On 28 September 2018, the government issued a bill on its final proposal to amend national rules on the deductibility of interest expenses under the EU Anti-Tax Avoidance Directive (2016/1164 / EU). According to proposal, the deductibility of net interest expense would remain same as current limited to 25% of EBITD (taxable business profit added with interest expenses, tax depreciations, and net group contributions).
In addition, the general deductibility threshold of EUR 500,000 would continue to apply and an additional threshold would be added under which the net interest expense of a third party would be fully deductible up to EUR 3 million. The definition of interest would be extended to cover expenses in relation to raising financing. All corporate taxpayers resident in Finland are generally subject to the new rules, including Real estate companies that currently fall outside the scope.
The current group ratio rule would remain, i.e. no limitation rules apply if the Finnish company’s equity-to-gross-assets ratio is greater than or equal to the group-consolidated ratio. Loans concluded before 17 June 2016 would be grandfathered. The new restrictions will apply to 2019 and following tax years.
