Government Proposal On Reducing Transfer Tax Rates In Finland

• Law Firm: Castren & Snellman Attorneys
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Tax, Corporate and Company Law, Real Estate, Tax Authorities
• Author: Mr Mikko Alakare and Lotta Manu
• Published date: 16 October 2023

Finnish Government proposes to reduce the transfer tax rates as follows:

• real estate: from 4% to 3%
• shares in housing companies and real estate companies: from 2% to 1.5%
• other securities: from 1.6% to 1.5%.

The law would enter into force on 1 January 2024, but the new tax rates would apply retroactively from the date of introduction of the government proposal, i.e. 12 October 2023.

The amendment is primarily aimed to boost the housing and real estate market, which has slowed down since the pandemic, but will also have an impact on mergers and acquisitions.

Until the law enters into force, the transfer tax must be paid in accordance with the current regulations and tax rates. In practice, this means that for transactions made in 2023, the transfer tax will first be overpaid, and the Tax Administration will refund the excess tax plus interest after the year end.

According to the Tax Administration's press release, the excess tax will be refunded to taxpayers without a separate application. In practice, however, this requires that the Tax Administration has the taxpayer's valid payment details.

The amendment...