Espoo, Finland, 2014-01-02 09:00 CET (GLOBE NEWSWIRE) -- PRESS RELEASE 2 January 2014
Fortum Corporation has received a tax assessment decision from the Finnish tax authority regarding the revenue earned by Fortum's subsidiary in Belgium in 2007. The same revenue has already been taxed in Belgium in accordance with the Belgian tax legislation. Even the Swedish tax authority targets to tax the same revenue. According to the international taxation principles, taxes are to be paid in the country where the revenue is earned, and the same revenue cannot be taxed multiple times. Countries should clarify and align their taxation principles, so that multiple and heavy adjustment processes could be avoided. In 2012, Fortum paid a total of EUR 560 million in taxes.
“It seems to us that the economic recession has tightened the tax environment in Europe and various countries are taxing the same revenue multiple times although it has been agreed between countries that income will be taxed only once. For international companies operating in multitude of countries, the situation brings uncertainty and prolonged taxation processes,” says Reijo Salo, Head of Tax, Fortum Corporation.
In a tax audit for years 2007 – 2011, the Finnish tax authority’s tax assessment decision concerns Fortum’s Belgian finance company. According to the Belgian tax authorities, the revenue generated from intra-Group loans with a market-rate interest and used for financing investments in other Fortum countries is to be taxed in Belgium. According to the Finnish tax authority, this intra-Group revenue should be taxed in the Finnish parent company, Fortum Corporation. The Finnish tax authority asks Fortum Corporation to pay EUR 136.4 million, including penalties and late payment interest amounting to EUR 63.2 million, for 2007. Fortum had already paid taxes of EUR 21.2 million on the same revenue in Belgium for 2007. Fortum’s view is that the Finnish tax authority’s decision has no legal grounds and the company will appeal the decision.
Also the Swedish tax authority has sent Fortum an additional tax decision for 2011. According to this decision, e.g. the market-rate interest paid to the Belgian finance company is not tax deductible, but Fortum should pay EUR 59.5 million in additional taxes to Sweden. Fortum's view is that also this decision lacks legal grounds and Fortum will appeal the decision.
Fortum is one of the largest tax payers both in Finland and Sweden. About 60 per cent of the company’s taxes are paid in Sweden and slightly under 30 per cent in Finland.
Reijo Salo, Head of Tax, tel. +358 50 452 4443
Fortum’s tax footprint: http://annualreporting2012.fortum.com/en/2012/sustainability-report-2012/our-business-2/generating-value-to-stakeholders/taxation/
Fortum's purpose is to create energy that improves life for present and future generations. We provide sustainable solutions that fulfil the needs for low emissions, resource efficiency and energy security, and deliver excellent value to our shareholders. Our activities cover the generation, distribution and sales of electricity and heat as well as related expert services.
Fortum's operations focus on the Nordic countries, Russia, Poland and the Baltics. In the future, the integrating European and fast-growing Asian energy markets provide additional growth opportunities. In 2012, Fortum’s sales totalled EUR 6.2 billion and comparable operating profit was EUR 1.7 billion. We employ approximately 10,400 people. Fortum’s shares are quoted on NASDAQ OMX Helsinki.
Further information: www.fortum.com