Application for advance ruling

You can request an advance ruling on how the act on car tax (Autoverolaki 777/2020) is applied in the taxation of your vehicle. You can request an advance ruling on matters such as:

• a vehicle’s taxable value
• the amount of car tax.

An advance ruling is in force for a limited period of time and no longer than up until the end of the calendar year following the year when the decision was issued. However, an advance ruling on the taxable value or amount of car tax is in force for no more than 3 months.

The Tax Administration must comply with a legally valid advance ruling if the party who requested the ruling so requires. The actual circumstances must match the situation described in the application.

If a car tax return has already been filed on the vehicle, no advance ruling will be issued.

An advance ruling on gift tax can be requested either by the donor or by the gift recipient.

However, the gift recipient cannot request an advance ruling on whether they must pay tax on capital gain. Such a ruling may be requested only by the donor.

You can request an advance ruling on how a certain action would affect inheritance tax. Examples of such actions include renunciation of inheritance or will, partition, and distribution of inheritance. However, you cannot request an advance ruling on the amount of inheritance tax.

An advance ruling can be requested by a party to the estate, a beneficiary of a special will, and a surviving spouse. A request cannot be made until after the person leaving an inheritance has died. However, it must be made before the Tax Administration finishes the assessment of inheritance tax.

Add copies of existing documents, such as

• a deed of estate inventory
• a will
• a deed of partition, and a deed of estate distribution
• an estimate statement of the property’s fair market value, if such a statement exists.

You can request an advance ruling on the excise duty payable on a product or on the taxability of business activities. An advance ruling can be issued only to an applicant that files and pays excise duties. In other words, no advance ruling will be issued to a product’s end user that has paid the excise duty included in the product’s purchase price and is then requesting a refund. You can also request an advance ruling on excise taxation when the tax assessment is carried out in line with the provisions relating to customs. In that case, however, the application must be addressed to Customs.

In the application, give a comprehensive account of the facts relating to your tax question. The Tax Administration will resolve the matter on the basis of the legislation in force and of any other legal sources.

You are expected to provide the Tax Administration with a comprehensive account of the facts relating to your question. When resolving the matter in advance, we will refer to the legislation in force and to other legal sources.

YOUR APPLICATION SHOULD POSE A QUESTION

Your application letter should contain an exact individualised question to be answered, i.e. the fiscal or tax-related question you are submitting the application for. The question must concern the applicant's own taxes, and the ruling’s impact should concern the taxes directly. The following examples illustrate individualised questions:

• Will the tax authority regard the business development described in our application letter as an R&D activity within the meaning of the Act concerning additional deductions based on R&D expenses (Laki tutkimus- ja kehittämistoiminnan menoihin perustuvista lisävähennyksistä verotuksessa (1298/2022))?
• Does the development activity described in our application fulfil the requirements set out by the provisions of § 3, subsections 1 and 2 of the Act concerning additional deductions based on R&D expenses, and will Company A be entitled to claim the general additional deduction for the costs caused by the described activity?
• Does the development activity described in our application fulfil the requirements set out by the provisions of § 3, subsection 4 of the Act concerning additional deductions based on R&D expenses, and will Company A be entitled to claim an extra additional deduction for the costs, assuming a growth in the costs for the second year of activity?

GIVE FURTHER INFORMATION ABOUT THE RESEARCH AND DEVELOPMENT

Please include a written account on the research and development activity being pursued. Each one of the R&D projects should be separately described. The written account is expected to cover at least the following items:

1. What are the grounds for your company or organisation to believe that the activity should be deemed to constitute R&D within the meaning of the Act?
   • What is the planned end result of the activity, having a specific purpose or a specific usefulness?
   • What kind of problems are addressed through the pursuit of the activity, and what kind of innovative solutions are being searched? What kind of hypothetical scenarios serve as a base for your activity, and how do you plan to test the hypotheses?
   • What are the grounds that make the searched new solutions or results essentially new?  What are the items concretely describable, that make the searched new solutions and innovations different from currently existing information, products, services or processes?
   • What makes the activity that the additional deduction is claimed for different from your corporate entity’s basic operation of business, and from its usual activities that aim for improvement and development such as your general, regular product development and releases of improved products and services?
   • What kind of R&D tasks are included in the activity that the additional deduction is claimed for, and what are the objectives of these R&D tasks? 
   • What kind of risks are associated with the pursued activity? What kind of scientific or technological dimensions are associated that are unknown?
   • On what grounds are the activities considered systematic?
     • Is there a pre-defined goal? 
     • Prior to the start of your activities, were they backed with financing and resources in advance? 
     • In what way are your activities subjected to follow-up and control?
     • Had there been a project plan laid out beforehand?
   • On what grounds are the activities transferrable or repeatable? 
     • What kind of results are being searched, which will have repeatability? 
     • How can the results of your activity become helpful or useful in the operation of your entity’s business at present, and in the future? 
     • Will your entity be the future owner of the immaterial rights, possibly connected to the new products being researched and developed?
2. How is the R&D activity associated with your main operation of business or agriculture?
3. Written account outlining any direct financial support from the state of Finland, or other public financial support, which your entity has received for the R&D activity. Is the financial support characterised as a general financial aid or is it expressly directed towards wage expenses and purchased services?

Add the required attachments to the application

Your application should contain a project plan concerning the R&D activity. Please include it as an enclosed document if available.

Read more: The combined deduction for research and development

When advance rulings concerning transfer taxes are sought, the parties entitled to submit an application are those who would be in the roles of the taxpayer of the transfer tax or a person liable for payment of the transfer tax, if the assets or property were to be transferred as planned.

Your application should pose an exact question

For advance rulings on transfer taxation, the question on your application letter should be whether an obligation to pay transfer tax will arise, or alternatively, your letter can enquire about the transfer-tax amount. Please take account of the above when you formulate your application letter.  The above rule means that you cannot ask, for example, whether the Tax Administration would approve of a certain euro value for the corporate shares to be transferred to another owner.

Provide enough facts to describe the planned transfer in detail and attach relevant documents

Your application letter or the enclosed documents must contain a full description of the transfer of assets or property that you are planning. This means that you should enclose a draft version of the transfer agreement or other documentation explaining the terms and conditions of the transfer. If your application concerns a question that would require knowledge of the fair market value of the property to be transferred before an advance ruling could be prepared, you would have to furnish the Tax Administration with a written account concerning the market value, based on a proper reasoning. If you apply for an advance ruling to ask about the transfer tax that would become payable if the corporate arrangement you are planning is made, please familiarise yourself with the section Tax effects of business reorganisation to find a list of content requirements and documents to enclose.  

The Tax Administration may refrain from issuing a requested advance ruling, if the application letter and enclosed documents are insufficient as a description of the planned transfer. Likewise, the Tax Administration may also refrain from issuing a requested advance ruling if, for other relevant reasons, the application letter and documents fail to give the Tax Administration enough information. Yet another example of a situation where the Tax Administration would refrain from issuing a ruling is when the applicant had described relevant facts and information in a controversial way, or when the planned transfer had only been described in general terms, without an identification of the parties or without details on the asset or property.

Several questions or applicants relating to one transfer

It is possible that the Tax Administration would charge considerable total fees directly related to the decision (päätösmaksut) when the issued advance ruling responds to multiple questions covering several categories of taxes or several applicants, although the applicant had planned just one transfer of property. As a result, it is recommended for applicants to carefully think through the questions to include in their application. For example, to think about whether an advance ruling on both income tax and transfer tax has any real usefulness.