Peer Review Report Combined: Phase 1 + Phase 2: Finland

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES

Peer Review Report
Combined: Phase 1 + Phase 2
-:HSTCQE=V^V^WV:
ISBN 978-92-64-19192-1
23 2013 07 1 P
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, COMBINED: PHASE 1 + PHASE 2
FINLAND
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by 120 jurisdictions, which participate in the Global Forum on an
equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the international standards of transparency and exchange of information for tax purposes.
These standards are primarily reected in the 2002 OECD Model Agreement on Exchange
of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model
Tax Convention on Income and on Capital and its commentary as updated in 2004. The
standards have also been incorporated into the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised but all foreseeably relevant information must be
provided, including bank information and information held by duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identied by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
Phase 1 reviews assess the quality of a jurisdictions legal and regulatory framework for
the exchange of information, while Phase 2 reviews look at the practical implementation of
that framework. Some Global Forum members are undergoing combined Phase 1 and
Phase 2 reviews. The Global Forum has also put in place a process for supplementary
reports to follow-up on recommendations, as well as for the ongoing monitoring of
jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions
to effectively implement the international standards of transparency and exchange of
information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please refer to
www.oecd.org/tax/transparency and www.eoi-tax.org.
FINLAND
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Consult this publication on line at http://dx.doi.org/10.1787/9789264191938-en.
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Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Finland
2013
COMBINED: PHASE 1 + PHASE 2
March 2013
(reflecting the legal and regulatory framework
as at December 2012)
This work is published on the responsibility of the Secretary-General of the
OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of the OECD or of the governments of its
member countries or those of the Global Forum on Transparency and Exchange
of Information for Tax Purposes.
This document and any map included herein are without prejudice to the status
of or sovereignty over any territory, to the delimitation of international frontiers
and boundaries and to the name of any territory, city or area.
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Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews
ISSN 2219-4681 (print)
ISSN 2219-469X (online)
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http://dx.doi.org/10.1787/9789264191938-en
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT FINLAND OECD 2013
TABLE OF CONTENTS 3
Table of Contents
About the Global Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Information and methodology used for the peer review of Finland. . . . . . . . . . . . 9
Overview of Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
B.1. Competent Authoritys ability to obtain and provide information . . . . . . . . 50
B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 59
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
C.1. Exchange-of-information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
C.2. Exchange-of-information mechanisms with all relevant partners . . . . . . . . 70
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 74
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 75
Summary of Determinations and Factors Underlying Recommendations. . . . 81
4 TABLE OF CONTENTS
Annex 1: Jurisdictions Response to the Review Report . . . . . . . . . . . . . . . . . . 85
Annex 2: List of All Exchange of Information Mechanisms . . . . . . . . . . . . . . . 86
Annex 3: List of All Laws, Regulations and Other Relevant Material . . . . . . . 94
Annex 4: People Interviewed During On-Site Visit . . . . . . . . . . . . . . . . . . . . . . 96
ABOUT THE GLOBAL FORUM 5
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax
Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 100 jurisdic-
tions, which participate in the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review
of the implementation of the international standards of transparency and
exchange of information for tax purposes. These standards are primarily
reflected in the 2002 OECD Model Agreement on Exchange of Information
on Tax Matters and its commentary, and in Article 26 of the OECD Model
Tax Convention on Income and on Capital and its commentary as updated in
2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably
relevant information for the administration or enforcement of the domestic tax
laws of a requesting party. Fishing expeditions are not authorised but all fore-
seeably relevant information must be provided, including bank information
and information held by fiduciaries, regardless of the existence of a domestic
tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the
Global Forum as relevant to its work, are being reviewed. This process is under-
taken in two phases. Phase 1 reviews assess the quality of a jurisdictions legal
and regulatory framework for the exchange of information, while Phase 2 reviews
look at the practical implementation of that framework. Some Global Forum
members are undergoing combined Phase 1 and Phase 2 reviews. The Global
Forum has also put in place a process for supplementary reports to follow-up on
recommendations, as well as for the ongoing monitoring of jurisdictions following
the conclusion of a review. The ultimate goal is to help jurisdictions to effectively
implement the international standards of transparency and exchange of informa-
tion for tax purposes.
All review reports are published once approved by the Global Forum and
they thus represent agreed Global Forum reports. For more information on the
work of the Global Forum on Transparency and Exchange of Information for Tax
Purposes, and for copies of the published review reports, please refer to www.
oecd.org/tax/transparency and www.eoi-tax.org.
EXECUTIVE SUMMARY 7
Executive Summary
1. This report summarises the legal and regulatory framework for
transparency and exchange of information in Finland as well as the practi-
cal implementation of that framework. The international standard, which
is set out in the Global Forums Terms of Reference to Monitor and Review
Progress Towards Transparency and Exchange of Information, is concerned
with the availability of relevant information within a jurisdiction, the compe-
tent authoritys ability to gain timely access to that information, and whether
that information can be effectively exchanged with the jurisdictions exchange
of information partners.
2. Finland is a Nordic country situated in the Fennoscandian region of
Northern Europe with approximately 5.4 million inhabitants. Finlands econ-
omy is primarily based on the service, manufacturing and refinery sectors.
Finland has a comprehensive income tax system for natural and legal persons
and has been concluding double taxation conventions (DTCs) allowing for the
international exchange of information since the late 1960s.
3. Finlands legal and regulatory framework for the maintenance of
ownership information ensures that such information is available with respect
to relevant entities and arrangements. In practice, to reply to most requests
concerning ownership information, the Finnish competent authority can
simply access its databases, where relevant information collected from tax-
payers and third parties is stored. The quality of the framework is recognised
by Finlands peers who confirmed that Finland has an excellent track record
in delivering ownership information whenever requested. Finland prohibited
the issuance of bearer shares since 1 January 1980, and there are mechanisms
in place to identify the holder of bearer shares issued prior to that date that
might still be in circulation in Finland.
4. Relevant legal entities and arrangements are required to keep full
accounting records and underlying documentations for a period of 10 years
and 6 years, respectively.
5. In Finland, the Ministry of Finance is the designated competent authority
for DTCs and Tax Information Exchange Agreements (TIEAs), the Multilateral
8 EXECUTIVE SUMMARY
Convention on Mutual Administrative Assistance in Tax Matters (Multilateral
Convention) and certain EU legislation. The Ministry has delegated its competent
authority to the tax authority in most cases. The competent authority has access
to information held in its own databases as well as the databases maintained
jointly with the National Board of Patents and Registration of Finland (NBPRF).
The competent authority also has broad powers to obtain bank, ownership,
identity, and accounting information and measures are in place to compel the pro-
duction of such information. The application of rights and safeguards in Finland
does not restrict the scope of information that the tax authority can obtain. Inputs
received from Finlands peers suggest that Finland has not encountered any dif-
ficulties accessing information to respond to an EOI request.
6. Finland has a longstanding involvement in international exchange of
information in tax matters. Currently, Finland is able to exchange informa-
tion in tax matters through a broad network of EOI arrangements covering
119 jurisdictions. Out of these 119 jurisdictions, 71 of those are DTCs and
39 are TIEAs. The remaining nine jurisdictions are parties only to the
Multilateral Convention and/or the Nordic Mutual Assistance Convention on
Mutual Administrative Assistance in Tax Matters. Out of the 110 DTCs and
TIEAs, 95 are currently in force. Finland was one of the first countries to
sign and ratify the Multilateral Convention and the 2010 protocol. The 2010
protocol was ratified and is in force since 1 June 2011. A domestic tax inter-
est requirement does not exist in Finland and there are no restrictions in the
Finnish legislation as regards the competent authoritys access to information
held by banks. Finlands EOI arrangements cover all its relevant partners
including major trading partners as well as the EU and the OECD member
jurisdictions.
7. Regarding the effectiveness of exchange of information, Finlands
competent authority has more than adequate resources to exchange informa-
tion effectively. There is sufficient professional staff with clear responsibility
for processing requests and retrieving and obtaining the requested infor-
mation. The staff members also possess the required expertise and have
undergone training specific to international exchange of information. Inputs
received from Finlands peers suggest that Finlands practices in terms
of exchange of information are of a very high standard and they consider
Finland to be a reliable, efficient and cooperative exchange of information
partner. Out of 220 incoming requests on direct taxation matters received
from 2009 to 2011, Finland managed to answer 93.2% of the cases within
90 days and 4.6% of the cases within 180 days. No cases took more than one
year for Finland to furnish a reply.
8. A follow up report on the steps undertaken by Finland to answer the
recommendation made in this report should be provided to the PRG within
twelve months after the adoption of this report.
INTRODUCTION 9
Introduction
Information and methodology used for the peer review of Finland
9. The assessment of the legal and regulatory framework of Finland and
the practical implementation and effectiveness of this framework was based
on the international standard for transparency and exchange of information as
described in the Global Forums Terms of Reference to Monitor and Review
Progress Towards Transparency and Exchange of Information, and was
prepared using the Global Forums Methodology for Peer Reviews and Non-
Member Reviews. The assessment was based on the laws, regulations, and
exchange of information mechanisms in force or effect as at December 2012,
Finlands responses to the Phase 1 and Phase 2 questionnaires, other informa-
tion, explanations and materials supplied by Finland during the on-site visit
that took place in Helsinki on 14 to 16 August 2012, and information supplied
by partner jurisdictions. During the on-site visit, the assessment team met
with officials and representatives of the relevant Finland government agen-
cies including the Ministry of Finance, the Financial Supervisory Authority,
the National Board of Patents and Registration of Finland, the Finnish Tax
Administration and the Uusimma Tax Auditing Unit (see Annex 4).
10. The Terms of Reference (ToR) breaks down the standard of trans-
parency and exchange of information into 10 essential elements and 31
enumerated aspects under three broad categories: (A) availability of infor-
mation; (B) access to information; and (C) exchange of information. This
combined review assesses Finlands legal and regulatory framework and the
implementation and effectiveness of this framework against these elements
and each of the enumerated aspects. In respect of each essential element, a
determination is made regarding Finlands legal and regulatory framework
that either: (i) the element is in place; (ii) the element is in place but certain
aspects of the legal implementation of the element need improvement; or
(iii) the element is not in place. These determinations are accompanied by
recommendations for improvement where relevant. In addition, to reflect the
Phase 2 component, recommendations are also made concerning Finlands
practical application of each of the essential elements. As outlined in the Note
10 INTRODUCTION
on Assessment Criteria, following a jurisdictions Phase 2 review, a Rating
will be applied to each of the essential elements to reflect the overall position
of a jurisdiction. However, this rating will only be published at such time as
a representative subset of Phase 2 reviews is completed. This report there-
fore includes recommendations in respect of Finlands legal and regulatory
framework and the actual implementation of the essential elements, as well
as a determination on the legal and regulatory framework, but it does not
include a rating of the elements.
11. The assessment was conducted by a team which consisted of
two assessors and two representatives of the Global Forum Secretariat:
Mr. Frederick Strauss, Deputy Tax Attach, Internal Revenue Service of the
United States; Mr. Bulent Citci, Senior Tax Inspector, Tax Inspection Board
of Turkey; Mr. Robin Ng and Ms. Renata Teixeira from the Global Forum
Secretariat.
Overview of Finland
12. Finland is a Nordic country situated in the Fennoscandian region of
Northern Europe with an area of 338 424 square kilometres. It has borders
with Sweden to the west, Norway to the north, the Russia Federation to the
east and Estonia to the south across the Gulf of Finland. Finland is the most
heavily forested country in Europe covering approximately 86% of the coun-
trys total area. There are also 187 888 lakes and 179 584 islands in Finland.
13. Finland has a population of approximately 5.4 million inhabitants and
an average population density of 16 inhabitants per square kilometre. Finnish
and Swedish are the official languages of Finland.
14. Finland has a highly industrialised mixed economy with a per
capita output matching those of France, Germany, United Kingdom and
Belgium. Gross Domestic Product (GDP) in 2011 was EUR 171 billion with
66% of its GDP generated by the service sector and 31% by the manufactur-
ing and refinery sectors. Finland adopted the EURO currency on 1 January
2002.
15. Finlands main trading partners are Russia, Germany, Sweden,
China, Netherlands, the United States and the United Kingdom.
1
Main inves-
tors in Finland in recent years have been Sweden, the United States, Spain the
United Kingdom and Denmark.
2
1. Statistics Finland (www.stat.fi/tup/suoluk/suoluk_kotimaankauppa_en.html#
foreigntrade).
2. Invest in Finland (www.investinfinland.fi/ ).
INTRODUCTION 11
16. Finland is one of the founding members of the Organisation for
Security and Co-operation in Europe (OSCE) and the World Trade Organisa-
tion (WTO), and a member of the International Monetary Fund (IMF) and
the World Bank (since 1948), the United Nations (1955), the Organisation for
Economic Co-operation and Development (1969) and the Council of Europe
(1989). Finland acceded to the European Union (EU) on 1 January 1995 and
was one of the 12 original EU countries of the euro zone. As an OECD coun-
try, Finland has been a member of the Global Forum on Transparency and
Exchange of Information for Tax Purposes since its creation.
General information on legal system and the taxation system
Legal system
17. Finland has a Nordic civil law legal system. Laws are codified as Acts
of Parliament, but customary laws are also recognised. Major sources of law
are the 1999 Constitution, Acts, Regulations, precedents, government bills
and customary law. International treaties on tax matters are brought into force
by Acts in Finland (s. 95, Constitution). In cases of inconsistencies between
domestic law and international treaties, international treaties take precedence.
Moreover, Finland is a signatory of the Vienna Convention on the Law of
Treaties.
18. Finland has a mixed presidential/parliamentary system with execu-
tive powers divided between the President and the Prime Minister. The
President directs national security and foreign affairs policies while the Prime
Minister has primary responsibility for all other areas, including European
Union (EU) issues. The President is elected for a term of six years and may
remain in office for a maximum of two consecutive terms. The supreme deci-
sion-making authority in Finland is vested with the Parliament that approves
the state budget, enacts legislation and ratifes international treaties. The 200
Members of Parliament are elected once every four years.
19. The court system for civil and criminal jurisdiction consists of District
Courts (krjoikeus), Courts of Appeal (hovioikeus), and the Supreme
Court (korkein oikeus). The administrative branch of justice consists of
Administrative Courts (hallinto-oikeus) and the Supreme Administrative
Court (korkein hallinto-oikeus). In addition to the regular courts, there are
also some special courts in certain branches of administration. For instance,
there is a High Court of Impeachment (valtakunnanoikeus) for criminal
charges against certain high-ranking officeholders and also the Market Court
(markkinaoikeus), the Labour Court (tytuomioistuin), the Insurance Court
(vakuutusoikeus) and the Prison Court (vankilaoikeus). The independence of
the judiciary is enshrined in the Constitution.
12 INTRODUCTION
Tax system
20. Under the Finnish Constitution, the right of taxation lies with the
State (central government), the municipalities (communes) and the local com-
munities of the Evangelical-Lutheran and Orthodox Churches.
21. Income tax is levied under the Finnish Income Tax Act (TVL). Under
this Act, resident taxpayers are subject to tax on their worldwide income,
while non-residents are taxed on income originating from Finland (ss. 9 and
10, TVL). An individual is deemed to be resident in Finland if he has his main
place of abode in Finland or if he is continuously present in Finland for a
period of more than six months. A presence is deemed continuous irrespective
of temporary absence. Finnish nationals are considered a resident of Finland
for three years after the end of the year in which he left the country, unless he
shows that he has not maintained essential ties in Finland during the tax years
concerned. However, under the terms of tax treaties, the three-year rule may
be negated if the individual is deemed resident in another country.
22. An individual is taxed separately on earned income and income
from investment. Earned income is subject to national income tax, municipal
income tax and church tax. Earned income includes salaries, wages and bene-
fits in kind. Taxes on wages and salaries paid by an employer are collected via
a withholding tax mechanism. Investment income includes dividend income,
capital gains, certain interest income and income from rental activities. As
from 2006, all taxpayers (except legal persons) are within an assessment
system where they are not required to file an income tax return on their own
initiative. The tax authority sends pre-completed tax return to the taxpayer
in the month of March or April of the year following the tax year. The pre-
completed tax return contains an estimated assessment based on information
collected from various sources such as the employers, banks, pension funds,
insurance companies and the stock exchange. The individual taxpayer must
sign and return the pre-completed tax return by 8 or 15 May (as provided for
on the form) only if he has corrections or amendments. Assessment of taxable
income for a non-resident is determined under the same procedure as for resi-
dents. Individuals are subject to a progressive income rate for earned income
and a flat rate for investment income. The taxation on earned income consists
of the progressive state rate (6.5% to 29.75%), communal tax (between 15.5%
and 21.5% or average of 19.25%), social security contribution (2%) and church
tax (between 1% and 2.15%). The overall tax rate for earned income ranges
from 0% to about 55%. Tax rate for investment income is 30% and 32% for
capital gains exceeding EUR 50 000.
23. Basic tax regulations relating to corporations are contained in the
Business Income Tax Law (EVL). The net business income of all taxpayers
is determined in accordance with the Act. If the Business Income Tax Law
does not contain a relevant provision dealing with the stream of income, then
INTRODUCTION 13
the TVL will be applied as it can be applied to both companies and individu-
als. Companies that are treated as corporate bodies are subject to corporate
income tax at a flat rate. There is no local or municipal taxation on corporate
taxpayers. Resident private companies (Oy), public companies (Oyj), co-oper-
atives, European companies (SEs), branches and permanent establishments of
foreign companies are subject to corporate income tax. General and limited
partnerships and European economic interest groupings (EEIGs) are not rec-
ognised as separate taxpayers and their profits are taxed in the hands of the
partners (ss. 4, 9 and 16a, TVL). The tax rate for corporations is 24.5% with
effect from 1 January 2012.
24. The TVL does not contain provisions defining the meaning of resi-
dence with regard to corporate bodies but according to present practice, a
corporate body is regarded as resident in Finland only if it is registered
(incorporated) in Finland or otherwise established under Finnish Law.
Generally, foreign companies are not considered resident of Finland even
if they are effectively managed in Finland. Nevertheless, such presence
may create a permanent establishment if the conditions in the domestic law
and the relevant Double Taxation Conventions (DTCs) definitions are met.
Resident companies are subject to tax on their worldwide income. Branches
of non-resident companies are taxed on their Finnish-sourced income and on
income attributable to the branch.
25. A company must file a tax return with the tax authority within 4
months from the end of each accounting year. A non-resident or a branch
of a foreign company must also submit its tax return to the Corporate Tax
Office of Uusimaa. However, if the assessment of the non-resident is under
the purview of the Tax Office for Major Corporations, the tax return must
be submitted to it. In addition, the tax return can be submitted to any tax
office in Finland or a foreign embassy of Finland that will forward it to the
Corporate Tax Office of Uusimaa or Tax Office for Major Corporations. In
addition, assessments must be completed within 10 months from the end of
the last month of the accounting year.
International exchange of information for tax purposes
26. The negotiations of tax agreements, including any types of EOI
arrangements are under the purview of the Ministry of Finance. Finland has
an extensive network of EOI agreements. Of these agreements, 71 are DTCs
and 39 are Tax Information Exchange Agreements (TIEAs). Finland is also
a party to the multilateral Convention on Mutual Administrative Assistance
in Tax Matters (Multilateral Convention) and the Nordic Mutual Assistance
Convention on Mutual Administrative Assistance in Tax Matters (Nordic
Convention). In 2009, 2010 and 2011, Finland received 220 requests for infor-
mation on direct taxation matters from its EOI partners.
14 INTRODUCTION
Overview of the financial sector and relevant professions
27. The financial sector in Finland has to comply with a number of EU
regulations and directives. Most of the participants in the financial sector,
such as the investors, banks, intermediaries, stock exchanges and central
securities depositories (CSDs), must provide information to Finnish national
authorities. The Financial Supervisory Authority (FIN-FSA)
3
is the supervi-
sory authority for Finlands financial and insurance sectors. The supervised
entities include banks
4
, insurance and pension companies, investment firms,
fund management companies and the Helsinki Stock Exchange. The activities
subject to supervision include trade reporting, insider trading, public offers,
investment services and banking services. The supervision of the stock
exchange and the CSDs is divided between the Ministry of Finance and FIN-
FSA. The Bank of Finland (acting as central bank) also plays a major role in
oversight of the CSD.
28. The financial sector supervisory authorities in the EU co-operate and
exchange information through three European Supervision Authorities the
European Banking Authority, the European Securities and Markets Authority
and the European Insurance and Occupational Pensions Authority.
Anti money laundering/combating financing of terrorism
legislation
29. In Finland, responsibility for the development of anti-money launder-
ing legislation is vested with the Ministry of the Interior while the FIN-FSA
and other assigned national bodies are responsible for ensuring that the pro-
cedures, risk management and internal control of supervised entities meet the
statutory requirements. The Finnish Financial Intelligence Unit (FIN-FIU)
operating in cooperation with the National Bureau of Investigation deals with
reports submitted to it on suspicious transactions.
30. The Act on Preventing and Clearing Money Laundering and Terrorist
Financing (AML Law) transposing the requirements of the EUs third Anti-
Money Laundering Directive and its complementary European Commission
Directive became effective in Finland on 1 August 2008. The Act is further
supplemented by Government Decrees 616/2008, 1204/2011, Ministry of the
Interiors decision 156/2012 and Governments decision 1022/2010. Finland
went through the FATF mutual evaluation in 2007, and the mutual evaluation
3. www.finanssivalvonta.fi/en/About_us/Pages/Default.aspx.
4. There are 14 commercial banks, 211 member banks of the OP-Pohjola Group,
36 local co-operative banks, 33 saving banks and 16 branches of foreign banks
authorised to accept deposits operating in Finland as at 31 December 2011.
INTRODUCTION 15
report was adopted by the FATF plenary in June 2007. Since 2007, seven
follow-up reports have been submitted with the latest one in October 2012.
Recent developments
31. The Finnish authority advised that it is currently in negotiations
or planning negotiations with Albania, Botswana, Chile, Egypt, Jamaica,
Panama, Oman, the United Arab Emirates, Kuwait, Peru, Qatar, Saudi Arabia,
Tunisia, Turkmenistan, Uzbekistan and Russia for EOI agreements. They have
also initialled the EOI agreement with Malaysia in November 2011 and with
Hong Kong, China and Tajikistan in May and June 2012, respectively.
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 17
Compliance with the Standards
A. Availability of Information
Overview
32. Effective exchange of information requires the availability of reliable
information. In particular, it requires information on the identity of owners
and other stakeholders as well as information on the transactions carried out
by entities and other organisational structures. Such information may be kept
for tax, regulatory, commercial or other reasons. If such information is not
kept or the information is not maintained for a reasonable period, a jurisdic-
tions competent authority
5
may not be able to obtain and provide it when
requested. This section of the report describes and assesses Finlands legal
and regulatory framework for availability of information. It also assesses the
implementation and effectiveness of this framework.
33. Finnish law provides for the formation of a wide range of legal enti-
ties and arrangements. Private limited liability company is the most common
form of legal entity in Finland. Comprehensive obligations are consistently
imposed on companies and partnerships to ensure that ownership information
is available in the hands of public authorities, the entity itself or custodians.
The issuance of bearer shares has been forbidden in Finland since 1 January
1980 and there are mechanisms in place to identify the holder of bearer
5. The term competent authority means the person or government authority des-
ignated by a jurisdiction as being competent to exchange information pursuant
to a double tax convention or tax information exchange agreement.
18 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION
shares issued prior to that date. The obligations to keep ownership informa-
tion under company law and tax laws are complemented by the anti-money
laundering legislation. Enforcement provisions are in place to ensure the
availability of ownership and identity information.
34. The concept of trusts that exists under common law does not exist
under Finnish law. However, there are no obstacles for a Finnish person to act
as trustee of a foreign trust. The Finnish tax authorities indicated that they
are not aware of any instances where foreign trusts have been administered
by Finnish persons. The combination of general record-keeping requirements
under the tax law and the customer due diligence requirements under the
AML Law appears to allow information on settlor(s) and beneficiaries of for-
eign trusts with a Finnish resident trustee to be made available to the Finnish
authorities.
35. As far as accounting information is concerned, the Finnish Accounting
Act requires all relevant entities and arrangements to keep accounting
records and underlying documentations for a period of 10 years and 6 years,
respectively.
36. Enforcement provisions are in place to ensure the availability of
information in accordance with the international standards.
37. With regard to banking information, the Accounting Act and the
AML Law require banks and other financial institutions to keep transaction
records and conduct customer due diligence. Consequently, information of
account holders, including all records pertaining to the account holder, bank
accounts and transactions is available.
38. The Finnish tax authority possesses a very comprehensive database
that contains extensive information on taxpayers. The database is updated
frequently through periodical tax information provided by taxpayers and
third parties (banks, employers, stock exchange etc.). Comments received
from Finlands treaty partners indicate that ownership, accounting and bank-
ing information was available when requested.
A.1. Ownership and identity information
Jurisdictions should ensure that ownership and identity information for all relevant
entities and arrangements is available to their competent authorities.
Companies (ToR
6
A.1.1)
Types of companies
39. Companies in Finland are formed pursuant to the Limited Liability
Companies Act 624/2006 (LLCA). A limited liability company can be formed
by one or more persons. The liability of shareholders is limited to the sub-
scribed capital. Under Chapter 1, Section 1(1) of the LLCA, a limited liability
company may be a:
Private Company (Oy): The shares of a private company cannot be
admitted to public trading. The minimum share capital required of a
private company is EUR 2 500.
Public Company (Oyj): The minimum share capital required of a
public company is EUR 80 000. The shares of a public company can
be offered to the public and traded on stock markets.
40. Both private and public companies are subject to mandatory reg-
istration with the National Board of Patents and Registration of Finland
(NBPRF) within 3 months from the date of signing the articles of association
(Chapter 2, Section 8(1) of the LLCA).
41. In addition to the private and public company incorporated pursuant
to the LLCA, there are also European Companies (SEs). SEs are regulated
by Council Regulation (EEC) No. 2157/2001 on Statute for a European
Company which was transposed into Finnish law under the Finnish European
Companies Act, 742/2004. Pursuant to Section 10 of the Council Regulation,
the rules that apply to SEs are the same as those applicable to public limited
companies. In Finland, the requirements applicable to public companies apply
mutatis mutandis to SEs.
42. As at 30 June 2012, there are 229 048 private companies, 204 public
companies and 1 SE registered in the Trade Register in Finland.
6. Terms of Reference to Monitor and Review Progress Towards Transparency and
Exchange of Information.
Information held by government authorities
Registration of companies
43. Under Chapter 2, Section 8(1) of the LLCA, both private and public
companies are required to be registered in the Trade Register maintained by
the NBPRF within 3 months from the date of signing the articles of associa-
tion. The official names of the founding shareholders must be recorded in
the articles of association and submitted to the NBPRF. While subsequent
changes to the share ownerships do not need to be reported to the NBPRF,
this information must be provided to the tax authority or be kept by the com-
pany or a custodian, as analysed below.
Information provided to the tax authority
44. Under Section 7 of the Act on Assessment Procedure 1558/1995
(AAP), all private and public companies are required to submit a tax return
to the Finnish Tax Authority. Section 10 of the AAP provides that the Tax
Authority will publish precise information detailing the information that must
be provided in the tax return by each type of taxpayers. The tax return for
companies must include among other particulars, information on the names,
business IDs or personal identity codes and the number of shares held by each
shareholder that owns at least 10% of all shares of the company (Form 6B and
Form 72). The same information is also required to be provided in relation to
every shareholder if the company has less than 10 shareholders.
45. All the information provided by the companies in the prescribed
forms is captured and stored electronically in the database maintained by
the tax authority. Information is maintained in the database for a period of
10 years. This period is counted from the year following the year of taxation
(e.g. the taxation for year 2013 is finalised on 31 October 2014 and the infor-
mation is stored in the database until 31 December 2024).
46. The transfer of securities (including shares of private companies)
is an event subject to the transfer tax (section 1, Asset Transfer Tax Act).
The transferee is required to file a prescribed form (Form 6012e) with the
tax authority. The information provided in the form includes the name, per-
sonal or business ID number of the transferor and transferee and the interest
transferred. The form must be filed and the transfer tax must be paid within
two months from the date of transfer (section 21, Asset Transfer Tax Act).
Securities that are publicly traded are generally exempt from the transfer tax
if they fulfil the conditions for exemption in section 15a of the Asset Transfer
Tax Act. Notwithstanding the above, information relating to the ownership
of publicly traded shares is kept in the central securities depository (CSD) as
indicated in the subsequent paragraphs.
Information held by the companies
47. Shares of companies may be issued either in book-entry form or in
the form of share certificates.
48. There are currently 168 companies in Finland with shares issued
in book-entry form, of which 134 are publicly traded. All publicly traded
companies must maintain their shares in book-entry form. There are also
other reasons for companies to maintain shares in the book-entry system. For
instance, by having shares electronically registered in the book-entry system,
the company will have access to up-to-date shareholder information and allows
an efficient management of ownership changes and dividend distributions.
49. In Finland, shares issued in book-entry form are maintained in a
computerised shareholder register kept by the central securities depository
(CSD) (Chapter 4, Section 3 of the LLCA). Euroclear Finland is the CSD
of Finland and holds the register for shares and debt securities traded in the
Finnish financial markets. Pursuant to the LLCA, the shareholder register
maintained by the CSD must contain the name of the shareholder (or the
nominee, in case of nominee ownership), the shareholders (or nominees) per-
sonal identity code, contact details, payment address, taxation information,
the quantity of shares by share class and the account operator maintaining
the book-entry account. An account operator is defined under Chapter 1,
Section 2b of the Act on Book-Entry System to mean an organisation that
has been granted the right to make registration in the book-entry register.
In the case of a transfer of shares, the transferee is required to inform the
account operator to update the shareholder register. The LLCA does not
specify a time frame for which the transfer of shares has to be updated in the
shareholder register but under Chapter 4, Section 2(1) of the LLCA, the trans-
feree cannot exercise his shareholder rights in the company until his name is
entered into the share register.
50. Most companies in Finland issue shares in certificate form. In rela-
tion to those companies, the board of directors of the company is required
to keep a Share Register under Chapter 3, Section 15(1) of the LLCA. The
register must contain a list of the shares or the share certificates in numerical
order, their dates of issue and the names and addresses of the shareholders. If
there is a transfer of shares, the transferee of the share is required to provide
the company with evidence of the transfer as well as evidence of the payment
of the transfer tax. The company must verify the evidence of the transfer as
well as the payment of the transfer tax and update the Share Register imme-
diately (Chapter 3, Section 16(1) of the LLCA). The LLCA does not specify a
time frame for which the transferee has to inform the company of the transfer
of shares. Nevertheless, under Chapter 3, Section 2(1) of the LLCA, the trans-
feree cannot exercise his shareholder rights in the company until his name is
entered into the share register.
Foreign companies
51. The Finnish Income Tax Act does not contain provisions defining
residence with regard to corporate bodies but according to present practice,
a corporate body is regarded as resident in Finland only if it is registered
(incorporated) in Finland or otherwise established under Finnish Law.
Generally, a foreign company is not considered resident of Finland even if it
is effectively managed from Finland. Nevertheless, such presence may create
a permanent establishment (e.g. a branch) if the conditions under the domes-
tic law and the relevant treaty are met. There are 1 104 branches of foreign
companies registered in the Trade Register as at 30 June 2012.
Registration of branch of a foreign company
52. A foreign company is required to submit a Start-up Notification
concerning the establishment of a branch to the Trade Register before com-
mencing business operation in Finland. If the company is from a country
outside the EEA, a permit issued by the NBPRF for the establishment of the
branch is also required. However, no ownership information of the company
is provided to the NBPRF in the Start-up Notification or in relation to
applying the permit.
53. A branch is required to file a tax return and disclose ownership infor-
mation pursuant to the same rules concerning ownership information that has
to be filed for Finnish private and public company (ss. 7 and 10, AAP). More
specifically, the tax return for branches of foreign companies must include
among other particulars, information on the name, business ID or personal
identity code and the number of shares held by each shareholder that owns at
least 10% of all shares of the company. The same information is also required
for each shareholder if the company has less than 10 shareholders. The
sanctions for non-compliance for private and public companies are equally
applicable to a branch of a foreign company.
54. Similarly, all the information provided by the branches of foreign
companies in the prescribed forms is data-captured and stored electronically
in the database maintained by the tax authority.
Nominees
55. The concept of nominee ownership exists in Finland in relation to
shares in book-entry form.
56. Shares issued in certificate form are deemed by the Finnish authori-
ties to be owned by the person whose name is recorded in the share register
maintained by the company. In this regard, all the benefits and consequences
of owning the shares will apply to the persons reflected as the owner of the
share in the share register. Therefore, nominee ownership is not recognised
in respect of shares in certificate form.
Information held by Nominees
57. Finnish law expressly allows shares to be held by nominees when
the shares are in book-entry form. Under Section 5a of the Act on Book-
Entry Account, shares in book-entry form owned by a foreign individual, a
corporation or a foundation can be held in a nominee account maintained by
a custodian with the CSD. When the account is a nominee account, the CSD
will record the identity information of the custodian instead of the beneficial
owner of the shares. There is also a requirement that the account explicitly
indicate that it is a nominee account. The account holder of a custodial nomi-
nee account may be a central securities depository, a central bank, an account
management organisation or a credit institution (s. 5(a), Act on the Book-
Entry Accounts). The holder of a custodian nominee account is required to
know the identity of the person he is acting for under Section 28 of the Act on
the Book-Entry System.
Conclusion and Practice
58. Ownership information for private and public company established
in Finland is kept by the company in the Share Register or by the CSD in the
shareholder register. Ownership information on shareholdings of at least 10%
in private, public and foreign companies is held by the Finnish tax authority.
The holder of a custodian nominee account under the book-entry system is
required to know the identity of the person he/she is acting on behalf.
59. In practice, the Finnish competent authority can simply access its data-
base to reply to most requests concerning ownership information. Ownership
information may be accessed directly by the tax auditors from the comput-
ers connected to the tax authoritys computer network and the access to the
information is almost instantaneous. The Finnish authorities advised that tax
authoritys databases are updated on a constant basis whenever new data or
information is made available to them.
60. With regard to ownership information of shares in book-entry form,
the CSD keeps ownership information in its database. Reports identifying
owners of shares in book-entry form can be generated within a few business
days whenever a request is made to the CSD.
61. In the three-year period under review (2009-11), Finland received
requests concerning ownership information of companies. The Finnish
authorities maintain consolidated statistics concerning incoming requests
concerning information on the identity or ownership information of legal
entities (including companies, partnerships, etc.). In the period under review,
23 EOI requests concerning identity or ownership information were received.
Generally, response times were within 90 days (an average response time of
71 days). The comments provided by Finlands EOI partners confirmed that
ownership information of companies was one of the common categories of
information requested. They have also reported that there were no instances
where the requested information was not provided to them.
Bearer shares (ToR A.1.2)
62. Bearer shares cannot be issued in Finland since 1 January 1980,
resulting from the repeal of the Limited Liability Companies Act (LLCA) of
1895, and the issuance of the LLCA of 1978. The LLCA of 1978 was repealed
and replaced by the existing LLCA of 2006 that contains the same prohibi-
tion on the issuance of bearer shares. The Finnish authority advised that the
decision to prohibit the issuance of bearer shares in 1978 was based on three
reasons: (i) the use of bearer shares was not prevalent and they were mainly
used by publicly traded companies; (ii) the need for companies to know its
shareholders; and (iii) to prevent shareholders from misusing voting rights.
63. It is possible that some bearer shares issued prior to 1 January 1980
by companies that were in existence at that time are still in circulation in
Finland. Finland estimates that there are approximately 9 400 companies
that were incorporated before 1 January 1980 which are still in existence and
active today. This represents less than 5% of the total number of all compa-
nies currently in existence. These 9 400 companies could have potentially
issued bearer shares if their articles of association allowed them to do so.
There are no specific statistics on how many of the 9 400 companies could
issue bearer shares pursuant to their articles of association, if any of them
has issued bearer shares and if any bearer shares are still in circulations after
32 years of prohibition. The Finnish authorities confirmed that bearer shares
were never detected in tax audits. In its EOI practice, Finland has never faced
a case where it could not identify all shareholders of a company. As the use
of bearer shares was not prevalent and no issues have arisen in practice, the
Finnish legislator does not see the need to issue any further legislation on the
subject matter.
64. In any case, any legacy issue relating to bearer shares should not pose
a material risk as mechanisms enabling the identification of the holders of
such shares are in place. For instance, there is a requirement for companies
to include information on the names, business IDs or personal identity codes
and the number of shares held by each shareholder that owns at least 10% of
the shares of a company, in their tax return. The same information is also
required for every shareholder if the company has less than 10 shareholders
(ss. 7 and 10, AAP). Moreover, companies must keep a share register which
must contain a list of the shares or the share certificates in numerical order,
their dates of issuance and the names and addresses of the shareholders
(Chapter 3, Section 15(1) of the LLCA). The transfer of shares of a non-listed
company is also subject to a transfer tax, and the identity of the transferor
and transferee must be provided to the tax authority (s. 30, Asset Transfer Tax
Act). In addition, resident taxpayers must provide detailed information on the
dividend income they receive and must also declare assets including shares
they own in their tax return annually (s. 7.1, Act on Assessment Procedure).
65. Bearer shares cannot be issued in Finland since 1 January 1980.
While some bearer shares may still exist, the risk associated with the circu-
lation of these shares is not significant as the use of bearer shares was not
prevalent prior to 1980 and there are appropriate mechanisms in place to
identify the holders of such remaining shares. Namely, various reporting obli-
gations applicable to both companies and shareholders (including holder of
bearer shares) ensure that any holder of a remaining bearer share is identified.
Partnerships (ToR A.1.3)
Types of partnerships
66. Partnerships in Finland are formed pursuant to the Partnerships Act
389/1988 (PA). Under Chapter 1, Section 1 of the PA, a partnership may be
a general or limited partnership. Both general and limited partnerships are
legal persons under Chapter 1, Section 1 of the PA. A partnership is formed
by a partnership agreement and both individuals and legal persons can be a
partner of a general or limited partnership. A partnership must have at least
two partners.
General Partnership: All partners are personally, jointly and sev-
erally liable for the obligations of the partnership. Partners can
contribute to the partnership in the form of cash, assets or work
(services). Unless otherwise agreed, all partners decide together the
matters relating to the partnership.
Limited Partnership: There are two categories of partners: general
partners and limited partners. There must be at least one general
partner and one limited partner in a Finnish limited partnership.
General partners have management control whereas limited partners
have no management control but receive a return on their invest-
ment. General partners are personally, jointly and severally liable
for all the obligations of the partnership. Limited partners are only
liable on debts incurred by the firm to the extent of their registered
investment.
67. In addition to the above partnerships, there are also European
Economic Interest Groupings (EEIGs) (Council Regulation (EEC) No. 2137/85
of 25 July 1985 on the European Economic Interest Grouping). EEIG is a form
of association between companies and other legal bodies, firms or individuals
from different EU countries who operate together across national frontiers.
Finland has also transposed the Council Regulation into the Act on European
Economic Interest Grouping 1299/1994 (AEEIG).
68. As at 30 June 2012, there are 12 630 general partnerships, 35 198 lim-
ited partnerships and one EEIG registered in the Trade Register in Finland.
Registration of partnerships
69. Chapter 1, Section 2 of the PA indicates that the partnerships entry in
the Trade Register maintained by NBPRF is governed by the Trade Register
Act 129/1979. The Trade Register Act provides that where the partner is an
individual, the name, address, identity number, date of birth and nationality
have to be provided and where the partner is a legal person, the companys
identification number has to be provided (sections 3 and 4, Trade Register
Act). As the partners are registered in the Trade Register, partnerships are
required to notify the Trade Register if there are any changes to the composi-
tion of the partners of the partnership (section 11 of the Business Information
Act).
70. An EEIG is also required to be registered in the Trade Register main-
tained by the NBPRF. The information that has to be furnished by an EEIG
is also governed by the Trade Register Act 129/1979 as spelt out in Section 2
of the AEEIG. In this regard, an EEIG has to file the same information and
details as those required by a general and limited partnership described in the
preceding paragraph.
71. All the information described in the preceding two paragraphs are
kept and maintained in the tax authoritys database.
72. Partnerships are not regarded as separate taxable entities in Finland.
The net income of a partnership is determined under the rules applicable to
corporate bodies but is attributed to the partners according to each partners
share in the partnerships total income and must be taxed either as earned
income or investment income in the hands of the partners. In this regard,
all partnerships and EEIGs will be required to submit a prescribed form
(Form 6A) to the tax authority for the determination of the taxable income
attributable to the partners and information identifying the partners of the
partnership/EEIG has to be provided to the tax authority if there are changes
to the composition of the partnership. The same rule applies to foreign
partnerships that are carrying on a business in Finland. Moreover, Finnish
resident partners of foreign partnerships are taxed in Finland as if they were
partners in a domestic partnership and any losses of the partnership are
deducted at the partner level.
73. All the information provided by the partnerships in the prescribed
forms are captured and stored in the database maintained by the tax authority.
Information held by the partnership or partners
74. A partnership is formed by a partnership agreement. The PA is silent
as to the information that has to be included in the partnership agreement
and whether the partnership or a partner is required to maintain information
that identifies the partners. Notwithstanding the above, as partnerships/EEIG
are also responsible for registering the transfer of partnership interests with
the Trade Registry, this would imply that they would have to maintain such
information in order to comply with their statutory obligations.
75. Information identifying partners of a general, limited partnership and
EEIG is filed in the Trade Register and with the tax authority and are stored
the tax authoritys database. In practice, the Finnish competent authority
can access information stored in its database to reply to most EOI requests
concerning ownership information. Such information may be accessed by
the tax auditors directly from the computers connected to the tax authoritys
network and the access to the information is almost instantaneous. The tax
authoritys tax database is updated frequently on a constant basis whenever
new information is received.
76. In the three-year period under review (2009-11), Finland received
requests relating to the identity of partners in a partnership. The Finnish
authorities maintain consolidated statistics concerning incoming requests
concerning information on the identity or ownership information of legal
entities (including companies, partnerships, etc.). In the period under review,
23 EOI requests concerning identity or ownership information were received.
In average, requests were responded in less than 90 days. Finlands EOI
partners that provided comments to this review did not refer to information
identifying partners of partnerships as one of the categories of information
they requested Finland to provide.
Trusts (ToR A.1.4)
77. The Finnish legal system does not allow for the creation of trusts and
the legal concept of trust does not exist under Finnish law. Finland has not
ratified the 1985 The Hague Convention on the Law Applicable to Trusts and
on their Recognition. There is, however, no obstacle for Finnish citizens or
legal persons to be trustees of foreign trusts.
Information held by trustees acting by way of business and other
service provider subject to AML Law
78. Under the AML Law, service providers (trust and company service
providers) referred to in Article 3(7) of the Directive 2005/60/EC of the
European Parliament and of the Council are required to comply with AML
Law and conduct CDD procedures (s. 2(23), AML Law). Article 3(7)(d) of
the Directive further define trust and company service providers means
any natural or legal person which by way of business provides any of the fol-
lowing services to third parties: (); (d) acting as or arranging for another
person to act as a trustee of an express trust or a similar legal arrangement.
Therefore, the AML requirements cover all circumstances where a trustee is
acting by way of business.
79. In this regard, if a settlor(s) approaches such a Finnish service
providers to establish a trust and/or act as trustee, the Finnish service pro-
vider would be required to conduct CDD and, as such, identify and verify
the identity of his or her customer under Section 7 of the AML Law. Such
service providers are also required to identify the beneficial owners
under Section 8 of the AML Law. The term beneficial owner is defined
under Section 5(6) of the AML Law to mean a natural person on whose
behalf a transaction is being conducted. In the case where the customer is
a legal person, it means the natural person who controls the legal person by
(i) having at least 25% voting rights; or (ii) has the power to appoint or dis-
miss the majority of member of the board of the legal person. If the measures
laid down cannot be carried out, the obligated person is obliged to decline
entering into a business relationship with the prospective customer.
80. There are currently no written guidelines in Finland detailing how
the CDD is to be carried out in the case of a trust. Notwithstanding the
absence of specific guidelines on trusts, the general guidance in respect of
CDD provided in the AML Law still applies. The Finnish Regional State
Administrative Agency (RSAA), who is the AML supervisory authority for
all trust and company service providers in Finland, advised that it consid-
ers the beneficiaries of a trust as the beneficial owners. The RSAA has
also highlighted that the situation of a Finnish resident acting as a trustee or
administrator of a foreign trust is not common in Finland. The RSAA has not
encountered any situations where obligated person under its supervision has
requested for clarification on how the CDD should be conducted in situations
where the customer is a trust (or a trustee) or where the customer purports to
create a trust and require trusteeship services from the obligated person.
81. To the extent that a trust (or the trustee) uses the service of an obligated
person that is an entity listed in Section 2 of the AML Law (e.g. opening an
account with a financial institution), the AML Law would apply to the trust (or
the trustee) as customer. The obligated persons are required to conduct CDD
and identify and verify the identity of their customers/prospective customer
under Section 7 of the AML Law. If the prospective customer is representing
another person, the obligated person is required to also identify and verify the
identity of the representative. The beneficial owner also has to be identified
and verified by the obligated person under Section 8 of the AML Law. If the
measures laid down cannot be carried out, the obligated person is obliged to
decline entering into a business relationship with the prospective customer.
Information held by the tax authority
82. Finnish tax law does not contain specific provisions on the taxation
of assets or income derived through foreign trusts with a link to Finland.
The Finnish authorities have also indicated that they are not aware of any
instances where foreign trusts have been administered by Finnish persons.
Notwithstanding the above, if information is considered necessary for
Finnish tax assessment purposes, the taxpayer has an obligation to disclose
such information to the tax authority. This may include relevant ownership
information concerning assets held in trust.
83. Finland taxes its residents on their worldwide income. The trustee
and the beneficiaries must provide all information necessary to determine the
amount of taxable income or assets to the Finnish tax authority (s. 11, AAP).
Therefore, the taxation of Finnish resident trustees in respect of income
arising from the trust assets they hold would put an onus on the trustees to
explain the origin of the income. A trustee resident in Finland is subject to
record-keeping requirements for determination of his/her income, as any
other person resident in Finland. Thus, all records that are necessary for the
determination of his/her income must be kept. This would most likely include
trusts deed and other documents related to the management of the trust,
which will allow the identification of the settlor(s) and beneficiaries.
84. Finnish tax law does not contain specific provisions on the taxation
of assets or income derived through foreign trusts with a link to Finland.
Notwithstanding the above, a trustee resident in Finland is subject to tax
on his worldwide income and to the record-keeping requirements for deter-
mination of his/her income. Thus, all records that are necessary for the
determination of his/her income must be kept. These records would most
likely include the trust deed and other documents related to the management
of the trust, which allow the identification of settlor(s) and beneficiaries. It
can therefore be concluded that Finland has taken reasonable measures to
ensure that ownership information is available to its competent authorities in
respect of foreign trusts with a Finnish resident trustee or administrator.
85. In addition to the tax obligations, AML CDD obligations will also
apply in a number of circumstances. Information identifying the settlor(s)
and beneficiaries of a trust is likely to be available with professional service
provider providing trustee services by way of business, as they are required
to identify their customers and the beneficial owners. The same information
may also be available if a trust (or trustee) uses the service of a service pro-
vider (e.g. financial institution) that is subject to AML Law in Finland. The
general obligations to identify beneficial owners under AML would amount
to an obligation to identify the beneficiaries who have at least 25% interest in
the trust. The supervisory authority for trust and company service providers
for AML Law purposes, advised that the situation of a Finnish resident acting
as a trustee or administrator of a foreign trust is not common in Finland.
86. From the comments provided by Finlands EOI partners, information
identifying settlor(s) and beneficiaries of foreign trusts was not one of the
categories of information Finland was specifically requested to provide in the
last 3 years. Finland confirmed that it has not received any requests concern-
ing settlor(s) and beneficiaries of foreign trusts.
Foundations (ToR A.1.5)
87. Foundations in Finland are regulated by the Foundation Act. A foun-
dation can be established by either a foundation deed or a written will, which
must state the purpose of the foundation and the property to be endowed to it.
88. A foundation must have a useful (beneficial) purpose and the pur-
pose cannot be to conduct business or to bring direct financial gains to the
founder or a functionary of the foundation. Foundations in Finland are typi-
cally established for the purpose of preserving a national heritage (e.g. for
maintaining a museum), maintaining an organisation of community interest
(e.g. sports club) or for the purpose of granting grants, scholarships, fellow-
ship and awards. Notwithstanding the general rule governing the purpose of
a foundation, the Finnish authority advised that it is possible for a foundation
to be given the authorisation to carry out auxiliary business activities. Such
foundations are however, required to be registered in the Trade Register
with the NBPRF. There are approximately 2 800 foundations registered in
the Register of Foundations maintained by NBPRF and 30 are concurrently
registered in the Trade Register maintained by NBPRF.
Registration of foundations
89. Permission has to be granted by NBPRF to establish a foundation.
To apply for the permission, an application accompanied by (i) the original
or certified copy of the deed of the foundation or the will with a certificate
proving that it cannot be contested; and (ii) the by-laws drafted for the foun-
dation, have to be submitted to NBPRF. The deed of the foundation or the
will establishing the foundation must be signed by the founder and attested
by two persons under Chapter 1, Section 3(1) of the Foundation Act. In this
regard, information identifying the founder is found in the foundation deed or
will and is filed with the NBPRF for the application of permission to establish
a foundation.
90. The Finnish authorities confirmed that NBPRF only grants permit for
establishing foundations having a beneficial purpose. If the purposes of the
foundation is not considered beneficial, the permission is denied.
91. After permission has been granted by the NBPRF, a foundation must
be registered in the Register of Foundations maintained by NBPRF. The
Finnish authorities explained that permission would not be given if the value
of the property endowed is less than EUR 25 000, or so disproportionate
to the purpose of the foundation that no prerequisites for establishment are
fulfilled. For the registration in the Register of Foundations, the following
information has to be provided in a notice to be filed with NBPRF.
The full name, citizenship, place of residence and Finnish social
security code or, in its absence, the date of birth of the chairman and
each member and deputy member of the board of trustees;
Confirmation by the trustees and a certificate of the auditor stating
that the movable property bestowed on the foundation is in the pos-
session of the trustees;
A certified copy of a deed of conveyance regarding the real property
bestowed on the foundation, which must be signed also by the person
who has received the property on behalf of the foundation;
The full name, citizenship, place of residence and Finnish social secu-
rity code or, in its absence, the date of birth of any person authorised
to sign on behalf of the foundation either by himself or together with
another person; and
The postal address of the foundation.
92. Any subsequent changes made to the members of the board of trus-
tees of a foundation or persons authorised to sign the name of the foundation
as well as any change in the postal address of the foundation is also required
to be registered in the Register of Foundation maintained by NBPRF under
Chapter 5, Section 22 of the Foundation Act.
93. There is however, no express obligation to identify the beneficiaries
(where applicable) in the by-laws of the foundation or in the notice filed
with NBPRF for the registration in the Register of Foundations. The Finnish
authorities have explained that this is because in many instances the benefi-
ciaries of foundations may not be identifiable at the time of establishment of
the foundation. Moreover, the beneficiaries may vary over time (e.g. the case
of foundations granting scholarships or awards).
94. After registering with the NBPRF/Register of Foundations, the foun-
dation must register with the tax authority. The tax authority review whether
the foundation meets the criteria to be be tax exempt. The tax authority
explained what the following criteria is: it promotes solely and directly public
benefit in material, spiritual (religious), ethical or societal meaning, its activi-
ties are not restricted to only a limited group of people, and it does not bring
financial gain to the founder or a functionary of the foundation. Foundations
are exempted from income tax if they are deemed as an entity promoting
public benefit. However, the exemption does not cover any business income
or income derived from real estate property derived by a foundation, which
remains subject to tax. If an exempted foundation is carrying on business,
it has to file tax returns in connection with its business income. Moreover,
all foundation must file information on all grants, scholarships, fellowships
and awards awarded exceeding EUR 1 000 on annual basis, identifying the
beneficiaries of the grants, scholarships, fellowships and awards. In any case,
a foundation must always keep all records concerning the identity of the ben-
eficiaries for tax purposes.
95. If a foundation is not deemed an entity promoting public benefit, it will
be liable to pay tax on its income as other business enterprises. In this case, the
foundation would be required to file annual tax returns with the tax authority.
Moreover, the foundation must also file information on benefits paid and keep
all records concerning the identity of the beneficiaries for tax purposes.
Information held by service providers
96. To the extent that a foundation uses the service of an obligated person
subject to AML Law (e.g. opening an account with a bank), the AML Law
would apply to the foundation as customer. The AML Law obligated persons
are required to conduct CDD and identify and verify the identity of their
customers under Section 7 of the AML Law. The beneficial owner is also
required to be identified and if necessary, have their identity verified by the
obligated person under Section 8 of the AML Law. The term beneficial
owner is defined under Section 5(6) of the AML Law to mean a natural
person on whose behalf a transaction is being conducted (i.e. in the case of
a foundation it is expected that the beneficiaries of the foundation would
be identified as the beneficial owners). In the case where the customer
is a legal person, it means the natural person who controls the legal person
by (i) having at least 25% voting rights; or (ii) has the power to appoint
or dismiss the majority of member of the board of the legal person. If the
measures laid down cannot be carried out, the obligated person is obliged to
decline entering into a business relationship with the prospective customer.
Considering the general language used in the AML Law, it is somewhat
unclear whether the obligation to identify the beneficial owner will ensure
that all beneficiaries of the foundation are identified.
Conclusion
97. Information identifying the founder(s) and members of the board of
trustees is available with the Register of Foundations maintained by NBPRF.
Information concerning the payment of benefits must be filed with the tax
authority and the foundation must keep information on the identity of the
beneficiaries as part of its tax compliance obligations. Moreover, it appears
that most foundations in Finland pursue a public benefit and in the circum-
stances that they do not, they are subject to extensive tax obligations.
Other relevant entities and arrangements
98. Co-operative can be formed in Finland under the Co-operatives Act
(CoA). A co-operative is defined as an organisation whose membership and
share capital have not been determined in advance. The purpose of a co-oper-
ative shall be to promote the economic and business interests of its members
by way of the pursuit of economic activity where the members make use of the
services provided by the co-operative or services that the co-operative arranges
through a subsidiary or otherwise (Chapter 1, Section 2(1) of the CoA). A co-
operative must have at least three members (Chapter 3, Section 3(1) of the CoA)
and must be registered in the Trade Register maintained by the NBPRF. There
are 4 308 co-operatives registered in the Trade Register as at 30 June 2012.
Information held by Co-operatives
99. Chapter 3, Section 3 of the CoA expressly provides that a member-
ship register must be kept by the Board of Director of the co-operative. The
membership register must include the name and address of the members, the
number of shares held by each member, the date of admission of the member
and the date the member ceased to be a member (if applicable). The member-
ship register must be accessible to the members and the creditors at the head
office of the co-operative.
100. All co-operatives are required to maintain a register of members and
therefore ownership information is available with them. Finland has received
no requests for information in relation to co-operatives. No issues have been
raised by Finlands EOI partners in this regard.
Enforcement provisions to ensure availability of information
(ToR A.1.6)
101. The existence of appropriate penalties for non-compliance with key
obligations is an important tool for jurisdictions to effectively enforce the
obligations to retain identity and ownership information. In Finland, adminis-
trative authorities, including the tax authority can impose punitive fees (civil
penalties) according to the powers allocated to them.
Enforcement provisions under tax law
102. Section 32 of the AAP establishes the following sanctions in case
taxpayers fail to comply with tax reporting obligations:
The tax authority may impose a surtax of up to EUR 150 if the
taxpayer has filed a tax return or a comparable notice, document
or filing containing a minor error or omission and in spite of being
prompted, has neglected to correct the error or omission; or if the
taxpayer has been late in submitting a notice, document or filing
without an acceptable reason;
The tax authority may impose a surtax of up to EUR 800 if the tax-
payer has filed a return or a comparable notice, document or filing
that has a major error or omission; or has not filed the same docu-
ments until prompted (proof of prompting to be shown);
The tax authority may impose a surtax of 30% of the taxable income
and as appropriate a surtax amounting to 1% of the asset balance if
the taxpayer has by way of intent or gross negligence, filed a return
or a comparable notice, document or filing that has a major error or
omission; or if the taxpayer has failed to submit any filing.
Enforcement provisions under commercial and civil laws
Companies
103. Under Chapter 25, Section 2 of the LLCA, any person who inten-
tionally fails to keep the share register or the shareholder register or to keep
such register available shall be convicted of a company law violation and
sentenced to a fine (based on day fines) unless the fault is considered of
minor significance or subject to a more severe penalty. The amount of a day
fine is determined in proportion to the income or solvency of the person fined
(i.e. one sixtieth of the average monthly income of the person subject to the
fine less taxes). The number of day fines to be applied is determined with
basis on the gravity of the failure.
Partnerships/EEIGs
104. While information identifying the partners is generally required to be
entered in the Trade Register, the Finnish Authority has advised that non-compli-
ance of such obligations does not affect the legal capacity of partnership or affect
any changes made to the composition of the partnership. A sanction in the form
of a civil penalty may nonetheless be imposed on the offender for non-compli-
ance with the registration and notification obligations. The penalty is determined
based on day fines, as described above in the analysis on companies.
Trusts
105. Trusts are not recognised in Finland with exception to the reference
to it in the AML Law. Notwithstanding the above, the enforcement measures
provided in connection to general tax reporting obligations applicable to tax-
payers in general would apply to Finnish resident trusts. Moreover, a Finnish
trust and company service provider is subject to AML law which contain
enforcement measures in case of violation of the obligation to conduct cus-
tomer due diligence (as indicated in subsequent paragraphs).
Foundations
106. Under Chapter 5, Section 27(2) of the Foundation Act, the penalties as
prescribed in Section 19(1) of the Business Information Act may apply to the
failure to register changes made to the members of the board of trustees of a
foundation or persons authorised to sign the name of the foundation as well as
any change in the postal address of the foundation. The penalty is determined
based on day fines, as described above in the analysis on companies.
Co-operatives
107. Under Chapter 22, Section 2(3) of the CoA, a person who neglects
to keep a membership register shall be convicted of an infraction and sen-
tenced to a fine (based on day fines), determined based on the methodology
described above on the analysis on companies.
Enforcement provisions under AML Law
108. Failure of an AML obligated person to conduct customer due dili-
gence (CDD) is punishable with a fine under Section 40 of the AML Law.
109. If the CDD measures prescribed in the AML Law cannot be carried
out, the AML obligated person is obliged to decline entering into a business
relationship with the customer or decline to carry out the transaction for the
customer. Violation of the obligation to decline the business relationship with
customer is punishable with a fine under Section 40 of the AML Law.
110. Finnish law provides for a wide range of sanctions. Penalties are
imposed in proportion to the offense and the means of the offender. It appears
that penalties are dissuasive enough to ensure compliance. Moreover, the
Finnish tax authority receives periodic reporting information from a number
of sources (e.g. employers, banks, pension funds, insurance companies, stock
exchange). The Finnish tax authority uses this information to pre-fill the tax
returns of individuals (pursuant to s. 7 of the Act on Assessment Procedure).
The tax authority sends the pre-completed tax returns to the taxpayer in the
month of March or April of the year following the tax year. This minimises
the extent to which taxpayers could provide inaccurate information to the
Finnish tax authority.
111. Additionally, the Finnish tax authoritys database allows for cross-
checking of information between different sources, includes information
from tax returns. Tax control is a key instrument to ensure compliance.
Information concerning a large number of taxpayers are analysed based on
established quantitative and qualitative criteria. As a result of this initial anal-
ysis, tax returns are selected for review by a tax officer who will be in contact
with the taxpayer for further clarification. The statistics on the number of
tax control measures conducted in the period under review (2009-11) are as
follows:
7
2009 2010 2011
Tax auditing unit
Tax audits 2 799 3 275 3 286
Tax control visits 249 37 45
Comparative data audits 73 17 425
Individual and Corporate taxation units
Tax audits 698 277 142
Tax control visits 723 362 642
Comparative data audits 9 - -
4 551 3 968 4 540
112. Moreover, the Finnish tax authority established in 2011 the Grey
Economy Information Unit and has conducted 3 428 tax audits on taxpayers
suspected of involvement in the grey economy. Tax auditing units spent 30%
of their working hours (25 353 working days) on auditing taxpayers suspected
of involvement in the grey economy.
8
113. The National Board of Patents and Registration monitors whether
legal entities registered in the trade register remain active and regularly
strike-off dormant companies from the register. This is carried out on legal
entities that do not file annual reports and tax returns for a number of years.
The NBPRF has struck off more than 100 000 legal entities since it started
this exercise.
114. With regard to the obligations established under the Finnish AML/CFT
framework, on-site inspections and other supervisory visits are conducted on
a regular basis. In 2011, 44 of such inspections/visits were conducted in super-
vised entities.
115. Based on the peer input received, Finland was capable of respond-
ing to all requests for ownership and identity information received from its
peers. This implies that ownership and identity information is adequately
maintained in Finland.
7. Source: Finnish Tax Administration Annual Report 2011.
8. Source: Finnish Tax Administration Annual Report 2011.
116. Finland is encouraged to continue its efforts in the exercise of appropriate
monitoring the effectiveness of its enforcement actions to ensure that obligations
to retain identity and ownership information are sufficiently enforced.
Determination and factors underlying recommendations
Phase 1 determination
The element is in place.
Phase 2 rating
To be finalised as soon as a representative subset of Phase 2 reviews is
completed.
A.2. Accounting records
Jurisdictions should ensure that reliable accounting records are kept for all
relevant entities and arrangements.
117. The ToR sets out the standard for the maintenance of reliable account-
ing records and the necessary accounting record retention period. It provides
that reliable accounting records should be kept for all relevant entities and
arrangements. To be reliable, accounting records should: (i) correctly explain
all transactions; (ii) enable the financial position of the entity or arrangement
to be determined with reasonable accuracy at any time; and (iii) allow finan-
cial statements to be prepared. Accounting records should further include
underlying documentation, such as invoices, contracts, etc. Accounting
records need to be kept for a minimum of five years.
General requirements (ToR A.2.1)
118. Under the Accounting Act, anyone who carries on a business or prac-
tices a profession must keep accounting records on these activities (Chapter 1,
Section 1). This includes Finnish or foreign persons engaged in business
operations or carrying out a profession, including a Finnish permanent estab-
lishment of a foreign enterprise (Accounting Board opinion 1275 23.05.1994).
Moreover, a number of Finnish legal entities are always obligated to maintain
accounting records, regardless of whether they carry on a business (Chapter 1,
Section 1). This includes limited liability companies, general partnerships,
limited partnerships, foundations and co-operatives (Chapter 2, Section 1).
119. Chapter 2 of the Accounting Act sets out the general principle that
all business transactions must be recorded in a chronological and systematic
order in the accounting system and supported by a voucher or other supporting
documents.
120. Chapter 3 of the Accounting Act further sets out the obligation for a
legal entity to prepare financial statements and an annual report that gives a
true and fair view of the legal entitys result of operation, financial position,
factors of uncertainty and other facts that influence the development of busi-
ness. The financial statement and annual report consists of a balance sheet, a
profit and loss statement, a cash-flow statement and the notes to the financial
statement.
121. These requirements ensure the completeness of the accounting
entries and enable the legal entities to form an overall picture of the events,
balance and result of the business activity.
122. According to Chapter 2, Section 9 of the Accounting Act, the account-
ing information is generally required to be kept within Finland. However,
accounting information may be kept temporarily abroad if it is necessary for
taking care of accounting or for drawing up the financial statement and annual
report of a legal entity. Accounting information may be kept electronically in
another EU member state permanently if a real-time connection can be guar-
anteed and if the information can be converted into clear written form.
123. The failure to comply with the requirements stipulated in the
Accounting Act is punishable with a fine under Chapter 8, Section 4 of the
Accounting Act or with a fine and imprisonment under Section 30 of the
Criminal Code depending on the gravity of the violation. Minor violations
are punishable as accounting violations under Chapter 8, Section 4 of the
Accounting Act. The sanction is in the form of a fine decided by the district
court (as a first instance) or the prosecutor in the so-called penal order pro-
cedure. Depending on the gravity of the case, the fine may vary between 1 to
120 day fines (unit fines). The amount of a day fine is determined based on
the offenders income level. Major violations of the obligations stipulated in
the Accounting Act are punishable according to the provisions in Section 30
of the Criminal Code as accounting offence, aggravated accounting offence
or negligent accounting offence. Depending on the gravity of the case, the
sentence may be a fine (between 1 to 120 day fines) or imprisonment for up
to 4 years.
124. The general rules described above apply to Finnish legal entities and
anyone carrying on a business in Finland. In addition, the Accounting Act
provides specific rules for specific types of entities, as described below.
Companies
125. In the case of a company, accounting records must be kept and the
financial statement and the annual report of the company must be drawn up
no later than 4 months after the end of the financial year and must be signed
by the Board of Directors and the Managing Director (Chapter 3, Sections
6 and 7 of the Accounting Act). A decision must be made at the Annual
Ordinary General Meeting of the shareholders to adopt the financial state-
ment and annual report within 6 months after the end of the financial year
(Chapter 5, Section 3(2) of the LLCA).
126. The financial statement and the annual report must also be filed with
the NBPRF no later than 2 months after the reports have been adopted at the
Annual Ordinary General Meeting (Chapter 3, Section 9 of the Accounting
Act). However, the NBPRF and the tax authority have streamlined their oper-
ations and as a result, such accounting information is only provided pursuant
to the Tax Return Form 6B. Therefore, in practice, taxpayers file accounting
information directly with the tax authority and there is no further obligation
to submit the same information to NBPRF.
Partnerships/EEIGs
127. In the case of a general or limited partnership, accounting records
must be kept and the financial statement and the annual report of the partner-
ship must be drawn up no later than 4 months after the end of the financial
year and must be signed by the partners (Chapter 3, Sections 6 and 7 of the
Accounting Act). The financial statement and the annual report must be filed
with the NBPRF no later than 6 months after the end of the financial year
if a partner is a company or another partnership (Chapter 3, Section 9 of the
Accounting Act and Chapter 9 of the PA). In this regard, all partnerships and
EEIGs are required to submit a prescribed form (Form 6A) to the tax author-
ity for the determination of the taxable income attributable to the partners
and information identifying the partners of the partnership/EEIG has to be
provided to the tax authority if there are changes to the composition of the
partnership. The same rule applies to foreign partnerships that are carry-
ing on a business in Finland. Moreover, Finnish resident partners of foreign
partnerships are taxed in Finland as if they were partners in a domestic part-
nership and any losses of the partnership are deducted at the partner level.
Trusts
128. The concept of trusts does not exist in Finnish law and there are no
express provisions concerning the keeping of accounting records for trusts
with Finnish resident trustees or administrators. A reference to trust and
company service providers only exists in the context of the AML Law, which
established CDD obligations on trustees of foreign trusts.
129. As noted in part A.1.4 of this report, the assets or income derived
in connection with a foreign trust are subject to tax as any other assets or
income of the Finland resident trustee and the Finnish resident trustee is
subject to record keeping requirements for the determination of its income
(under Act on Assessment Procedure and/or the Accounting Act).
130. The Finnish authorities confirmed that, pursuant to a fundamental
principle in Finnish accounting legislation (entiteettiperiaate), all persons
subject to the obligation to keep accounting records must keep segregated
accounts in connection to their own assets and liabilities and the assets and
liabilities of other persons. The entiteettiperiaate principle is reflected
in the Chapter 3 section 2 of the Accounting Act, which requires that true
and fair accounts be kept. Moreover, this principle is also spelled out in the
Finnish Accounting Ordinance (Chapter 1 section 6:5) which provides that
funds to be managed separately must be disclosed as separate item of the
balance sheet. The Finnish authorities confirmed that this principle would
apply to any person managing assets of third parties by way of business
(including a professional trustee) and would require him to segregate his
assets from the assets he is administering.
131. Moreover, if a person manages assets of several clients (e.g. a trustee
administering several trusts), the principle of huolellisuusperiaate, accord-
ing to that accounts must be managed prudently, would require that separated
accounts be kept for each of his client. The Finnish authorities confirmed
that this principle has been applied by the Finnish Accounting Board and the
courts.
Foundations
132. In the case of a foundation, the financial statement and the annual
report of the foundation must be drawn up no later than 4 months after the
end of the financial year and must be signed by the board of trustees of the
foundation (Chapter 3, Sections 6 and 7 of the Accounting Act). The financial
statement and the annual report must be filed with the NBPRF no later than
6 months after the end of the financial year (Chapter 3, Section 13(2) of the
Foundations Act).
Co-operatives
133. Chapter 6, Section (1)(1) of the CoA expressly provides that co-
operatives are required to prepare annual accounts in accordance with
the provisions of the Accounting Act as well as the specific requirements
expressly provided in the CoA. The annual accounts of a co-operative also
has to submitted to an auditor for audit no later than 1 month before the ordi-
nary general meeting of the co-operative. The financial statement and the
annual report must be filed with the NBPRF no later than 6 months after the
end of the financial year (Chapter 3, Section 9 of the Accounting Act).
Tax Law
134. Pursuant to the AAP, taxpayers are expected to report their taxable
incomes to the tax authority, including details on any deductions against
taxes, information on assets and liabilities, and other facts that have an
impact on the processes of tax assessment (s. 7). Moreover, a taxpayer who
operates a trade, business or agriculture should complete a tax return in all
circumstances (s. 7).
135. Considering the record keeping requirements provided for by the
Accounting Act, accounting records are kept by all relevant entities and
arrangements, which will correctly explain all transactions, enable the finan-
cial position to be determined with reasonable accuracy at any time and allow
financial statements to be prepared.
136. The Finnish tax authority has a wide range of instruments at its dis-
posal to protect its tax base and ensure compliance with legal obligations.
137. In Finland, most legal entities (including limited companies and co-
operatives) can file tax returns electronically. The filing rate is monitored and
companies that fail to timely file their returns are prompted to do so. Failure
to file tax returns has serious consequences. It may lead to the struck off the
tax register and invalidation of the entities business ID. This makes it almost
impossible for a company to conduct business or open a bank account etc.
138. Tax control is a key instrument to ensure compliance. Most of the tax
control is carried out by comparing the information supplied by taxpayers
and information received from a variety of sources (banks, other taxpay-
ers etc.) in a computerised system. Information concerning a large number
of taxpayers are analysed based on established quantitative and qualitative
criteria. As a result of this initial analysis, tax returns are selected for review
by a tax officer who will be in contact with the taxpayer for further clarifica-
tion (such as the provision of receipts or other documents). In 2011, the focus
in the control of corporate income taxation was on large and medium-size
enterprises. More than 370 000 enterprises were subjected to tax control.
139. The Finnish tax authority has identified violations of the obligations
imposed under the Accounting Act in the course of tax audits. The number of
reports concerning suspicious of accounting crimes made by the tax authori-
ties was 204 in 2009, 156 in 2010 and 147 in 2011.
140. Over the three-year period under review, 73 requests concerning
accounting information were sent by information exchange partners. Generally,
this information was provided within 90 days (the average response time was
55 days). From the comments provided by Finlands EOI partners, there have
been no instances where the accounting information sought was not provided.
Underlying documentation (ToR A.2.2)
141. Under the Accounting Act, all accounting entries in the accounting
system must be supported by a voucher (Chapter 2, Section 5). The voucher
may be internally generated (but must be duly approved by the reporting
entity) or provided by a third party (such as invoices, delivery order etc.) and
must contain information about when the business transaction occurred, what
it concerns, the amount involved and the counterparty the transaction was
entered into. Where appropriate, the voucher must also contain information
about other underlying documents or other information (such as invoices,
contracts etc.) Chapter 2, Section 10 (paragraph 2) of the Accounting Act
further require that vouchers must be kept in the order they were recorded or
otherwise arranged in such a manner that connections between the vouchers
and the recorded entries in the accounting system can be verified without
difficulties.
142. Chapter 2, Section 11 of the AAP further provides that any taxpay-
ers (e.g. individual sole proprietors) who do not have the obligation to keep
accounting records, or the obligation to keep simple financial records, should
keep their documentation, including paper-printed cash receipts. This docu-
mentation relates to the income reported in the tax return, including deductions,
assets, liabilities and other facts.
143. Pursuant to the record keeping requirements provided for by the
Accounting Act and the AAP, underlying documentation must be kept by
companies, partnerships/EEIGs, foundations and co-operatives.
144. From the comments provided by Finlands EOI partners, underlying
documentation was not one of the common categories of information Finland
was specifically requested to provide.
Document retention (ToR A.2.3)
145. According to Chapter 2, Section 10 (paragraphs 1 and 3) of the
Accounting Act, the minimum retention period for which accounting records
are required to be kept is 10 years. The same retention period also applies
in the case where the operation of the legal entity has been terminated or
whether the legal entity has been wound up. In such situation, the legal entity
is required to entrust the record keeping obligation to another person and
update the NBPRF of the person entrusted with such responsibility.
146. Accounting vouchers, correspondences related to the transactions,
reconciliation documents for a computerised accounting system as well as
other underlying documentations must be retained for at least 6 years after
the end of the calendar year during which the financial year ended under
Chapter 2, Section 10 (paragraph 2) of the Accounting Act.
147. Moreover, pursuant to the decision of the tax authority on declaration
obligations (latest decision no. 23.12.2011/1511, paragraph 18), corporations
are obliged to retain for at least 6 years after the end of the tax year the calcu-
lation of taxable income and a calculation of net worth (assets). Income and
cost items in the calculation of taxable income and assets and obligations in
the net worth calculation must be based on documentation required by the
Accounting Act.
148. Chapter 2, Section 11 of the AAP further provides that any taxpay-
ers (e.g. individual sole proprietors) who do not have the obligation to keep
accounting records, or the obligation to keep simple financial records, should
keep their documentation, including paper-printed cash receipts for five
years. This documentation relates to the income reported in the tax return,
including deductions, assets, liabilities and other facts.
149. From the comments received by Finlands EOI partners, records were
provided when requested and there have been no instances where Finlands
EOI partners have highlighted that information is not available due to the
retention period.
Phase 2 rating
completed.
A.3. Banking information
Banking information should be available for all account-holders.
150. The requirement for financial institution to maintain transaction
records derives from the Accounting Act (1336/1997). The Act applies to
anyone who carries on a business or practices a profession as well as
limited liability companies, co-operatives, partnerships, associations, founda-
tions, insurance funds, mutual insurance companies, insurance associations,
investment companies, employees profit-sharing funds, deposit insurance
funds, guarantee funds, investor compensation funds and clearing funds.
Since banks and other financial institutions must be incorporated in the
form of one of the entities listed above, the requirements provided under the
Accounting Act apply to them with no exceptions.
151. Pursuant to the Accounting Act, all vouchers for the financial year,
correspondences related to the transactions and reconciliation documents for
a computerised accounting system must be maintained for at least 6 years
(Chapter 2, Section 10). Transaction records and correspondences are con-
sidered to fall within the definition of accounting records. Even when legal
entities have terminated their operations or dissolved, there is an obligation
to preserve the records for 6 years. Section 10 also provides that ledgers and
charts of accounts must be preserved for up to the 10
th
year following the expiry
of the calendar year in which the accounting period was closed. The documents
must be made available to the authorities whenever requested and can be kept
in paper form, microfilm or in an electronic form that is easily accessible.
152. With regard to information identifying bank customers, the Finnish
AML Law requires financial institutions to maintain full identity information
of their clients. More specifically, under Chapter 2, Section 10 of the AML
Law, financial institutions are required to maintain records establishing the
identity of their clients for a period of 5 years following the end of a regular
business relationship. When a transaction is occasional and amounting to
over EUR 15 000, identity records of the clients have to be kept for a period
of 5 years following the date the transaction was carried out under the same
section.
153. The Accounting Act and the AML Law require financial institutions
to keep records of their customers and the transactions with customers as
well as to conduct CDD. As a result, information is available for all account
holders, including all records pertaining to the customers, bank accounts and
transactions.
154. The Finnish Financial Supervisory Authority (FIN-FSA) conducts
on-site inspections and other supervisory visits pursuant to an annual plan
which is based on risk analysis of the market and supervised institutions. The
plan is reviewed twice a year. The FIN-FSA carries out its supervisory visits
regularly and AML/CFT supervision is recognised as an essential part of the
ongoing supervision. The frequency of supervisory visits in part depends
on the size of the entity. After the inspection, the FIN-FSA sends out an
inspection letter in which points out deficiencies and orders the inspected
entity to take corrective measures.
155. Since the new AML/CFT Act took effect in 2008, the FIN-FSA has
followed closely with the entities progress to review their CDD procedures,
ongoing monitoring systems, internal guidance, training and internal audit.
In addition, the FIN-FSA has also carried out inspections in the following
areas of relevance for AML/CFT issues: operational risks, internet banking
services, IT-security and systems. The AML/CFT supervisory visits focus
on verifying compliance with the AML/CFT laws and regulations, especially
with meeting the requirement of risk-based approach, ongoing monitoring
of transactions and customer relationships (including compliance with the
international sanctions regime), CDD process for high risk customers, CDD
for beneficial owners, and employee training programmes.
156. The number of AML/CFT on-site inspections and other supervisory
visits from 2008 to 2011 are summarised in the table below:
Financial institutions supervised by FIN-FSA 2008 2009 2010 2011
Credit institutions including branches of foreign
credit institutions
14 10 34 20
Insurance companies, including branches of
foreign insurance companies
1 1 3 7
Investment firms and mutual fund management
companies
20 11 15 6
Payment institutions, registered payment
services and money remittance agents
4 5 14 11
157. After the inspection, the FIN-FSA sends an inspection letter to the
entity, in which the FIN-FSA points out deficiencies and orders the entity
to take corrective measures. The total numbers of sanctions issued by the
FIN-FSA in general have increased in recent years. However, no sanctions
were issued relating to AML/CTF obligations between 2008 and 2011. It is
the policy of the FIN-FSA that the threshold for issuing sanctions should not
be too high. However, in the FIN-FSAs opinion sanctions must also not be
an end in itself. If supervisory goals can be achieved by less stringent means
and the issuance of a sanction is not necessary for other reasons, the FIN-FSA
usually chooses to employ more lenient supervisory measures.
158. From the comments provided by Finlands EOI partners, banking
information was one of the categories of information Finland was specifically
requested to provide and there have been no instances where the requisite infor-
mation was not provided to Finlands EOI partners. Over the three-year period
under review there were 26 requests made for banking information. Generally,
this information was made available within 90 days (63 days on average).
Phase 2 rating
completed.
COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 49
B. Access to Information
Overview
159. A variety of information may be needed in a tax enquiry and jurisdic-
tions should have the authority to obtain all such information. This includes
information held by banks and other financial institutions as well as infor-
mation concerning the ownership of companies or the identity of interest
holders in other persons or entities, such as partnerships and trusts, as well
as accounting information in respect of all such entities. This section of the
report examines whether Finlands legal and regulatory framework gives
the authorities access powers that cover all relevant persons and information
and whether rights and safeguards are compatible with effective exchange of
information. It also assesses the effectiveness of this framework in practice.
160. The Ministry of Finance is the designated competent authority under
all Finlands DTCs, TIEAs, Multilateral Convention and EU legislations. The
Ministry has delegated its competency to the tax authority in most cases.
161. The access powers of the competent authority are provided under Act
on Assessment Procedure (AAP). The access powers are wide and generally
override any other secrecy, confidentiality or comparable restriction under
Finnish law. They allow the competent authority to obtain information held
by banks and other financial institutions as well as information concerning
the ownership of companies or the identity of interest holders in other persons
or entities, such as partnerships and trusts, as well as accounting information
with respect to all such entities. In addition to the general access powers, the
competent authority may also request the assistance of the police to search
and seize documents directly from any persons.
162. Under Finnish law, there is no obligation on the competent authority
to notify the subject of a request for information. As a matter of practice, the
Finnish competent authority does not send a notification to the subject of the
request.
50 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION
163. Finlands institutional framework supports effective access to and
provision of information requested by competent authorities of other jurisdic-
tions. Input from Finlands EOI partners confirms that over the last 3 years
Finland has had no difficulties to access information in order to respond to
an EOI request.
B.1. Competent Authoritys ability to obtain and provide information
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information).
164. The Ministry of Finance is the designated competent authority under
all Finlands DTCs, TIEAs, Multilateral Convention and EU legislations. The
Ministry has however, delegated the competency to the tax authority except
in the following circumstances:
For EOI arrangement under DTCs signed with Spain and Egypt; and
For all other matters that are considered high fundamental importance.
165. Finland does not have a single unit that handles all international
information exchange. Incoming EOI requests are divided between different
units and each individual unit is competent to exchange information for mat-
ters that fall within its purview as described in the working order of the tax
authority.
166. Most incoming EOI requests are processed in the Tax Auditing
Unit. At the central level (known as the Steering and Development Unit,
International Group), the unit is staffed by seven full time officers working
on international exchange of information. Approximately 2.5 officers are
assigned to deal with direct taxation matters while the other 3.5 officers are
assigned to deal with indirect taxation matters. One officer is responsible for
simultaneous audits and international audit projects.
167. The Steering and Development Unit reviews incoming requests
regarding direct taxation (and indirect taxation if the legal basis for the request
is any other agreements other than the EU regulation) before it is assigned to
a designated person in the international network to gather the requisite infor-
mation. The international network consists of regional audit directors and tax
auditors from all five regional units specialised in international exchange of
information (i.e. the contact persons). In each of the regional units, there are
approximately 2 to 4 contact persons specialised in international exchange of
information. The total number of contact persons in Finland is currently 23.
All contact persons are experienced tax auditors and all of them are actively
working as auditors, with one exception in the largest region of Finland
(Uusimaa), there is one person working full time with international requests
concerning direct and indirect taxes (all incoming and outgoing requests and
spontaneous exchanges).
168. Moreover, if the request is based on the EU regulation No. 904/2010
on VAT, the competency to deal with the request is delegated to the regional
office. This means that the contact persons from the regional offices will
send the reply directly to the requesting EU member state without going
through the Steering and Development Unit.
169. The Corporate Taxation Unit is the competent authority for MAP
negotiations. One officer is responsible for negotiations on transfer pricing
matters, and one for all other double taxation situations where companies are
involved.
170. The Individual Taxation Unit is responsible for MAP negotiations
concerning double taxation situations involving individual taxpayers. One
officer is fully responsible for this matter. The same officer is also the com-
petent authority for automatic exchange (individuals and companies) except
where the exchange is automatic exchange of VAT information within the EU
that falls within the responsibility of the Tax Auditing Unit.
Powers to collect information
171. The Finnish competent authority has access to a number of data-
bases, in which ownership, identity and accounting information collected by
the tax authority and National Board of Patents and Registration of Finland
(NBPRF) is maintained. Moreover, the tax authoritys databases also include
information on: VAT transactions, defaults of VAT, employers payments,
scholarships, book-entry securities, register of taxpayers subject to prelimi-
nary taxation, evaluations of real estate taxation values, real estate database
(general information, occupancy information, active partners, ownership
information, ground ownership information, building information, building
list), credit information, forest holding transactions, employment income,
shareholder information, taxation value of shares, dividend information,
family relations (spouse, wife, husband, children, cohabitation, marriage),
investment fund share redemption, financial year, lines of business, income
tax, employees salary, VAT and preliminary tax amount declaration, taxable
earned income, taxable capital gains, security trading transactions and finan-
cial statement information.
172. Moreover, the tax authority has access to the Business Information
System (BIS system), maintained jointly by the NBPRF and tax authority.
The system enables businesses and organisations to report their informa-
tion in one single notification to both authorities. BIS is not a database in
traditional meaning but a channel and service portal for companies. The BIS
System can also be accessed publicly free of charge. Information contained
in the BIS System includes: business ID, trade name, company form, home
municipality, language, main line of business, postal address, street address,
telephone, registrations in force (e.g. VAT, trade registration, employer
registration).
173. The Finnish competent authority therefore is able to reply to a
number of requests without the need for the authority to make requests of
external parties (e.g. ownership information can be generally found in the
registers kept by the tax authority). The majority of the requests received
by the Finnish competent authority in the period under review required the
authority to contact the information holder (for example, requests for detailed
accounting information, contracts, banking information).
174. Section 11 of the AAP sets out the powers of the competent authority
to access information directly from a taxpayer. Section 11 provides:
On request by the Tax Administration, or by an authority dealing
with appeals, it is the taxpayers obligation to deliver, in addition
to the tax return, the information, explanations, including cash
receipts on paper, which may be necessary in the assessment of
the taxpayers taxes, or in the processing of an appeal.
175. Chapter 3, Section 19 of the AAP further provides for the access
powers of the competent authority on information held by a third party.
Section 19 provides:
If prompted by the Tax Administration, all physical and legal
persons are concerned by an obligation to report information to
the Tax Administration, in reference to a name, a bank account
number, a bank transaction number, or a comparable special
characteristic, to facilitate the tax assessment of another taxpayer.
This information may additionally be necessary for the purpose
of appeal processing. This information is to be reported if it
can be obtained from the documentation held by the physical or
legal person concerned, or if it is known to the person for other
reasons, unless special grounds, by definition of law, confer the
right to refuse from testifying. However, no refusal is acceptable
in the case of information directly affecting tax assessment, and
concerning the relevant taxpayers financial or economic position.
176. The use of the access powers contained in section 19 of the AAP in
the context of an EOI request from a foreign jurisdiction was clarified in a
decision of the Supreme Administrative Court issued in 1996 (see section
B.1.3 of this report). Moreover, section 22 of the AAP specifically authorises
the tax authority to obtain the information protected by secrecy laws.
Bank, ownership, and identity information (ToR B.1.1) and accounting
records (ToR B.1.2)
Ownership and identity information
177. A range of information is directly available to the Finnish competent
authority by means of accessing the databases maintained by the tax author-
ity and the NBPRF. The Finnish competent authority has access to a database
where ownership and identity information collected by the tax authority is
maintained (i.e. ownership information provided as part of the information
required in the tax return as described in Section A.1).
178. EOI requests pertaining to information that is readily available in
the databases maintained by the NBPRF or the tax authority are usually
answered directly at the central level in most cases, within the Steering
and Development Unit. No notice needs to be issued by the Finnish compe-
tent authority in this case. The Finnish competent authority advised that an
answer could generally be provided within a week, sometimes within the
same day.
179. The Finnish tax authority maintains a website
9
available in English
where some identity information of legal entities (e.g. companies and part-
nerships) is publicly available without a fee. The Finnish competent authority
informs Finlands EOI partners concerning the website and encourages them
to make use of it. Notwithstanding the above, the Finnish competent authority
will still reply to requests, even if they refer to information that is publicly
available on the public website.
180. For ownership and identity information that is not available in the tax
authoritys databases, the competent authority will invoke its access powers
under Sections 11 or 19 of the AAP and issue a notice to the taxpayer or any
relevant person holding the information to request for the information.
181. In terms of procedure, requests received at the Steering and
Development Unit are passed on to designated auditors who are part of
Finlands network for information gathering. These auditors contact the rel-
evant parties, usually by letter, and request the information. An answering time
of approximately two weeks is usually given. If the requests are complex, the
answering time is usually extended by a few weeks. The answering time will
only be further extended in exceptional cases.
9. www.ytj.fi/english/yrityshaku.aspx?path=1704;1736;2052&kielikoodi=3.
Accounting records
182. As referred to in section A.2 of this report, financial statements must
be filed with the NBPRF within the appropriate deadline imposed under the
Accounting Act. However, the NBPRF and the tax authority have streamlined
their operations and as a result, such accounting information is filed directly
with the tax authority using Tax Return Form 6B. Therefore, in practice,
taxpayers file accounting information directly with the tax authority and
there is no further obligation to submit the same information to NBPRF. The
information filed is stored in the tax authoritys database. When the Finnish
competent authority receives a request concerning accounting information, it
will first check if the information is available in the tax authoritys database,
which will normally be the case. However, if the information is not filed by
the taxpayer or if the information is not required to be filed by the taxpayers
(e.g. underlying documentation), the competent authority makes use of its
access powers under Sections 11 or 19 of the AAP and issues a notice to the
relevant person holding the information to request for the information.
Banking information
183. Banking secrecy is provided for in the Act on Credit Institutions
(121/2007) and financial institutions are prohibited from disclosing banking
information to a third party unless it is specifically authorised in the law
(Subsection 1 of Section 141). Subsection 2 of Section 141 of the Act on Credit
Institutions further provides that a credit institution and an undertaking
belonging to the same consolidation group with it shall be liable to disclose
the information referred to in subsection 1 to a prosecuting and pre-trial
investigation authority for the investigation of a crime as well as to another
authority entitled to this information under the law.
184. Section 22 of the AAP specifically authorises the tax authority to obtain
the information protected by secrecy laws, and so the competent authority can
be considered as one of the authorities entitled to this information under the
law as mentioned in Section 141 of the Act on Credit Institution. More spe-
cifically, section 22 of the AAP specifically provides that For purposes of this
chapter, the parties concerned by the information-reporting requirement are
to hand over the facts and information to the Tax Administration regardless of
secrecy, confidentiality, or comparable restrictions.
185. In practice, when an incoming EOI request is pertaining to banking
information held by a financial institution, the competent authority will use
its information gathering powers under section 19 of the AAP and issue a
notice to the banks at a centralised location. Every Finnish bank has its own
centralised database and there is a single point of contact for the Finnish tax
authority to request for the information.
186. If the account holder is not a resident in Finland, the case is handled
by the Steering and Development Unit. Banks are usually given an answering
time of two weeks. If the account holder has some connections to Finland, the
request will be assigned to an auditor who will request the information from
the bank. The difference in procedures is explained by practical reasons; if
there is no link to Finland, the request is perceived as having no tax revenue
impact in Finland and therefore, it can be handled directly by the Steering
and Development Unit in order to speed up the process.
187. The competent authority has not encountered any difficulties in obtain-
ing the required information from banks in Finland in the last three years. The
input from Finlands EOI partners confirms that banking information was
provided on a timely basis when requested. Over the three-year period under
review there were 26 requests made for banking information. Generally, this
information was made available within 90 days (63 days in average).
Use of information gathering measures absent domestic tax interest
(ToR B.1.3)
188. The concept of domestic tax interest describes a situation where a
contracting party can only provide information to another contracting party
if it has an interest in the requested information for its own tax purposes.
189. While there is no explicit reference in section 19 of the AAP for the
competent authority to use its access powers for purpose of fulfilling an incom-
ing EOI request, there is no express restriction in the AAP to the use of access
powers only in a domestic context. The Finnish authorities advised that the
access powers under the AAP can be used to fulfil the obligations of an EOI
agreement to which Finland has entered into. The use of the access powers
under the AAP in the context of an EOI request from a foreign jurisdiction
was clarified in a decision of the Supreme Administrative Court issued in 1996
(rec 4763/1/95, vol. 4063). The decision was related to the interpretation of
Article 26 of the DTC between Finland and a foreign jurisdiction and whether
the Finnish competent authority has powers to obtain banking information in the
absence of a domestic tax interest in that information. The Court ruled that as
the requested information was necessary for the assessment of the foreign com-
panys taxes due in the foreign jurisdiction and no restriction was imposed for
information exchange under Article 26(1) of the DTC, the Finnish bank did not
have the right to refuse to provide the information to the Finnish tax authority.
190. This court case confirms that Finland does not have a domestic
tax interest and the competent authority has powers to obtain information
requested by its EOI partners notwithstanding the fact that Finland may not
need the information for its own tax purposes. In the view of the Finnish
authorities, the principles of this case would equally apply to TIEAs.
Compulsory powers (ToR B.1.4)
191. Under section 22a of the AAP, the tax authority can impose punitive
fees if a person (i.e. the information holder) is found to have been negligent
in its duty to provide the information to the tax authority under the AAP, as
described below. The penalties provided in section 22a of AAP apply to any
third-party holding the information; in all circumstances where the informa-
tion is requested of the taxpayer, and he or she fails to provide it, the penalties
in section 32 of the AAP apply instead (please see below). The penalties
apply irrespective of whether the information is sought for domestic or for-
eign tax purposes.
The tax authority can impose a punitive fee for negligence of up to
EUR 2 000 (unless the case qualifies as one of the cases below);
The tax authority can impose a punitive fee for negligence of up
to EUR 5 000 if a party concerned by the information-reporting
requirement has let an error or omission, characterised as important,
be included in the relevant report, document or other carrier of infor-
mation; or has not submitted any information until prompted.
The tax authority can impose a punitive fee for negligence of up
to EUR 15 000, if a party concerned by the information-reporting
requirement has, to falsely fulfil the requirement, consciously let
an error or omission be included in the relevant report, document or
other carrier of information; or has not submitted any information
at all.
192. During the period under review (2009-11), the Finnish tax authority
did not need to apply the penalties provided under section 22a of the AAP,
since all third-party information holders have provided information when
requested by the tax authority.
193. Section 32 of the AAP establishes the following sanctions in case
taxpayers fail to comply with tax reporting obligations:
The tax authority may impose a surtax of up to EUR 150 if the
taxpayer has filed a tax return or a comparable notice, document
or filing containing a minor error or omission and in spite of being
prompted, has neglected to correct the error or omission; or if the
taxpayer has been late in submitting a notice, document or filing
without an acceptable reason;
The tax authority may impose a surtax of up to EUR 800 if the tax-
payer has filed a return or a comparable notice, document or filing
that has a major error or omission; or has not filed the same docu-
ments until prompted (proof of prompting to be shown);
The tax authority may impose a surtax of 30% of the taxable income
and as appropriate a surtax amounting to 1% of the asset balance if
the taxpayer has by way of intent or gross negligence, filed a return
or a comparable notice, document or filing that has a major error or
omission; or if the taxpayer has failed to submit any filing.
194. In addition, the tax authority may also request the assistance of the
police under Section 93 of the AAP to search and seize documents directly
from any persons if it is deemed necessary to obtain the required information.
Secrecy provisions (ToR B.1.5)
Banking secrecy
195. The secrecy obligation for banks and other credit institution follows
from the Act on Credit Institutions. The legal provisions in the AAP reviewed
above (i.e. section 22 of the AAP) grant the tax authority the necessary
powers to lift banking secrecy in order to reply to EOI requests.
Professional secrecy
196. The powers of the Finnish tax authority to access information under
section 19 of the AAP (described in B.1.1 above) prevails over legal provi-
sions on professional secrecy. An exception was recognised by the Finnish
Parliament regarding with the duty of confidentiality of an attorney. This
exception appears to be in line with section 21 of the Finnish Constitution
which guarantees that a person must have the right to fair trial.
197. In Finland, there are two statutes dealing with professional secrecy
applicable to attorneys: (i) the Advocates Act and (ii) the Code on Judicial
Procedure.
198. Pursuant to section 5(c) of the Advocates Act, an attorney (advo-
cate) may not disclose without consent or unlawfully disclose a secret of an
individual or his/her family or a business or professional secret of which the
attorney has become aware of in the course of his professional activity. This
provision imposes an obligation on attorneys to maintain secrecy in relation
to information they may become aware as part of his legal profession and not
in relation to other activities attorney might conduct (e.g. company formation
etc.).
199. The Code on Judicial Procedure provides for a list of persons that
may not give evidence in a court procedure (Chapter 17, section 23). The
list includes an attorney or counsel, in respect of information the client has
entrusted to him or her for the pursuit of a case, unless the client gives con-
sents to him or her to testify.
200. The Finnish Parliament, prior to the approval of the Assessment Act
(the Act which preceded the current AAP), debated the scope of the access
powers of the competent authority. The Parliament concluded that the tax
authoritys access powers do not override the prohibition for an attorney or
counsel to give evidence even in a case concerning the taxpayers economic
affairs (Finance Committee Report 98/1994).
201. Considering the above-mentioned provision of the Code on Judicial
Procedure and parliamentary discussions, the Finnish competent authority
interpreted that its access powers under Sections 19 and 22 of the AAP are
restricted by the professional legal privilege applicable to attorneys and coun-
sels. According to the Finnish authorities, the secrecy duty applies solely to
the information a client has entrusted the attorney for the purposes of a pend-
ing or forthcoming case.
202. The Finnish authorities have confirmed that legal privilege would
only apply in the context of seeking or obtaining legal advice provided by
attorneys and counsels. In this sense, the authorities confirmed that the legal
privilege is not wide as to restrict access to information in case a lawyer acts,
for instance, as a nominee shareholder, a trustee, a company director or under
a power of attorney to represent a company in its business affairs.
203. The legal privilege in Finland, therefore, is in line with the require-
ments under the standard.
204. According to Finlands EOI partners, there does not seem to have
been any case where a request for information was not answered due to
secrecy provisions. The competent authority has also confirmed that they
have never encountered problems accessing information held by third party
even if it was held by attorneys and counsels.
Phase 2 rating
completed.
B.2. Notification requirements and rights and safeguards
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information.
Not unduly prevent or delay exchange of information (ToR B.2.1)
205. The Terms of Reference provides that rights and safeguards should
not unduly prevent or delay effective exchange of information. For instance,
notification rules should permit exceptions from prior notification (e.g. in
cases in which the information request is of a very urgent nature or the
notification is likely to undermine the chance of success of the investigation
conducted by the requesting jurisdiction).
206. Under Finnish law, there is no obligation on the competent authority
to notify the subject of a request for information.
207. Where the information sought is not in the possession of the
competent authority, a notice would have to be issued to the holder of the
information (e.g. a financial institution) to request for the information under
section 19 of the AAP. The information sought must be clearly specified in
the request to the holder of the information. There is no obligation under
Finnish law to mention that the information is sought on behalf of a foreign
tax authority. The competent authoritys guidelines do not include any recom-
mendation on this and the practice varies. The Finnish authorities confirmed
that the fact that the information is sought on behalf of a foreign tax authority
is often mentioned in the notice sent to the holder.
208. The peer input received for this review confirms that there have not
been any cases where rights and safeguards that apply to a person in Finland
unduly prevented or delayed effective exchange of information.
209. There have been a couple of instances where persons filed court
cases when they consider the access and exchange of information was not
authorised under Finnish law. The court cases dated from 1996, 2004 and
2006. The Supreme Administrative Court has decided all three cases in
favour of the Finnish competent authority, confirming the competent author-
itys powers to access and exchange information. In the 1996 case, Finlands
Supreme Administrative Court confirmed that the Finnish tax authority can
access and exchange banking information pursuant to the terms of Finland
domestic law and the DTC with a foreign jurisdiction. The second ruling
concerned a request from a treaty partner for information on insurance hold-
ers in a Finnish insurance company which actively marketed boat insurances
in the treaty partner jurisdiction. The Supreme Administrative Court ruled
in 2004 that the tax authority has the right to obtain such information and
can on basis of the Nordic Mutual Assistance Agreement exchange it with its
treaty partner. The third case in 2006, referred to whether the information to
be exchanged constituted a business secret. A treaty partner had requested
Finland to provide information on business transactions and payment details
between a company in Finland and a company in another country. The
Supreme Administrative Court ruled that such information could not be con-
sidered business secret and, as such, it could be exchanged with the other
competent authority.
Phase 2 rating
completed.
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION 61
C. Exchanging Information
Overview
210. Jurisdictions generally cannot exchange information for tax purposes
unless they have a legal basis or mechanism for doing so. A jurisdictions
practical capacity to effectively exchange information relies both on having
adequate mechanisms in place as well as an adequate institutional frame-
work. This section of the report assesses Finlands network of exchange of
information agreements against the standards and the adequacy of its institu-
tional framework to achieve effective exchange of information in practice.
211. Finland has an extensive treaty network allowing for exchange of
information for tax purposes, and is currently engaged in additional treaty
negotiations as well as renegotiations of its older treaties. Finland has EOI
arrangements with 119 jurisdictions; 71 of these arrangements are DTC
and 39 are TIEA. The remaining jurisdictions are parties to the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters (Multilateral
Convention) and/or the Nordic Mutual Assistance Convention on Mutual
Administrative Assistance in Tax Matters (the Nordic Convention). Out of the
71 DTCs signed by Finland, six are not in force (Uruguay, Barbados (proto-
col), Belgium (protocol) and Switzerland (protocol), Cyprus
10
and Tajikistan).
Out of the 39 signed TIEAs, nine are not in force (Belize, Brunei, Costa Rica,
10. Note by Turkey: The information in this document with reference to Cyprus
relates to the southern part of the Island. There is no single authority represent-
ing both Turkish and Greek Cypriot people on the Island. Turkey recognises the
Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable
solution is found within the context of the United Nations, Turkey shall preserve
its position concerning the Cyprus issue.
Note by all the European Union Member States of the OECD and the European
Union: The Republic of Cyprus is recognised by all members of the United
Nations with the exception of Turkey. The information in this document relates to
the area under the effective control of the Government of the Republic of Cyprus.
62 COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION
Dominica, Guatemala, Jamaica, Liberia, Panama and Samoa). Finland has
taken all domestic procedures to bring those treaties into force.
212. As an EU member, Finland is also able to exchange information with its
EU counterparts under the scope of EU Council Directive 2011/16/EU. The arti-
cles in this Directive are in line with the international standard. Finland is also
involved in automatic exchange of information with a number of EOI partners
(when the EOI instrument so provides) and with other EU member states under
the EU Council Directive 2003/48/EC in respect of savings interest and under
EU Regulations on administrative co-operation in the fields of VAT and excise.
213. Finland still actively seeks to expand its exchange of information
network. The Finnish competent authority has recently commenced negotia-
tions with several jurisdictions under the auspices of the Joint Nordic TIEA
co-operation to establish TIEAs and has approached others noting its desire
to enter into negotiations to establish TIEAs. On average, it takes somewhere
between 3 to 6 months before a TIEA or DTC is ratified in Finland.
214. The 1989 Nordic Convention, which is in force with respect to
Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden,
contains detailed provisions on the exchange of information on request for tax
purposes. It also contains provisions concerning automatic and spontaneous
exchange; simultaneous examinations; service of documents; presence and
participation of representatives from requesting jurisdictions at examinations;
and recovery of tax.
215. In 1989, Finland became a signatory to the Multilateral Convention.
The Multilateral Convention provides for all possible forms of administrative
co-operation between states in the assessment and collection of taxes, in par-
ticular with a view to combating tax avoidance and evasion. Finland is also a
signatory to the protocol to this convention, and it already entered in force on
1 June 2011.
216. A domestic tax interest requirement does not exist in Finland and
there are no restrictions in the Finnish legislation as regards the authorities
powers to access information held by banks. Notwithstanding the above, such
limitations might exist in some of Finlands partner jurisdictions. Finland is
aware of this risk and embarked on an ambitious programme to renegotiate
its older treaties to incorporate provisions akin to Article 26(4) or (5) of the
OECD Model Tax Convention. This is to allow exchange information with
these treaty partners to meet the international standard. Finland has already
completed the process for all its treaties that required Article 26(5) to fully
meet the international standard (to due limitations existing in the partner
jurisdictions domestic laws) with the exception of one DTC, which Finland
is in midst of renegotiation.
217. All EOI articles in Finlands agreements contain confidentiality pro-
visions and Finlands domestic legislation contains relevant confidentiality
provisions. These provisions apply equally to all information in the requests
received as well as to responses received from counterparts.
218. Finlands agreements ensure that the contracting parties are not
obliged to provide information which would disclose trade, business, indus-
trial, commercial or professional secrets or information which is the subject
of attorney client privilege or to make disclosures which would be contrary
to public policy.
219. Regarding the effectiveness of exchange of information, Finlands
competent authority has adequate resources to exchange information effec-
tively: there is sufficient professional staff with clear responsibility for
processing requests and retrieving information; the staff members have
adequate expertise and training specific to exchange of information; and
Finland has adequate financial and technical resources dedicated to fulfil its
exchange of information obligations.
220. Responses received from Finlands exchange of information partners
suggest that Finlands practices in terms of exchange of information are of
a very high standard. Peer jurisdictions consider Finland to be a reliable,
efficient and cooperative exchange of information partner. Finland receives
a relatively high volume of requests and replies to the vast majority of those
requests within 90 days. A few requests that involved issues that were more
complex were responded to within 180 days.
C.1. Exchange-of-information mechanisms
Exchange of information mechanisms should allow for effective exchange of information.
221. There is a variety of instruments bilateral and multilateral agree-
ments as well as EU Directives and Regulations through which Finland can
assist other tax authorities and seek assistance from them in relation to both
direct and indirect tax liabilities. These include:
Double taxation agreements (DTCs) and a tax information exchange
agreement (TIEA);
The Multilateral Convention;
The EU Council Directive 2011/16/EU of 15 February 2011 on
administrative co-operation in the field of taxation, replacing Council
Directive 77/799/EEC concerning mutual assistance by the competent
authorities of the Member States of the EU in the field of direct taxa-
tion and taxation of insurance premiums;
Directive 2010/24/EU on mutual assistance by the EU Member States
for the recovery of claims relating to certain levies, duties, taxes and
other measures;
Council Regulation (EU) No 904/2010 of 7 October 2010 on admin-
istrative cooperation and combating fraud in the field of value added
tax; and
Council Directive 2003/48/EC on taxation of saving income in the
form of interest payments;
The Nordic Convention.
222. In addition to DTCs and TIEAs, Finland is a signatory of the
Multilateral Convention developed by the OECD and the Council of Europe.
The updated Multilateral Convention incorporates international standard
for exchange of information in tax matters. Whilst this report is focused on
the terms of its EOI agreements and practices concerning the exchange of
information on request, it is noted that the updated Multilateral Convention
explicitly allows spontaneous and automatic exchange of information as well.
223. When two or more arrangements for the exchange of information
for tax purposes exist between Finland and a treaty partner, the parties may
choose the most appropriate agreement under which to exchange the informa-
tion. There are no domestic rules in Finland requiring it to choose between
mechanisms where it has more than one agreement involving a particular
partner and, thus, the competent authority is free to invoke all of the available
mechanisms or to choose the most appropriate, unless otherwise provided in
the EOI mechanism itself.
Other forms of exchange of information and co-operation
224. Finland is actively engaged in many different types of tax co-operations
with its partners. For instance, Finland is involved in various simultaneous
tax audit projects and to date, has participated in simultaneous tax audits with
Estonia, Lithuania, Germany, Latvia, Denmark, Poland, Spain, the United
Kingdom, Ireland, the Netherlands, the Czech Republic and Austria.
225. A cooperation group on improving information exchange with Russia
was set up by the Director Generals of both tax authorities in 2009. The aim
of this group is to improve the exchange of information flow between Finland
and Russia with a special focus on automatic information exchange.
226. Finland has also participated in many international information
exchange initiatives in the area of automatic information exchange. For example,
Finland is a member of the EU Commission Committee on Administrative
Cooperation in Taxation and participates in a working group created to set
the standard for automatic information exchange in order to implement the
new provisions of the EU Council Directive 2011/16/EU. On the Nordic level,
Finland leads the working group Automatic Exchange of Information within
the Nordic countries with the aim of improving the effective use of automati-
cally exchanged information and the using the information in pre-completed
tax returns for taxpayers. To meet the objectives set out by the EU and Nordic
project, Finland has established an internal project to define and make the
necessary changes required to its own databases.
Foreseeably relevant standard (ToR C.1.1)
227. The international standard for exchange of information envis-
ages information exchange upon request to the widest possible extent.
Nevertheless it does not allow fishing expeditions, i.e. speculative requests
for information that have no apparent nexus to an open inquiry or investiga-
tion. The balance between these two competing considerations is captured in
the standard of foreseeable relevance which is included in Article 26(1) of
the OECD Model Tax Convention set out below:
The competent authorities of the contracting states shall exchange
such information as is foreseeably relevant to the carrying out the
provisions of this Convention or to the administration or enforce-
ment of the domestic laws concerning taxes of every kind and
description imposed on behalf of the contracting states or their
political subdivisions or local authorities in so far as the taxation
thereunder is not contrary to the Convention. The exchange of
information is not restricted by Articles 1 and 2.
228. Finlands DTCs are patterned after the OECD Model Tax Convention
and its commentary as regards the scope of information that can be exchange.
DTCs signed or amended by protocol after 2005 generally use the term foresee-
ably relevant. 20 out of 71 DTCs signed by Finland uses the term foreseeably
relevant (DTCs signed with Armenia, Australia, Austria, Barbados (not in
force), Belarus, Belgium (not in force), Canada, China, Georgia, Cyprus, India,
Kazakhstan, Luxembourg, Moldova, Poland, Singapore, Switzerland, Tajikistan,
Turkey, Uruguay (not in force)).
229. Finlands older DTCs usually use the term as is necessary or as
is relevant in lieu of foreseeably relevant. It is the case for 51 out of the
71 DTCs signed by Finland. The terms as is necessary and as is relevant
are recognised in the commentary to Article 26 of the OECD Model Tax
Convention to allow for the same scope of exchange as does the term fore-
seeably relevant.
230. All of Finlands 39 TIEAs are modelled after the OECD Model TIEA
and use the term foreseeably relevant.
In respect of all persons (ToR C.1.2)
231. For exchange of information to be effective, it is necessary that a
jurisdictions obligation to provide information is not restricted by the resi-
dence or nationality of the person to whom the information relates or by the
residence or nationality of the person in possession or control of the informa-
tion requested. For this reason, the international standard for exchange of
information envisages that exchange of information mechanisms will provide
for exchange of information in respect of all persons.
232. Fifty-five of Finlands 71 DTCs as well as all its 39 TIEAs provide
for exchange of information with respect to all persons. None of these
agreements restricts the jurisdictional scope of the exchange of information
provisions to certain persons, for example those considered resident in one of
the contracting parties.
233. The scope of the DTC signed with 16 jurisdictions (Bosnia and
Herzegovina, Bulgaria, Croatia, Egypt, France, Germany, Ireland, Japan, Kosovo,
Montenegro, Portugal, Spain, Serbia, Tanzania, the United Arab Emirates and the
United Kingdom) is limited to persons covered by the convention. However, these
DTCs note that information is to be exchanged for carrying out the provisions of
the domestic laws. As non-residents are under the scope of the Finnish legislation,
these DTCs provide for the exchange of information in respect of all persons.
Obligation to exchange all types of information (ToR C.1.3)
234. Jurisdictions cannot engage in effective exchange of information if
they cannot exchange information held by financial institutions, nominees or
persons acting in an agency or a fiduciary capacity. The OECD Model Tax
Convention, which is an authoritative source of the standard, stipulates that
bank secrecy cannot form the basis for declining a request to provide infor-
mation and that a request for information cannot be declined solely because
the information is held by nominees or persons acting in an agency or fiduci-
ary capacity or because the information relates to an ownership interest.
235. Twenty-two of Finlands 71 DTCs and Protocol to the DTCs include
provisions akin to Article 26(5) of the OECD Model Tax Convention, which
provides that a contracting party may not decline to supply information solely
because the information is held by a bank, other financial institution, nomi-
nee or person acting in an agency or a fiduciary capacity or because it relates
to ownership interests in a person. Finlands policy is to include Article 26(5)
in all of its new agreements.
236. Although Finlands older DTCs do not include such a provision,
there are no limitations in Finlands laws with respect to access to bank-
ing information, information held by nominees, and ownership and identity
information. There may be, however, such limitations in place in the domestic
laws of some of its treaty partners. In these cases, the absence of a specific
provision requiring exchange of banking information unrestricted by bank-
ing secrecy may serve as a limitation on the exchange of information which
can occur under the relevant DTC. Finland is aware of this risk and has
negotiated all its old treaties with countries that may need a provision similar
to Article 26(5) of the OECD Model Tax Convention to exchange banking
information, with exception of one DTC, which Finland is in midst of rene-
gotiation. The DTC with Malaysia does not contain the model Article 26(5)
and Finland is unable to request for banking information from Malaysia
until the treaty is renegotiated. Finland has started to renegotiate a new DTC
with Malaysia in November 2011 to address this issue. Finland is encour-
aged to continue to its efforts to monitor the effectiveness of the exchange
of information with its treaty partners and, if necessary, renegotiate older
DTCs. All new treaties signed by Finland already contain provisions akin to
Article 26(5) of the OECD Model Tax Convention.
237. All of Finlands 39 TIEAs include the provisions contained in
Article 5 paragraphs (a) and (b) of the OECD Model TIEA, obliging the con-
tracting parties to exchange all types of information.
Absence of domestic tax interest (ToR C.1.4)
238. The concept of domestic tax interest describes a situation where a
contracting party can only provide information to another contracting party
if it has an interest in the requested information for its own tax purposes. An
inability to provide information based on a domestic tax interest requirement
is not consistent with the international standard. Contracting parties must use
their information gathering measures even though invoked solely to obtain
and provide information to the other contracting party.
239. Twenty-two of Finlands DTCs contain provisions akin to Article 26(4)
of the OECD Model Tax Convention, obliging the contracting parties to use
information-gathering measures to exchange requested information without
regard to a domestic tax interest. All of Finlands 39 TIEAs allow informa-
tion to be obtained and exchanged notwithstanding it is not required for any
domestic tax purpose.
240. Finlands older DTCs do not contain such a provision. There are,
however, no domestic tax interest restrictions on the competent authorities
powers to access information for exchange of information purposes. Finland
is able to exchange information, including in cases where the information
is not publicly available or already in the possession of the governmental
authorities.
241. A domestic tax interest requirement may however exist in some of
Finlands partner countries. In such cases, the absence of a specific provision
requiring exchange of information unrestricted by domestic tax interest may
serve as a limitation on the exchange of information. Finland is aware of this risk
and has actively pursued to renegotiate its old treaties to incorporate provision
akin to Article 26(4) of the OECD Model Tax Convention whenever necessary.
Moreover, all new treaties signed by Finland already contain provisions akin
to Article 26(4) of the OECD Model Tax Convention. Finland is encouraged to
continue to its efforts to monitor the effectiveness of the exchange of information
with its treaty partners and, if necessary, renegotiate older DTCs.
Absence of dual criminality principles (ToR C.1.5)
242. The principle of dual criminality provides that assistance can only be
provided if the conduct being investigated (and giving rise to an information
request) would constitute a crime under the laws of the requested country if
it had occurred in the requested country. In order to be effective, exchange of
information should not be constrained by the application of the dual criminal-
ity principle.
243. There are no dual criminality requirements in Finlands agreements
for exchange of information in tax matters.
Exchange of information in both civil and criminal tax matters
(ToR C.1.6)
244. Information exchange may be requested both for tax administration
purposes and for tax prosecution purposes. The international standard is not
limited to information exchange in criminal tax matters but extends to infor-
mation requested for tax administration purposes (also referred to as civil
tax matters).
245. All of Finlands exchange of information agreements provide for
exchange of information in both civil and criminal tax matters.
Provide information in specific form requested (ToR C.1.7)
246. Exchange of information mechanisms should allow for the provision
of information in the specific form requested (including depositions of wit-
nesses and production of authenticated copies of original documents) to the
extent possible under a jurisdictions domestic laws and practices.
247. There are no restrictions in the exchange of information provisions in
Finlands DTCs that would prevent Finland from providing information in a
specific form, as long as this is consistent with its own administrative practices.
248. Protocol to the DTC with the United States (2006) includes a specific
clause to reinforce the need to provide information in the form requested
(in the form of depositions or witnesses and copies of unedited original
documents).
In force (ToR C.1.8)
249. Exchange of information cannot take place unless a jurisdiction has
exchange of information arrangements in force. Where exchange of infor-
mation agreements have been signed, the international standard requires
that jurisdictions must take all steps necessary to bring them into force
expeditiously.
250. Finland has an extensive EOI network covering 119 partners, 71 of
them being covered by DTCs, 39 by TIEAs. The remaining jurisdictions are
parties to the Multilateral Convention and/or the Nordic Convention.
251. Pursuant to the Finnish Constitution, all signed international tax
agreements has to be tabled for the Parliaments approval. After approved by
the Parliament, the agreement is ratified by the President. After completing
all the necessary steps, Finland informs its treaty partner officially and the
agreement enters into force by way of a Regulation.
252. The Finnish authorities advised that in practice, the time taken for the
ratifications of a DTC or TIEA depends largely on the time of the year the
agreement is tabled to the Parliament for approval. If the signed agreement
is presented to the Parliament in autumn, the Finnish authority has advised
that it would usually take a longer time for the Parliament to approve the
agreement as the Parliament is usually preoccupied with the debate on the
governments budget. On average, it takes between 3 to 6 months before a
TIEA or DTC is ratified.
253. Of the 39 TIEAs signed, 9 are not in force. Of the 9 TIEAs that are not
in force, one is signed in 2009 (Samoa), three are signed in 2010 (Dominica,
Belize and Liberia), one is signed in 2011 (Costa Rica) and four are signed in
2012 (Brunei, Guatemala, Jamaica and Panama). Of the 71 DTCs, four are
not in force (Barbados (protocol signed in November 2011), Belgium (proto-
col signed in September 2009), Switzerland
11
(protocol signed in September
11. The earlier protocol signed between Finland and Switzerland in September 2009
required the requesting party to provide the name and address of the taxpayer
and the name and address of the holder of information when making an EOI
request. These requirements were deemed unduly restrictive and were considered
inconsistent with the standard. The new protocol of September 2012 rectifies
this issue. The Protocol between Finland and Switzerland of September 2012
did not require any parliamentary approval from the Swiss side in line with the
2012), Cyprus (DTC signed in November 2012) and Tajikistan (DTC signed in
October 2012). Finland has taken all domestic procedures to bring those trea-
ties into force. Finland has also ratified the amended Multilateral Convention
and it is in force since 1 June 2011.
Be given effect through domestic law (ToR C.1.9)
254. For exchange of information to be effective, the contracting par-
ties must enact any legislation necessary to comply with the terms of the
agreement.
255. All Finlands EOI agreements that have been signed and ratified by
both parties are in effect in Finland. Moreover, Finlands competent author-
ity has a developed legal and institutional framework that supports effective
exchange of information. Clear procedures are followed by EOI staff for
processing, co-ordinating and responding to incoming requests.
Phase 2 rating
completed.
C.2. Exchange-of-information mechanisms with all relevant partners
The jurisdictions network of information exchange mechanisms should cover
all relevant partners.
256. Ultimately, the international standard requires that jurisdictions
exchange information with all relevant partners, meaning those partners
who are interested in entering into an information exchange arrangement.
Agreements cannot be concluded only with counterparties without eco-
nomic significance. If it appears that a jurisdiction is refusing to enter into
agreements or negotiations with partners, in particular ones that have a rea-
sonable expectation of requiring information from that jurisdiction in order
Federal Decree approved by the Swiss parliament in December 2011. Finland sent
a notification to Switzerland on 3 January 2013 concerning the entry into force
on 3 February 2013. The Protocol will apply retrospectively since the entry into
force of the Protocol of September 2009.
to properly administer and enforce its tax laws it may indicate a lack of com-
mitment to implement the standard.
257. Finland has 114 EOI agreements that provide for effective exchange
of information in tax matters. These agreements are with counterparties,
which represent:
all of its major trading partners and main investors;
99 of the 117 Global Forum Member jurisdictions;
all EU member States;
12
18 of the G20 jurisdictions; and
33 of the 34 OECD member economies.
258. It is evident that Finland has an extensive treaty network allowing for
exchange of information for tax purposes. More recently, Finland has taken
an active role in collaboration with other Nordic countries to expand its treaty
network.
259. While the Nordic countries still remain Finlands main EOI partners,
exchange of information among other neighbouring countries (Estonia and
Russia) with which Finland has close economic relations have increased sig-
nificantly over the years.
260. Comments were sought from the jurisdictions participating in the
Global Forum in the course of the preparation of this report, and no jurisdic-
tion advised the assessment team that Finland had refused to negotiate or
conclude an information exchange agreement with it. In summary, Finlands
network of information exchange agreements covers all relevant partners.
Nordic TIEA co-operation
261. Joint Nordic TIEA co-operation began in 2006 with the objective of
co-ordinating the Nordic approach for entering into TIEAs with jurisdictions
identified as tax havens in the 2000 OECD report Harmful Tax Competition:
An Emerging Global Issue. In order to strengthen the Nordic negotiating posi-
tion and to keep costs for this work down, the Nordic countries co-ordinate
their negotiation work under the auspices of the Nordic Council of Ministers.
The Faroe Islands and Greenland also independently take part in this work.
262. A steering group of representatives from all Nordic countries coor-
dinates the negotiation efforts. Participants in the steering group are experts
12. EU Council Directive 2011/16/EU of 15 February 2011 on administrative co-operation
in the field of taxation.
with experience from their finance ministries, as well as experience in
national and international work in the field of tax evasion. Negotiations are
carried out by a team comprising a project leader and one or more representa-
tives from the other countries. The actual information exchange agreements
are however entered into on a bilateral basis because of constitutional reasons.
Nordic co-operation in TIEA negotiations has reaped great success. Resulting
from this co-operation, Finland has signed 39 TIEAs to the standard since
2007, 30 of which are in force (see Annex 2 to this report for details).
Factors underlying
recommendations Recommendations
Finland should continue to develop its
exchange of information network with
all relevant partners.
Phase 2 rating
completed
C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate
provisions to ensure the confidentiality of information received.
Information received: disclosure, use, and safeguards (ToR C.3.1)
263. Governments would not engage in information exchange without the
assurance that the information provided would only be used for the purposes
permitted under the exchange mechanism and that its confidentiality would
be preserved. Information exchange instruments must therefore contain
confidentiality provisions that spell out specifically to whom the information
can be disclosed and the purposes for which the information can be used.
In addition to the protections afforded by the confidentiality provisions of
information exchange instruments, jurisdictions with tax systems generally
impose strict confidentiality requirements on information collected for tax
purposes.
264. The provisions governing confidentiality are based on Article 26(2)
of the OECD Model Tax Convention (in its successive versions, depending
on the date of signature of the treaty in question) or on article 8 of the OECD
Model TIEA, according to which any information received by a Contracting
State shall be treated as secret in the same manner as information obtained
under the domestic laws of that State.
265. All DTCs and TIEAs signed by Finland have secrecy provisions
ensuring that all information received will be kept secret. The majority of
Finlands DTCs and a TIEA provide that the information obtained in the
course of a request for assistance should be accessible only to persons directly
concerned with or involved in the assessment of the taxes, or the admin-
istrative control of that assessment. This term embraces taxpayers, their
representatives, the tax authority, and judges of the tax courts.
266. The Council Directive 77/799/EEC, the Nordic Convention and the
EU/OECD Convention also contain safeguards corresponding to those in
Article 26(2) of the OECD Model Tax Convention, restricting the disclosure
of information by the competent authority of the receiving state.
267. The confidentiality provisions of Finlands DTCs are backed by
general confidentiality provisions in Finlands domestic tax legislation. More
specifically, section 4 of Act on the Public Disclosure and Confidentiality of
Tax Information provides that Taxation documents concerning a taxpayers
financial position and any other taxation documents containing information
on an identifiable taxpayer are confidential with the exception provided in
sections 5 to 9 and 21. The exceptions provided in sections 5 to 9 and 21 gen-
erally relates to information that are publicly available or publicly available
under the Business Information System (BIS system). The Criminal Code
punishes the violation of a secrecy duty with a fine or imprisonment for a
maximum term of one year (chapter 38, section 1 and chapter 40, section 5).
268. Access to the premises of tax authority (including the units dealing
with EOI) is restricted to authorised persons only. Moreover, the access to
Finlands EOI database and systems are also restricted to authorised users
only. The competent authority also adopts a clean desk policy where all
incoming requests and underlying documentation is stored in the protected
electronic system and all paper copies are destroyed. The EOI database is
only accessible to persons working directly with EOI matters.
All other information exchanged (ToR C.3.2)
269. The confidentiality provisions in Finlands exchange of information
agreements and domestic law do not draw a distinction between informa-
tion received in response to requests or information forming part of the
requests themselves. As such, the Finnish authorities consider that section 4
of Act on the Public Disclosure and Confidentiality of Tax Information pro-
tects both domestic and foreign taxpayers and apply equally to all requests
for information, background documents to such requests, and any other
document reflecting information, including communications between the
requesting and requested jurisdictions and communications within the tax
authorities of either jurisdiction.
Phase 2 rating
completed.
C.4. Rights and safeguards of taxpayers and third parties
The exchange of information mechanisms should respect the rights and
safeguards of taxpayers and third parties.
Exceptions to requirement to provide information (ToR C.4.1)
270. The international standard allows requested parties not to supply
information in response to a request in certain identified situations. Among
other reasons, an information request can be declined where the requested
information would disclose confidential communications protected by attor-
ney-client privilege. Attorney-client privilege is a feature of the legal systems
of many countries.
271. All of the agreements concluded by Finland incorporate wording
modelled after Article 26(2) of the OECD Model Tax Convention or Article 8
of the OECD Model TIEA providing that requested jurisdictions are not
obliged to provide information which would disclose any trade, business,
industrial, commercial or professional secret or information which is the sub-
ject of attorney-client privilege/legal privilege or information the disclosure
of which would be contrary to public policy. Moreover, the attorney-client
privilege in Finland meets the international standard (see B.1.5).
272. Inputs from Finlands EOI partners received in the course of the peer
review appears to confirms that there have been no cases where rights and
safeguards that apply to a person in Finland unduly prevented or delayed
effective exchange of information.
273. There have been three instances where persons have pursued cases in
court aiming at impeding exchange of information. The Supreme Administrative
Court has decided all three cases in favour of the Finnish competent authority,
confirming the competent authoritys powers to access and exchange information
in the specific cases (see section B.2 of this report).
Phase 2 rating
completed.
C.5. Timeliness of responses to requests for information
The jurisdiction should provide information under its network of agreements
in a timely manner.
Responses within 90 days (ToR C.5.1)
274. In order for exchange of information to be effective it needs informa-
tion to be provided in a timeframe which allows tax authorities to apply the
information to the relevant cases. If a response is provided after a significant
lapse of time the information may no longer be of use to the requesting
authorities. This is particularly important in the context of international co-
operation as cases in this area must be of sufficient importance to warrant
making a request.
275. There are no provisions in Finlands laws or in its DTCs pertaining to
the timeliness of responses or the timeframe within which responses should
be provided. Finlands TIEAs include an obligation to either respond to the
request, or provide a status update within 90 days of receipt of the request.
There is no legal restriction on the ability of Finlands competent authority
to respond to requests within 90 days of receipt by providing the information
requested or by providing an update on the status of the request.
276. In 2009, 2010 and 2011, Finland received a total of 220 requests for
information on direct taxation matters (59 in 2009, 100 in 2010, 61 in 2011).
Finland counts as one request a request concerning a single taxpayer even
when more than one piece of information is requested. Finland also received
396 requests for information on indirect tax matters in that period.
277. Finlands main EOI partners are Estonia, Norway, Russia and Sweden.
278. Out of the 220 incoming requests, Finland was in position to provide
an answer within 90 days in 93.2% of the cases and within 180 days in 4.6%
of the cases. No cases took more than one year for Finland to furnish a reply.
Year
Fulfilled within
More than
365 days Pending Declined Total 90 days 180 days 365 days
2009 52 4 3 0 0 0 59
2010 96 2 2 0 0 0 100
2011 57 4 0 0 0 0 61
Total 205 10 5 0 0 0 220
279. The Finnish authorities do not systematically provide up-dates, due
to the fact that there have been few requests where they have not been able
to provide the requested information within 90 days. Updates are sent, how-
ever, whenever the authorities deem necessary (i.e. sometimes even before a
90-day period has elapsed). However, the Finnish authorities advised that in
the beginning of 2013 when the new EU Directive comes in force, they will
always send an update if they are not able to respond within the time limits of
the EU Directive or the relevant EOI instrument (in case of EOI with non-EU
members).
280. Inputs from Finlands EOI partners received in the course of the peer
review reveals that the responses received from Finland are of very high qual-
ity. Finland responded to almost all EOI requests within 90 days, and Finland
took more than 180 days to reply in only in five complex cases. Finland also
proactively took efforts to clarify on EOI request if the requests were unclear
or when Finland needed more information from the requesting state before a
reply could be furnished.
Organisational process and resources (ToR C.5.2)
281. Finland does not have a single unit that handles all international
information exchange. Incoming EOI requests are divided between different
units and each individual unit is competent to exchange information for mat-
ters that fall within its purview as described in the working order of the tax
authority.
282. Most incoming EOI requests are processed in the Tax Auditing
Unit. At the central level (known as the Steering and Development Unit,
International Group), the unit is staffed by seven full time officers working
on international exchange of information. Approximately 2.5 officers are
assigned to deal with direct taxation matters while the other 3.5 officers are
assigned to deal with indirect taxation matters. One officer is responsible for
simultaneous audits and international audit projects.
283. EOI requests pertaining to information that is readily available
in the databases maintained by the NBPRF or the tax authority are usu-
ally answered directly at the central level in most cases, the Steering and
Development Unit. The Finnish competent authority advised that generally
an answer can be provided within a week, sometimes even during the same
day.
284. Incoming requests regarding direct taxation (and indirect taxation
if the legal basis for the request is any other agreements other than the EU
regulation) are reviewed at the Steering and Development Unit before it
is assigned to a designated persons in the international network (regional
level) to gather the requisite information. If the request is based on the EU
regulation No. 904/2010 (VAT), the competency to deal with the request is
delegated to the regional office. This means the regional office will send the
reply directly to the requesting EU member state without going through the
Steering and Development Unit.
285. The international network consists of regional audit directors and
tax auditors specialised in international EOI. The tax auditors specialising in
international EOI referred to contact persons within the international net-
work. Participants in the international network come from five regional units.
In all these units, there are generally two to four appointed contact persons.
The total number of contact persons in Finland is 23. All the contact persons
are experienced tax auditors and they also work on other tax audits with the
exception of the contact persons from the Uusimaa, the largest region in
Finland where a contact person works full time on international EOI matters.
System to track EOI request VAPU system
286. Since 2007, Finland has implemented an IT system known as VAPU
to keep track of all incoming and outgoing EOI requests. VAPU provides
users with a searchable database that enables the tracking of the basic
information about an EOI request (e.g. reference number, country, taxpayer
concerned). VAPU also enables users to keep track of actions that have been
taken on a case and the deadlines to reply to an EOI request. The ability to
keep track of deadlines is important as Key Performance Indicators (KPIs)
are put in place in Finland for replying to incoming EOI request within a
specified timeframe.
287. The KPIs requires the tax auditing unit to reply to an EOI request
within a specified timeframe set under the EOI agreement itself or agreed
internally by the tax authority. For EOI request under DTCs and TIEAs,
it was revealed that the tax authority has set a target of eight weeks for
the regional level to provide a reply. For EOI request under the EU instru-
ments, the answering time ranges between one and six months depending
on whether the information is already in the possession of the tax authority
(as stipulated in the instrument). Finland has decided to follow even stricter
timeframes internally. In 2011, the Finnish competent authority managed to
achieve 98% compliance with the KPI set for providing a reply to an EOI
request.
288. The Finnish authority advised that the use of the VAPU system has
enabled Finlands competent authority to improve its effectiveness and effi-
ciency significantly because the VAPU system helps to:
minimise differences in practice and standardise operating proce-
dures in the five regions;
create a unique and automated reference number for each incoming
EOI request;
allow all data relating to a request to be accessible anywhere where a
computer is connected to the tax authoritys network;
manage access rights to the information stored in the system;
create a status update on the progress of any EOI request; and
keep track of deadline and timeframe for providing a reply.
EOI Manual
289. Finlands manual is based on the OECD manual and concerns both
incoming and outgoing requests. The manual takes into account all kinds of
information exchange regardless of legal basis, i.e. both direct and indirect
taxation. Finland has also prepared a quick-guide that is intended for any
tax auditor handling EOI matters. It concentrates only on the most important
issues to keep in mind when preparing a request for information or sending
spontaneous information. Both the manual and the quick guide are available
on the tax authoritys intranet.
Training provided to personnel
290. New officials joining the tax auditing units are introduced to the
international EOI work through practical on-the-job training. New officials
are introduced to the legal basis for engaging in international EOI and to the
different international organisations involved in EOI in tax matters. New offi-
cials also receive training to familiarise themselves with the software used
by the tax authority (tax authoritys databases, VAPU etc.). After the basic
training is completed, new officials will start working on exchanges with the
close guidance of a more experienced colleague.
291. The tax auditing unit organises biannual meetings where updates on
the latest development within the EOI area are shared with the tax auditors
from different regions. The meeting also provides the opportunity for the tax
auditors from different regions to discuss problems they have encountered
and allow them to exchange experience and share best practices. Specialised
training is also provided whenever needed to equip the tax auditors with any
specialised skills needed to better handle an incoming EOI request.
Conclusion
292. Overall, it appears that Finland has in place a robust and work-
ing organisational process and has put in place adequate resources to deal
with the demands of EOI requests received from its treaty partners. None
of Finlands EOI partners has raised issues with regard to the timeliness of
information provided by Finland.
Absence of restrictive conditions on exchange of information
(ToR C.5.3)
293. There are no laws or regulatory practices in Finland that impose
unreasonable, disproportionate, or unduly restrictive conditions on exchange
of information.
The assessment team is not in a position to evaluate whether this
element is in place, as it involves issues of practice that are dealt with in
the Phase 2 review.
Phase 2 rating
completed.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 81
Summary of Determinations and Factors
Underlying Recommendations
13
Determination
Factors underlying
Jurisdictions should ensure that ownership and identity information for all relevant entities
and arrangements is available to their competent authorities (ToR A.1)
Phase 1 determination:
Phase 2 rating: to be
finalised as soon as a
representative subset
of Phase 2 reviews is
completed.
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities
and arrangements (ToR A.2)
completed.
Banking information should be available for all account-holders (ToR A.3)
completed.
13. The ratings will be finalised as soon as a representative subset of Phase 2 reviews
is completed.
82 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS
Determination
Factors underlying
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information) (ToR B.1)
completed.
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information (ToR B.2)
completed.
Exchange of information mechanisms should allow for effective exchange of information
(ToR C.1)
completed.
The jurisdictions network of information exchange mechanisms should cover all relevant
partners (ToR C.2)
Finland should continue
to develop its exchange of
information network with all
relevant partners.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 83
Determination
Factors underlying
completed.
The jurisdictions mechanisms for exchange of information should have adequate provisions
to ensure the confidentiality of information received(ToR C.3)
completed.
The exchange of information mechanisms should respect the rights and safeguards of
taxpayers and third parties (ToR C.4)
completed.
The jurisdiction should provide information under its network of agreements in a timely
manner (ToR C.5)
The assessment team
is not in a position to
evaluate whether this
element is in place, as
it involves issues of
practice that are dealt
with in the Phase 2
review.
completed.
ANNEXES 85
Annex 1: Jurisdictions Response to the Review Report
14
Finland would like to express its appreciation for the work done by the
assessment team in evaluating Finland for this combined review. Finland
would also like to thank the Peer Review Group and other exchange of infor-
mation partners for their valuable contributions to the review.
Finland agrees with the findings of the report.
Finland is committed to effective exchange of information. Finland has a
long history of exchanging information for tax purposes and has an extensive
network of EOI arrangements to meet these aims.
Finally, there have been a few developments regarding Finlands network
of EOI arrangements since the draft report was prepared by the assessment
team. The TIEA with Dominica will enter into force on 27 March 2013. The
TIEA with Liberia has entered into force on 12 June 2012 as well as the TIEA
with Samoa on 20 October 2012. Furthermore a new TIEA with Botswana
was signed on 20 February 2013.)
14. This Annex presents the jurisdictions response to the review report and shall not
be deemed to represent the Global Forums views.
86 ANNEXES
Annex 2: List of All Exchange of Information Mechanisms
Multilateral agreements
Finland is party to the:
The Multilateral Convention on Mutual Administrative Assistance in
Tax Matters (MAC) was signed 11 December 1989 and entered into
force 1 April 1995. The 2010 Protocol amending the MAC was signed
on 27 May 2010 and entered into force 01 June 2011. The status of the
multilateral Convention is set out in the below table.
15
EU Council Directive 2011/16/EU of 15 February 2011 on admin-
istrative co-operation in the field of taxation. This Directive is in
force since 11 March 2011 and repeals EU Council Directive 77/799/
EEC of 19 December 1977 with effect from 1 January 2013. All
EU member states are required to transpose it into national legis-
lation by 1 January 2013. The current EU member states, covered
by this Directive, are: Austria, Belgium, Bulgaria, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,
Sweden, and the United Kingdom.
EU Council Directive 2003/48/EC of 3 June 2003 on taxation of sav-
ings income in the form of interest payments. This Directive aims
at ensuring: (i) that savings income in the form of interest payments
in favour of individuals or residual entities being resident of an EU
Member State are effectively taxed in accordance with the fiscal laws
of their state of residence; and (ii) that information is automatically
exchanged among EU member states with respect to such payments.
15. The updated table is available at www.oecd.org/dataoecd/8/62/48308691.pdf.
ANNEXES 87
EU Council Regulation (EU) No 904/2010 of 7 October 2010 on
administrative cooperation and combating fraud in the field of value
added tax.
Nordic Mutual Assistance Convention on Mutual Administrative
Assistance in Tax Matters of 7 December 1989, which is currently in
force with respect to Denmark, Faroe Islands, Finland, Greenland,
Iceland, Norway and Sweden.
Bilateral and multilateral agreements
No. Jurisdiction
Type of EOI
agreement Date signed Date in force
1 Andorra TIEA 24 Feb 2010 12 Feb 2011
2 Anguilla TIEA 14 Dec 2009 10 Apr 2011
3
Antigua and
Barbuda
TIEA 19 May 2010 24 Mar 2011
4 Argentina
DTC 13 Dec 1994 5 Dec 1996
MAC 3 Nov 2011 1 Jan 2013
5 Armenia DTC 16 Oct 2006 30 Dec 2007
6 Aruba TIEA 10 Sep 2009 1 Jun 2011
7 Australia
DTC 20 Nov 2006 10 Nov 2007
MAC 3 Nov 2011 1 Dec 2012
8 Austria
DTC 26 Jul 2000 1 Apr 2001
DTC Protocol 4 Mar 2011 1 Dec 2011
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
9 Azerbaijan
DTC 29 Sep 2005 29 Nov 2006
MAC (original) 26 Mar 2003 1 Oct 2004
10 Bahamas, The TIEA 10 Mar 2010 9 Sep 2010
11 Bahrain TIEA 14 Oct 2011 11 July 2012
12 Barbados
DTC 15 Jun 1989 20 Aug 1992
DTC Protocol 3 Nov 2011 not yet in force
13 Belarus DTC 18 Dec 2007 13 Jul 2008
88 ANNEXES
No. Jurisdiction
Type of EOI
14 Belgium
DTC 18 May 1976 27 Dec 1978
DTC Protocol 15 Sep 2009 not yet in force
MAC 4 Apr 2011 not yet in force
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
15 Belize TIEA 15 Sep 2010 not yet in force
16 Bermuda TIEA 16 Apr 2009 31 Dec 2009
17
Bosnia and
Herzegovina
DTC 8 May 1986 18 Dec 1987
18 Brazil
DTC 2 Apr 1996 26 Dec 1997
MAC 3 Nov 2011 not yet in force
19 Brunei TIEA 27 Jun 2012 not yet in force
20 Bulgaria
DTC 25 Apr 1985 21 Apr 1986
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
21 Canada
DTC 20 Jul 2006 17 Jan 2007
22 Cayman Islands TIEA 1 Apr 2009 31 Mar 2010
23 China DTC 25 May 2010 25 Nov 2010
24 Colombia MAC 23 May 2012 not yet in force
225 Cook Islands TIEA 16 Dec 2009 2 Oct 2011
26 Costa Rica
TIEA 29 Jun 2011 not yet in force
MAC 1 Mar 2012 not yet in force
27 Croatia DTC 8 May 1986 18 Dec 1987
28 Curaao TIEA 10 Sep 2009 1 Jun 2011
29 Cyprus
DTC 15 Nov 2012 not yet in force
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
30 Czech Republic
DTC 2 Dec 1994 12 Dec 1995
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
31 Denmark
Nordic 7 Dec 1989 8 May 1991
MAC 28 Jan 2011 1 Jun 2011
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
ANNEXES 89
No. Jurisdiction
Type of EOI
32 Dominica TIEA 19 May 2010 not yet in force
33 Egypt DTC 1 Apr 1965 2 Apr 1966
34 Estonia
DTC 23 Mar 1993 30 Dec 1993
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
35 Faroe Islands Nordic 7 Dec 1989 9 May 1991
36
Former Yugoslav
Republic of
Macedonia
DTC 25 Jan 2001 22 Mar 2002
37 France
DTC 11 Sep 1970 1 Mar 1972
MAC 13 Dec 2011 1 Apr 2012
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
38 Georgia
DTC 11 Oct 2007 23 Jul 2008
MAC 28 Feb 2011 1 Jun 2011
39 Germany
DTC 5 Jul 1979 4 Jun 1982
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
40 Ghana MAC 10 Jul 2012 not yet in force
41 Gibraltar TIEA 20 Oct 2009 6 May 2010
42 Greece
DTC 20 Jan 1980 4 Oct 1981
MAC 21 Feb 2012 not yet in force
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
43 Greenland Nordic 7 Dec 1989 5 May 1991
44 Grenada TIEA 19 May 2010 22 Feb 2012
45 Guatemala TIEA 15 May 2012 not yet in force
46 Guernsey TIEA 28 Oct 2008 5 Apr 2009
47 Hungary
DTC 25 Oct 1978 24 Jul 1981
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
48 Iceland
MAC 28 Oct 2011 1 Feb 2012
90 ANNEXES
No. Jurisdiction
Type of EOI
49 India
DTC 15 Jan 2010 19 Apr 2010
MAC 26 Jan 2012 1 Jun 2012
50 Indonesia
DTC 15 Oct 1987 26 Jan 1989
51 Ireland
DTC 27 Mar 1992 26 Nov 1993
MAC 30 Jun 2011 not yet in force
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
52 Isle of Man TIEA 30 Oct 2007 14 Jun 2008
53 Israel DTC 1 Aug 1997 1 Jan 1999
54
Italy
DTC 12 Jun 1981 23 Oct 1983
MAC 17 Jun 2012 1 May 2012
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
55 Jamaica TIEA 4 Dec 2012 not yet in force
56 Japan
DTC 4 Mar 1991 28 Dec 1991
57 Jersey TIEA 28 Oct 2008 3 Aug 2009
58 Kazakhstan DTC 23 Mar 2009 5 Aug 2010
59
Korea, Republic
of
DTC 8 Feb 1979 23 Dec 1981
MAC 26 Mar 2012 1 Jul 2012
60 Kosovo DTC 8 May1986 18 Dec 1987
61 Kyrgyzstan DTC 3 Apr 2003 28 Feb 2004
62 Latvia
DTC 23 Mar 1993 30 Dec 1993
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
63 Liberia TIEA 10 Nov 2010 not yet in force
64 Liechtenstein TIEA 17 Dec 2010 4 Apr 2012
65 Lithuania
DTC 30 Apr 1993 30 Dec 1993
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
66 Luxembourg
DTC 1 Mar 1982 27 Mar 1983
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
ANNEXES 91
No. Jurisdiction
Type of EOI
67 Macao, China TIEA 29 Apr 2011 9 Dec 2011
68 Malaysia DTC 28 Mar 1984 23 Feb 1986
69 Malta
DTC 30 Oct 2000 30 Dec 2001
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
70 Marshall Islands TIEA 28 Sep 2010 2 Dec 2011
71 Mauritius TIEA 1 Dec 2011 6 July 2012
72
Mexico
DTC 12 Feb 1997 14 Jul 1998
MAC 23 May 2012 1 Sep 2012
73
Moldova,
Republic of
DTC 16 Apr 2008 9 Nov 2008
MAC 24 Nov 2011 1 Mar 2012
74 Monaco TIEA 23 Jun 2010 10 Dec 2010
75 Montenegro DTC 8 May 1986 18 Dec 1987
76 Montserrat TIEA 22 Nov 2010 31 Dec 2011
77 Morocco
DTC 25 Jun 1973 1 Dec 1980
New DTC 7 Apr 2006 20 Oct 2012
78 Netherlands
DTC 28 Dec 1995 20 Dec 1997
MAC 27 May 2010 not yet in force
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
79 New Zealand DTC 12 Mar 1982 22 Sep 1984
80 Norway
MAC 27 May 2010 1 Jun 2011
81 Pakistan DTC 30 Dec 1994 10 Apr 1996
82 Panama TIEA 12 Nov 2012 not yet in force
83 Philippines DTC 13 Oct 1978 1 Oct 1981
84 Poland
DTC 8 Jun 2009 1 Jan 2011
MAC 9 July 2010 1 Oct 2011
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
85 Portugal
DTC 27 Apr 1970 14 Jul 1971
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
92 ANNEXES
No. Jurisdiction
Type of EOI
86 Romania
DTC 27 Oct 1998 4 Feb 2000
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
87
Russian
Federation
DTC 4 May 1996 1 Jan 2003
88
Saint Kitts and
Nevis
TIEA 24 Mar 2010 21 Oct 2011
89 Saint Lucia TIEA 19 May 2010 17 Mar 2011
90
Saint Vincent and
the Grenadines
TIEA 24 Mar 2010 28 Apr 2011
91 Samoa TIEA 16 Dec 2009 not yet in force
92 San Marino TIEA 12 Jan 2010 15 May 2010
93 Serbia DTC 8 May 1986 18 Dec 1987
94 Seychelles TIEA 30 Mar 2011 8 Nov 2012
95 Singapore
DTC 7 Jun 2002 27 Apr 2002
DTC Protocol 16 Nov 2009 30 Apr 2010
96 Sint Maarten TIEA 10 Sep 2009 1 Jun 2011
97 Slovakia
DTC 15 Feb 1999 6 May 2000
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
98 Slovenia
DTC 19 Sep 2003 16 Jun 2004
MAC 27 May 2010 1 Jun 2011
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
99 South Africa
DTC 26 May 1995 12 Dec 1995
100 Spain
DTC 15 Nov 1967 30 Oct 1968
MAC 11 Mar 2011 1 Jan 2013
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
101 Sri Lanka DTC 18 May 1982 28 Mar 1984
102 Sweden
MAC 27 May 2010 1 Sep 2011
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
ANNEXES 93
No. Jurisdiction
Type of EOI
103 Switzerland
DTC 16 Dec 1991 26 Dec 1993
DTC Protocol 22 Sep 2009 19 Dec 2010
DTC Protocol 18 Sep 2012 2 Feb 2013
16
104 Tajikistan DTC 24 Oct 2012 not yet in force
105 Tanzania DTC 12 May 1976 27 Dec 1978
106 Thailand DTC 25 Apr 1985 28 Mar 1986
107 Tunisia MAC 16 Jul 2012 not yet in force
108
Turkey
DTC 6 Oct 2009 4 May 2012
MAC 3 Nov 2011 4 May 2012
109
Turks and Caicos
Islands
TIEA 16 Dec 2009 2 Apr 2011
110
Ukraine
DTC 14 Oct 1994 12 Dec 1995
111
United Arab
Emirates
DTC 12 Mar 1996 24 Feb 1997
112
United Kingdom
DTC 17 Jul 1969 5 Feb 1970
MAC 27 May 2010 30 Jun 2011
EU Directive
2011/16/EU
15 Feb 2011 1 Jan 2013
113
United States
DTC 21 Sep 1989 1 Jan 1991
DTC Protocol 31 May 2006 28 Dec 2007
114 Uruguay DTC 13 Dec 2011 6 Feb 2013
17
115 Uzbekistan DTC 9 Apr 1998 7 Feb 1999
116 Vanuatu TIEA 13 Oct 2010 8 Mar 2011
117 Vietnam DTC 21 Nov 2001 26 Dec 2002
118
Virgin Islands,
British
TIEA 18 May 2009 15 Apr 2010
119 Zambia DTC 30 Nov 1978 17 May 1985
16. Entered into force after January 2013 and, therefore, not included in the analysis
under element C.1.8 of this Report.
17. Entered into force after January 2013 and, therefore, not included in the analysis
under element C.1.8 of this Report.
94 ANNEXES
Annex 3: List of All Laws, Regulations
and Other Relevant Material
The Constitution of Finland
Commercial Laws/Civil Laws
Limited liability Companies Act
Partnership Act
Foundations Act
Foundation Decree
Co-operatives Act
Accounting Act and Ordinance
Business Information Act
Trade Register Act
Taxation Laws
Act on Assessment Procedure
Act on the public disclosure and confidentiality of tax information
Act on the taxation of shareholders in Controlled foreign companies (1994)
Anti-Money Laundering Laws
Act on Preventing and Clearing Money Laundering and Terrorist Financing
ANNEXES 95
Banking and Financial Laws
Act on Book-Entry Accounts
Act on Book-Entry System
Act on Credit Institution
Securities Markets Act
Act on Payment Institutions
Act on Investment Firms
Other Laws
Criminal Code of Finland
Code of Judicial Procedure
Advocates Act
96 ANNEXES
Annex 4: People Interviewed During On-Site Visit
Ministry of Finance
Director for International Tax Affairs Tax Department
Senior Governmental Secretary Financial Markets Department
Financial Supervisory Authority
Legal Adviser
National Board of Patents and Registration of Finland
Deputy Director
Tax Administration
Deputy Director General
Senior Lawyer
Senior Advisers
Uusimaa Tax Auditing Unit
Audit Manager
Tax Auditors
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forefront of efforts to understand and to help governments respond to new developments
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The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the
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(23 2013 07 1 P) ISBN 978-92-64-19192-1 No. 60563 2013
GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES
Peer Review Report
Combined: Phase 1 + Phase 2
-:HSTCQE=V^V^WV:
ISBN 978-92-64-19192-1
23 2013 07 1 P
Global Forum on Transparency and Exchange of Information
for Tax Purposes
PEER REVIEWS, COMBINED: PHASE 1 + PHASE 2
FINLAND
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by 120 jurisdictions, which participate in the Global Forum on an
equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the international standards of transparency and exchange of information for tax purposes.
These standards are primarily reected in the 2002 OECD Model Agreement on Exchange
of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model
Tax Convention on Income and on Capital and its commentary as updated in 2004. The
standards have also been incorporated into the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised but all foreseeably relevant information must be
provided, including bank information and information held by duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identied by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
Phase 1 reviews assess the quality of a jurisdictions legal and regulatory framework for
the exchange of information, while Phase 2 reviews look at the practical implementation of
that framework. Some Global Forum members are undergoing combined Phase 1 and
Phase 2 reviews. The Global Forum has also put in place a process for supplementary
reports to follow-up on recommendations, as well as for the ongoing monitoring of
jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions
to effectively implement the international standards of transparency and exchange of
information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please refer to
www.oecd.org/tax/transparency and www.eoi-tax.org.
FINLAND
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Consult this publication on line at http://dx.doi.org/10.1787/9789264191938-en.
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and
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