Finland vs. Corp. February 2014, Supreme Administrative Court HFD 2014:33

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A Ltd, which belonged to the Norwegian X Group, owned the entire share capital of B Ltd and had on 18.5.2004 sold it to a Norwegian company in the same group. The Norwegian company had the same day transferred the shares back on to A Ltd. C ASA had also been transferred shares in other companies belonging to the X group. C ASA was listed on the Oslo Stock Exchange in June 2004. Following the transaction with the subsidiary the Tax Office had raised A Ltd’s income for 2004 with 62,017,440 euros on the grounds that the price used in the transaction were considered below the shares’ market value. Further, a tax increase of EUR 620 000 had been applied.

A Ltd stated that the purchase price for the shares of B Ltd had been determined on the basis of the company’s net present value, calculated according to a calculation of the present value of cash flows in the B Ab. The calculation was made by an outside expert.

The purchase price had been calculated using “media kalkyl” that led to a lower value than the optional price determination calculations, which were based on high and low growth. Media kalkyl differed from other calculations in respect of certain variables that significantly affected the final outcome. For several of the variables used a description of how they were derived from B Ltd’s budget was missing, from historical data, data for comparison companies or other data. Variables not declared were also used in the calculation by the external expert, which was based on factor analysis and which was presented to support the calculations.


The Supreme Administrative Court noted that although the cash flow calculations in principle can be considered to be an acceptable way to determine the market price of shares in companies not listed on the stock exchange, the estimates presented by the company could not be considered a reliable account of the price that would have been used in a transfer between independent parties.

Because any comparison price that would have been based on events that could be equated with those at issue in this case were not available, and the yield based value of B Ltd had been established in a reliable manner, and since B Ltd’s assets under the Company’s balance had essentially consisted of financial assets, the fair value of B Ltd’s for taxation considered B Ltd’s net asset value. Using the net asset value was not wrong either for the reason that C ASA immediately after the listing of company had a market value lower than the net asset value.

Nor were the fact that C ASA at the time of listing of the company had a 20 percent minority stake, sufficient to show that the purchase price corresponded to the market price.

Consequently, the Company’s income in the taxation could be relevant amounts. With regard to the measures with which the company had tried to clarify the current value and that the issue concerned the appeal could be considered to make room for interpretation, the Supreme Administrative Court, removed the tax increase imposed in connection with the taxation.

Fiscal year 2004

The law on the taxation procedure (1558/1995) 31, 32 and 57 §


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