Finnish Administrative Court confirms the favourable decision granted to Fortum on Belgian financing company taxation

The Administrative Court in Finland on 16 May 2016 has rejected the Tax

Recipients’ Legal Services Unit’s (VOVA) appeal regarding the tax assessment

imposed on Fortum in December 2013 for the year 2007. Thus the favourable

decision granted to Fortum by the Board of Adjustment of the Large Taxpayers’

Office in 2014 remains in effect.



According to the tax assessment given in December 2013, the additional taxes

including penalties and late payment interest would have amounted to EUR 136.4

million. Fortum has not made a provision, as based on existing legal analysis

the decisions should be ruled in Fortum's favour.



Fortum’s Reijo Salo, Vice President, Corporate Tax, says that the decision now

received is in line with the principle adopted by the Supreme Administrative

Court in June 2014. According to the Supreme Administrative Court’s precedent

in June 2014, 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.



“For companies it is very important that tax policies are consistent and

predictable,” Salo continues. “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.”



VOVA can apply for the right to appeal to the Supreme Administrative Court.



Fortum Corporation

Corporate Communications





Further information:

Reijo Salo, Vice President, Corporate Tax, tel. +358 50 452 4443



Background information:

The Finnish tax authority levied the taxes in 2013 based on the revenue earned

by Fortum’s Belgian subsidiary in 2007. The same revenue has already been taxed

in Belgium in accordance with Belgian tax legislation. Fortum appealed the

additional taxes, and the Board of Adjustment approved the appeal on 21 August

2014. VOVA appealed the Board of Adjustment’s decision to the Administrative

Court.



VOVA’s appeal regarding the non-taxation of interest income for Fortum’s

Belgian and Dutch financing companies in 2008–2011 is pending before the Board

of Adjustment.



Read more:

Fortum's Interim Report January-March 2016, Note 22: Legal actions and official proceedings: http://apps.fortum.fi/investors/Fortum_Interim_Report_Q1_2016.pdf http://apps.fortum.fi/investors/Fortum_Interim_Report_Q1_2016.pdf - External link 



Fortum's tax footprint is available online:

http://apps.fortum.fi/gallery2/Fortum_as_a_Taxpayer.pdf http://apps.fortum.fi/gallery2/Fortum_as_a_Taxpayer.pdf - External link 

  



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