The Board of Adjustment approved Fortum’s appeal on additional taxes in Finland for 2007

PRESS RELEASE 2 September 2014

The Board of Adjustment of the Large Taxpayers’ Office has on 21 August 2014
unanimously approved Fortum Corporation's appeal for the tax assessment
imposed on Fortum for the year 2007 in December 2013. The Finnish tax authority
levied the taxes based on the revenue earned by Fortum’s Belgian subsidiary;
the same revenue has already been taxed in Belgium in accordance with Belgian
tax legislation. According to 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. The additional taxes imposed by the Finnish tax
authority including penalties and late payment interest amounted to EUR 136.4
million.

“The decision by the Board of Adjustment was naturally much expected and
welcomed by us. I hope that it foreshadows the tax authority’s interpretation
also in the future. The predictability of the operating environment – and
taxation as part of it – is vitally important to capital-intensive companies
like Fortum,” says Reijo Salo, Vice President, Corporate Tax at Fortum.

The Board of Adjustment’s decision is in line with the principle adopted in the
Supreme Administrative Court’s precedent in June 2014, according to which,
under transfer pricing rules, the nature of business cannot be re-characterised
for tax purposes, but can only adjust the pricing of goods or services. The
initial position of the tax authority was that, under the transfer pricing
rules, the equity investment made by Fortum Corporation to its Belgian
subsidiary could have been re-characterised as available funds or as a loan
given to the Belgian company.

The Tax Recipients’ Legal Services Unit has the right to appeal in the matter.
Fortum has an ongoing tax audit in Finland for 2008-2011. The Large Taxpayers’
Office has not announced how it will proceed in the changed situation.

Fortum Corporation
Corporate Communications

Additional information:
Reijo Salo, Vice President, Corporate Tax, Fortum Corporation, tel. +358 050
452 4443

Fortum and taxation
Fortum’s policy is to pay taxes on the production, employment, property and
earnings of each of the Group’s businesses in accordance with each country’s
local regulations. The company is a large tax payer in its main operating
countries of Finland and Sweden, but also pays several different taxes in other
countries where it does business. In 2013, for every EUR 1 of corporate tax,
Fortum paid EUR 1.69 other taxes and its total tax rate was 33.8%.

 

Read more about Fortum’s tax footprint

Fortum
Fortum’s purpose is to create energy that improves life for present and future
generations. Catering to the versatile needs of our customers, we generate,
distribute and sell electricity and heat, and offer related expert services.
Our operations focus on the Nordic and Baltic countries, Russia and Poland. In
2013, Fortum’s sales totalled EUR 6.1 billion and comparable operating profit
was EUR 1.6 billion. We employ approximately 8,800 people. Fortum’s shares are
traded on the NASDAQ OMX Helsinki. www.fortum.com