthermore, the proposal aims to establish rules for income allocation to a permanent establishment in cases where the business income article of the applicable tax treaty differs from the 2010 OECD Model Tax Convention or where no applicable tax treaty exists.
Additionally, the proposal suggests changes to the Act on Taxation of Business Income to explicitly account for internal transactions within a business when calculating taxable income.
Finally, the Act on the Elimination of International Double Taxation would be updated to ensure that the new provisions in the Income Tax Act are considered when using the credit method to eliminate double taxation for head offices based in Finland.
The new rules are intended to enter into force on 1 January 2026.
The deadline to submit comments is 30 June 2025.
