Finnish Administrative Court confirms the favourable decision granted to Fortum on Belgian financing company taxation


FORTUM CORPORATION PRESS RELEASE 16 May 2016

The Administrative Court in Finland on 16 May 2016 has rejected the Tax Recipients’ Legal Services Unit’s (VOVA) appeal regarding the tax assessment imposed on Fortum in December 2013 for the year 2007. Thus the favourable decision granted to Fortum by the Board of Adjustment of the Large Taxpayers’ Office in 2014 remains in effect.

According to the tax assessment given in December 2013, the additional taxes including penalties and late payment interest would have amounted to EUR 136.4 million. Fortum has not made a provision, as based on existing legal analysis the decisions should be ruled in Fortum's favour.

Fortum’s Reijo Salo, Vice President, Corporate Tax, says that the decision now received is in line with the principle adopted by the Supreme Administrative Court in June 2014. According to the Supreme Administrative Court’s precedent in June 2014, under transfer pricing rules, the nature of business cannot be re-characterised for tax purposes, but can only adjust the pricing of goods or services.

“For companies it is very important that tax policies are consistent and predictable,” Salo continues. “According to 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.”

VOVA can apply for the right to appeal to the Supreme Administrative Court. 

Fortum Corporation
Corporate Communications



Further information:
Reijo Salo, Vice President, Corporate Tax, tel. +358 50 452 4443



Background information:
The Finnish tax authority levied the taxes in 2013 based on the revenue earned by Fortum’s Belgian subsidiary in 2007. The same revenue has already been taxed in Belgium in accordance with Belgian tax legislation. Fortum appealed the additional taxes, and the Board of Adjustment approved the appeal on 21 August 2014. VOVA appealed the Board of Adjustment’s decision to the Administrative Court.

VOVA’s appeal regarding the non-taxation of interest income for Fortum’s Belgian and Dutch financing companies in 2008–2011 is pending before the Board of Adjustment.

Read more:
Fortum's Interim Report January-March 2016, Note 22: Legal actions and official
proceedings: http://apps.fortum.fi/investors/Fortum_Interim_Report_Q1_2016.pdf

Fortum's tax footprint is available online:
http://apps.fortum.fi/gallery2/Fortum_as_a_Taxpayer.pdf

Related press releases:

Press release 2 September 2014: The Board of Adjustment approved Fortum’s appeal on additional taxes in Finland for 2007
http://www.fortum.com/en/mediaroom/Pages/the-board-of-adjustment-approved-fortums-appeal-on-additional-taxes-in-finland-for-2007.aspx

Fortum
Fortum's vision is to be the forerunner in clean energy. We provide our customers with electricity, heat and cooling as well as other energy solutions that improve present and future life. Already 64% of our electricity generation is CO2 free. Our main markets are the Nordic and the Baltic countries, Russia, Poland and India. In 2015, we employed some 8,000 energy sector professionals, and our sales were EUR 3.5 billion. Fortum's share is listed on Nasdaq Helsinki. www.fortum.com