Personal scope of application As per 02 December 2022

Are there any deviations from the Directive in defining the intermediary?

2021/06/17

It seems that in Finland they have followed the Directive’s wording very closely for article 21. However, there is a slight difference in the wording of d) section where they have added “organization” in addition to already existing “association”. However, so far it is not clear why this was added and what are the practical consequences.Also, the term “intermediary” has been changed to “service provider”, but the legislator's documents do not state why this change has been made.

How is an intermediary defined? Is there a differentiation between a corporate entity and an individual person?

2021/06/17

According to main rule individuals (natural persons) will not be qualified intermediaries, unless they are independent entrepeneurs. Intermediary does not need to be legal person, but every kind of "juridical arrangement" will be within the definition.

Can a corporate tax department (or its members) within a MNE or within a group of entities qualify as an intermediary?

2021/06/17

The corporate tax department would be within "relevant taxpayer" definition. As a main rule, individuals will not be intermediaries so far they are employees.

How are the actions of designing, marketing, organizing, making available for implementation or managing the implementation of a tax arrangement defined?

2021/06/17

Designing: Arrangement includes at least one of the "Hallmark".Marketing: Person who recommends, proposes, or encourages others to join in an activity in which at least one of the hallmark is included. It does not matter who has designed this activity or whether this activity was designed at all to be used in this way.Organizing: Person who takes actions to make this activity available / supervises the execution of this activity.Making available for implementation: When a service provider has planned/designed the arrangement for "relevant taxpayer". It does not matter whether the taxpayer will use it or if minor details are missing. Making available will also be fulfilled if the arrangement has been marketed even to a restricted amount of people. Therefore, in the case of "marketable arrangements" no actual end-users will be needed.

Have the legal preconditions regarding the territorial nexus for an intermediary been implemented in accordance with the Directive?

2021/06/17

There are no deviations from the directive.

Are there any other conditions apart from those of the Directive, such as the territorial nexus of a tax arrangement to a certain Member State, which trigger a reporting obligation of an intermediary (e.g. including intermediaries from outside the EU)?

2021/06/17

In Finland, the obligation for reporting is given only for Finnish "relevant taxpayers" and "service providers". No additional conditions are given compared to the ones given in the directive. Slight wording differences also, but in any case no broader scope than in the directive.

In which cases is the relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

Only if no service provider is obliged to do it. Possible situations are:1) service provider is entitled to not report (e.g. advocates / Legal professional secrets);2) The taxpayer uses service provider outside EU;3) No service provider is used (in-house tax team).However, if the relevant taxpayer gives his permission to the service provider to reveal legal professional secrets, the reporting obligation transfers back to the service provider.

Are there any other persons beside intermediaries or relevant taxpayers obliged to report?

2021/06/17

Finnish tax administration has defined "Assisting service provider" which basically "means any person that, having regard to the relevant facts and circumstances and based on available information and the relevant expertise and understanding required to provide such services, knows or could be reasonably expected to know that they have undertaken to provide, directly or by means of other persons, aid, assistance or advice with respect to designing, marketing, organizing, making available for implementation or managing the implementation of a reportable cross-border arrangement."

Are there any deviations from the Directive in defining the relevant taxpayer?

2021/06/17

There are no deviations from the directive.

Mechanism to avoid multiple reporting

Which measures have been taken to avoid multiple reporting obligations referring to an intermediary obliged to report in several countries? Are there deviations from the Directive?

2021/06/17

No deviations from the directive.

Which measures have been taken to avoid multiple reporting obligations referring to more than one intermediary obliged to report? Are there deviations from the Directive?

2021/06/17

All intermediaries are jointly responsible unless they can prove that relevant information is already given by other intermediaries.

Which measures have been taken to avoid multiple reporting obligations referring to a relevant taxpayer obliged to report several countries? Are there deviations from the Directive?

2021/06/17

No deviations from the Directive.

Which measures have been taken to avoid multiple reporting obligations referring to more than one relevant taxpayer obliged to report? Are there deviations from the Directive?

2021/06/17

All Finnish Service Providers are collectively responsible for reporting.If asked information is already provided in other member states by other intermediaries the respective intermediary shall provide sufficient proof of that to the asking tax administration.

How does the National Tax Authority expect the conditions for exemption from filing a report to be met?

2021/06/17

Mainly with the reference number given by other tax authorities.

Material scope of application

Are national tax arrangements subject to reporting under the Directive?

2021/06/17

National tax arrangements are not subject to report.

Which taxes are affected? Are there deviations from the Directive?

2021/06/17

Everything else than VAT, Customs, Excise tax, and social security payments.

Does the hallmark catalogue deviate from the Directive? If yes, to what extent?

2021/06/17

There are no deviations from the directive.

Which hallmarks are linked with the main benefit test?

2021/06/17

There are no deviations from the directive.

How is the main benefit test defined?

2021/06/17

The main benefit test is fulfilled if with regard to all relevant facts and circumstances a person can reasonably expect the main benefit or one of the main benefits of the arrangement to be the obtaining of a tax advantage(no official English translation available, but it is defined in Finnish).

How is a tax advantage defined?

2021/06/17

There is no explicit definition in the local legislation.

Are there any deviations from the Directive in defining a cross-border arrangement?

2021/06/17

There are no deviations from the directive.

Is there a white list defining arrangements explicitly excluded from a reporting obligation? If yes, please provide details.

2021/06/17

No.

Are there any deviations from the Directive in defining associated enterprises?

2021/06/17

There are no deviations from the directive.

Reporting process

When is a cross border arrangement made available for implementation (e.g. handover of contract documents)?

2021/06/17

There is no specific guidance.

When is a cross-border arrangement ready for implementation?

2021/06/17

Tax administration does not differ a lot between "ready for implementation" from "available for implementation". The only named difference is, that "ready for implementation" will cover situations where no marketing is used (in-house arrangements).

When has the first step in the implementation of a cross-border arrangement been made?

2021/06/17

Whatever action which has been taken if that could simplify that arrangement has begun.

Which information should be included in the report? Are there deviations from the Directive?

2021/06/17

In addition to the directive, the report should include reference numbers if such has been given by other tax authorities.

What does the reporting process look like? Are there deviations from the Directive?

2021/06/17

After the first report, the service provider must update the report between every 3 months in case of marketable arrangements. Also, there is no option to seek deferral from reporting obligation.

Is the entire report to be provided by the intermediary/relevant taxpayer? Who must provide the report?

2021/06/17

The entire report must be provided by a service provider unless he can prove that certain information has already been submitted. The relevant taxpayer must file the report only in cases mentioned below:1) service provider is entitled to not report (e.g. advocates / Legal professional secrets);2) The taxpayer uses service provider outside the EU;3) No service provider is used (in-house tax team).

What are the respective deadlines for the intermediary and the relevant taxpayer to file the report? Are there deviations from the Directive in terms of filing the information within 30 days?

2021/06/17

There are no deviations from the Directive.

Which numbers are assigned by local tax authorities to the cross-border arrangements?

2021/06/17

Application number (for application corrections) and reference number (this one is used with co-operation with another EU state).

What is the reporting deadline for arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020?

2021/06/17

31.08.2020.

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies between 1 July 2020 and 31 December 2020?

2021/06/17

Within 30 days.

When is the reporting deadline for arrangements for which the event triggering the reporting obligation lies after 1 January 2021?

2021/06/17

Within 30 days.

Penalties

In which cases are penalties imposed?

2021/06/17

Neglecting the duties given in the Act on the Reporting Obligation for Cross-Border Tax Planning Structures / Act on Tax Assessment Procedure.There are three stages of sanctions:1. Minor incorrection/misleading information = 2,000 EUR2. Substantial incorrection/misleading information or late delivery = 5,000 EUR3. Intentional incorrections/misleading information or no reporting at all = 15,000 EURAccording to tax authorities, the third one will be the main sanction if no report delivered.

What are the penalties?

2021/06/17

Neglecting the duties given in the Act on the Reporting Obligation for Cross-Border Tax Planning Structures / Act on Tax Assessment Procedure.There are three stages of sanctions:1) Minor incorrection/misleading information = 2,000 EUR2) Substantial incorrection/misleading information or late delivery = 5,000 EUR3) Intentional incorrections/misleading information or no reporting at all = 15,000 EURAccording to tax authorities, the third one will be the main sanction if no report delivered.

Is a distinction made between penalties imposed on intermediaries/relevant taxpayers/other persons obliged to report?

2021/06/17

No distinction is made between intermediaries and relevant taxpayers.

What are the penalties in case of redundant reports? A redundant report is a report, which was filed, although there is no obligation to file one.

2021/06/17

There are no penalties for redundant reports.

Do the penalties differ with regard to incomplete, incorrect, missing or late reports? Are there any gradations?

2021/06/17

Neglecting the duties given in Act on the Reporting Obligation for Cross-Border Tax Planning Structures / Act on Tax Assessment ProcedureThere is three stages of sanctions:1) Minor incorrection/misleading information = 2000 EUR2) Substantial incorrection/misleading information or late delivery = 5000 EUR3) Intentional incorrections/misleading information or no reporting at all = 15 000 EURAccording to tax authorities the third 3) one will be the main sanction if no report delivered

Are arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020 treated differently in the means of penalties?

2021/06/17

Penalties do not differ.

Other aspects

Do already other reporting regimes on cross-border arrangements exist?

2021/06/17

No other disclosure regimes exist.

Are there any other special deviations from the Directive? 

2021/06/17

In cases of legal professional secrets, it is voluntary for relevant taxpayer / secondary service providers to include a reference number to the report. This concerns situations where the legal professional has reported "anonymously" and therefore reference number has already been given for this specific arrangement.

What is the name of the national Tax Authority responsible for DAC6?

2021/06/17

'Vero / Verohallinto.

Do any other obligations apart from reporting a reportable cross-border arrangement exist under the national DAC6 legislation? (i.e. indication of the arrangement in the tax return)

2021/06/17

There are no other obligations.

Professional privilege/secrecy

Who is primarily obliged to report? Is there a primary reporting obligation of the intermediary or the relevant taxpayer? Is there legal privilege and in how far has it been considered for allocating the reporting obligation?

2021/06/17

The service provider(s) (=intermediary) are always under primary reporting obligation unless the following conditions are met:1) service provider is entitled to not report (e.g. advocates / Legal professional secrets);2) The taxpayer uses service provider outside EU;3) No service provider is used (in-house tax team).However, if the relevant taxpayer gives his permission to the service provider to reveal legal professional secrets, the reporting obligation transfers back to the service provider.

Does the reporting obligation breach a legal professional privilege under national law?

2021/06/17

No.

Does the national law make reference to professional privilege or professional secrecy?

2021/06/17

There is no reference.

What is the difference, as per the national law, between professional privilege and professional secrecy?

2021/06/17

There is no reference.

To which categories of intermediaries does the professional privilege or professional secrecy apply?

2021/06/17

Advocates, public legal aid counsels and licenced legal counsels, each of which are defined in lex specialis.

In the context of the reporting obligation, under which conditions are the intermediaries entitled/obliged to make use of professional privilege or professional secrecy?

2021/06/17

Such persons are exempted from reporting obligation (i.e. only articles defining this obligation, not from the whole DAC6) with regard to information under professional privilege / professional secrecy obtained during the client-advisor relationship.

In cases in which professional privilege or secrecy applies, please describe the procedure for notification.

2021/06/17

In case professional privilege applies, the following information must still be given in "anonymous" form:1) service providers info2) which hallmarks are triggered3) date of the first day of the arrangement4) which domestic legislation is applied5) value of this arrangement6) which other countries this arrangement is potentially touching.In addition, usually, the following info can be given without breaching professional privilege: anonymous general description and in which EU state taxpayer has his tax residence.If somehow some/none of the above information cannot be given to tax administration, there is still the obligation to reach tax administration free-form way.

Does the national law provide specific conditions to waive professional privilege or professional secrecy?

2021/06/17

Yes, in cases where judgement may lead to over 6 years of time in prison or if there are other "significant reasons". The decision is made by a court.

Pauli Simolin
Tax- and Legal Adviser