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Finland Proposes New Earnings Stripping Rules - by Penny Woolford, Alex Feness and Maryse Mayer  

Global Tax Adviser

 

May 01, 2012

 

Penny Woolford and Alex Feness
Toronto, International Corporate Tax

 

Maryse Mayer
Montreal, International Corporate Tax

 

Finland has proposed to limit interest expense on group internal debts. Under the proposal, interest expense is restricted if interest is paid to associated corporations and exceeds 30% of interest, taxes, depreciation, and amortization (EBITDA). Restricted interest expense will carry forward to future years indefinitely (subject again to these rules each year), and is not lost on acquisition of control. Finnish corporations and partnerships, as well as foreign corporations with permanent establishments in Finland, will be subject to these rules, effective January 1, 2013. The restriction applies only where net interest expense (to associated and third party creditors) exceeds EUR 500,000.

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