PRESS RELEASE 2 January 2014
Fortum Corporation has received a tax assessment decision from the Finnish tax
authority regarding the revenue earned by Fortum's subsidiary in Belgium in
2007. The same revenue has already been taxed in Belgium in accordance with the
Belgian tax legislation. Even the Swedish tax authority targets to tax the same
revenue. According to the international taxation principles, taxes are to be
paid in the country where the revenue is earned, and the same revenue cannot be
taxed multiple times. Countries should clarify and align their taxation
principles, so that multiple and heavy adjustment processes could be avoided.
In 2012, Fortum paid a total of EUR 560 million in taxes.
“It seems to us that the economic recession has tightened the tax environment
in Europe and various countries are taxing the same revenue multiple times
although it has been agreed between countries that income will be taxed only
once. For international companies operating in multitude of countries, the
situation brings uncertainty and prolonged taxation processes,” says Reijo
Salo, Head of Tax, Fortum Corporation.
In a tax audit for years 2007 – 2011, the Finnish tax authority’s tax
assessment decision concerns Fortum’s Belgian finance company. According to the
Belgian tax authorities, the revenue generated from intra-Group loans with a
market-rate interest and used for financing investments in other Fortum
countries is to be taxed in Belgium. According to the Finnish tax authority,
this intra-Group revenue should be taxed in the Finnish parent company, Fortum
Corporation. The Finnish tax authority asks Fortum Corporation to pay EUR 136.4
million, including penalties and late payment interest amounting to EUR 63.2
million, for 2007. Fortum had already paid taxes of EUR 21.2 million on the
same revenue in Belgium for 2007. Fortum’s view is that the Finnish tax
authority’s decision has no legal grounds and the company will appeal the
Also the Swedish tax authority has sent Fortum an additional tax decision for
2011. According to this decision, e.g. the market-rate interest paid to the
Belgian finance company is not tax deductible, but Fortum should pay EUR 59.5
million in additional taxes to Sweden. Fortum's view is that also this decision
lacks legal grounds and Fortum will appeal the decision.
Fortum is one of the largest tax payers both in Finland and Sweden. About 60
per cent of the company’s taxes are paid in Sweden and slightly under 30 per
cent in Finland.
Reijo Salo, Head of Tax, tel. +358 50 452 4443
Fortum’s tax footprint:
Fortum's purpose is to create energy that improves life for present and future
generations. We provide sustainable solutions that fulfil the needs for low
emissions, resource efficiency and energy security, and deliver excellent value
to our shareholders. Our activities cover the generation, distribution and
sales of electricity and heat as well as related expert services.
Fortum's operations focus on the Nordic countries, Russia, Poland and the
Baltics. In the future, the integrating European and fast-growing Asian energy
markets provide additional growth opportunities. In 2012, Fortum’s sales
totalled EUR 6.2 billion and comparable operating profit was EUR 1.7 billion.
We employ approximately 10,400 people. Fortum’s shares are quoted on NASDAQ OMX
Further information: www.fortum.com