The Act on the Disclosure and Exchange of Information on Tax Matters (448/2017) in Finland implements the European Union’s directives regarding the mandatory disclosure and exchange of information on tax matters, particularly focusing on cross-border tax arrangements and cooperation between tax authorities. This act is a key component of Finland’s commitment to international tax transparency and combating tax evasion.

Key Features of the Act

• Scope of Application
  • The act applies to all taxes except value-added tax (VAT), customs duties, excise duties, and compulsory social security contributions.
  • It covers both natural persons and legal entities engaged in cross-border activities that may have tax implications in more than one jurisdiction.
• Mandatory Disclosure Rules (MDR)
  • Intermediaries (such as tax consultants, banks, and lawyers) and, in some cases, taxpayers themselves, must report certain cross-border arrangements (referred to as “reportable arrangements”) to the Finnish Tax Administration (FTA).
  • The reporting obligation is triggered when arrangements contain specific features known as “hallmarks,” which may indicate potential tax avoidance or evasion.
  • The act aligns with the EU Directive 2011/16/EU (as amended by Directive 2018/822, known as DAC6), ensuring harmonized reporting standards across the EU.
• Reporting Obligations
  • Reports must be filed within 30 days of the arrangement becoming available, ready for implementation, or when the first step has been taken.
  • For marketable arrangements, intermediaries must also submit periodic reports every three months.
  • Certain intermediaries, such as attorneys and legal aid counsels, may be exempt from reporting due to legal professional privilege (LPP), but must inform other intermediaries or taxpayers of their reporting obligations.
• Exchange of Information
  • The Finnish Tax Administration is the competent authority for exchanging tax information with other countries, in accordance with EU law and international treaties.
  • Information is exchanged automatically, upon request, or spontaneously, using secure formats and channels to protect confidentiality and data security.
  • Automatic exchanges include income from employment, pensions, directors’ fees, ownership of immovable property, and income from digital platforms, among others.
• Data Protection and Confidentiality
  • All exchanged information is subject to strict confidentiality rules, equivalent to those applied to national tax data.
  • Data protection is governed by national law, the EU General Data Protection Regulation (GDPR), and relevant international agreements.
• Taxpayer Obligations
  • Taxpayers must report their worldwide income and assets to the Finnish Tax Administration, regardless of the information exchanged internationally.
  • Failure to report can result in tax adjustments and penalties, with extended adjustment periods for information obtained through means other than automatic exchange.

Summary Table: Key Aspects of the Act