Recent developments on the application of the Finnish Interest Barrier rules

Finland introduced interest barrier rules to limit deductibility of interest payments from corporate taxpayers’ income in 2013. After the initial rules were adopted there were various amendments and a large amount of case law dealing with their application. Most recently this autumn the Finnish Supreme Administrative Court (SAC) issued a few rulings that clarify in particular the applicability of a balance sheet based safe harbour rule to the limitations. Also the Finnish Parliament has recently approved further amendments to the rules. The purpose of this briefing is to give an overview of these recent developments.

Deductibility of interest under the current Interest Barrier rules

Under the rules currently in force deductibility of net interest expenses (interest expenses in excess of interest income) is limited to 25% of a so-called tax-EBITD. The term “interest...