The Finnish Tax Administration updated its guidance on transfer pricing documentation

Due to recent legislative changes and case law, the Finnish Tax Administration (FTA) has published an updated version of its guidance on transfer pricing documentation.

The FTA published an updated version of the official guidance on transfer pricing documentation matters (Siirtohinnoittelun dokumentointi, VH/44/00.01.00/2022) on 28 April 2022. The purpose of the circular is to guide companies in preparing their transfer pricing documentation and demonstrating the arm’s length nature of their intra-group pricing. The new circular is an extensive and pivotal source of information on the arm’s length principle in Finland and provides useful views on technical documentation-related matters and other transfer pricing aspects.

The Finnish transfer pricing rules have traditionally complied with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the guidelines will be referred to as the OECD Guidelines”) to a large extent and the updated guidance is based on the January 2022 version of these guidelines. The update was necessary due to a recent amendment to Section 31 of the Finnish Assessment Procedure Act (VML § 31) codifying the arm’s length principle. In this legislative change that entered into force on 1 January 2022, two additional paragraphs were introduced to address the accurate delineation of transactions and the recharacterisation of transactions, bringing the interpretation of the arm’s length principle in Finland into closer alignment with the OECD Guidelines also in this respect.

Where applicable, the guidance was also updated with a new transfer pricing-related case law issued by the Supreme Administrative Court (SAC). The SAC rulings discussed in the updated guidance include, e.g. SAC:2021:172 on the use of the interquartile range, SAC:2021:73 on the use of US GAAP for transfer pricing purposes, SAC:2020:34 on loss-making operations and SAC:2021:123 on the treatment of joint ventures for transfer pricing purposes.

The updated guidance is applied to transfer pricing documentation prepared for tax years beginning on, or after, 1 January 2022.

Deloitte Finland’s transfer pricing professionals are happy to discuss any transfer pricing-related questions you may have!

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