Finland: New Precedent on the Transfer Pricing of Financial Transactions
The Finnish Supreme Administrative Court issued a precedent concerning intra-group financing on 21 May 2021.
The Finnish Supreme Administrative Court issued a precedent concerning intra-group financing on 21 May 2021 (SAC 2021:66). In the precedent, the SAC overturned an earlier decision handed down by the Administrative Court of Helsinki and ruled in favour of the taxpayer.
The main question concerned the determination of an arm’s length interest rate and the implicit support in intra-group financing that has been acknowledged in the OECD’s Transfer Pricing Guidance on Financial Transactions, which was published in February 2020. What makes the precedent interesting is that, instead of focusing on analysing the arm’s length nature of the pricing of the loan involved in the case as such, the SAC ruled that the pricing of intra-group loan financing could be construed as compensation for intra-group financial services to which the cost-plus method can be applied.
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