Finnish tax legislation currently provides a capital gains exemption for foreign investors with Finnish indirect real estate holdings. The Finnish Government is now planning to advance its intention to abolish this tax exemption, which was announced in January 2022. HPP estimates that Ministry of Finance will publish the related proposal for the new legislation required to abolish the exemption during 2022 and the new law would presumably come into force from the start of 2023.
It should be noted that HPP is not aware of any pending processes to change any current tax treaties, which may limit the effectiveness of the change in law. Foreign investors are urged to revisit their current structures for holding Finnish real estate investments in order to evaluate the impact of the change in law. The capital gains tax exemption set out in the tax treaty between Finland and Luxembourg should continue to be applicable in most cases, whereas the law will presumably be changed to be aligned with the Nordic tax treaty resulting in Finland having the right to levy capital gains tax as set out above.
HPP will follow the legislative process.