Requesting an advance ruling on gift or inheritance taxes
An advance ruling is a binding decision on how a specific tax matter will be resolved when assessment is carried out. For example, you can ask for an advance ruling when you make plans for a transfer of farm assets or business assets to certain close relatives of the next generation.
The parties that can request an advance ruling are:
- The donor, i.e. the party that plans to give away an asset
- The donee, i.e. the recipient
Request an advance ruling in writing
- Prepare a written, free-form application letter to ask for an advance ruling.
- You must use a separate cover page.
- Send your application with its cover page to the address stated on the first page of the form.
The Tax Administration will issue a ruling in approximately 8 weeks. If we need further information for the processing of your application, more time may be required. The fee for an advance ruling is €425. The Tax Administration may issue advance rulings that address several questions relating to a single tax problem. In this case, the fee may be higher.
Advance rulings are also available on matters relating to inheritance taxes
You can ask for an advance ruling on how a certain measure that you may have planned would impact inheritance taxation. Examples of such measures: one of the beneficiaries may wish to forgo the inheritance; the parties to the estate may wish to divide the related matrimonial assets; the parties to the estate have to choose from many alternative ways to distribute their estate. However, no advance rulings can be requested on the question of how much inheritance tax will be imposed when assessment is completed.
Requests for advance rulings can be made by a party to an estate, by a beneficiary of a special will, and by the surviving spouse. Requests cannot be made until after the decedent’s death. However, a request must be made before the Tax Administration finishes the assessment of inheritance tax.
Frequently asked questions
You may be given a partial relief of gift taxfor the transfer of property to members of the next generation if all the conditions listed below are met:
- The gift to be taxed contains an agricultural farm, some other business entity or a part of the above.
- You continue to operate the agricultural activities, the combined agricultural and forestry activities, or the business activity, in the same farm or business entity that you received as a gift.
- A part greater than €850 of the gift tax must relate to the farm or business that qualifies for the relief.
You must ask for the relief before we assess your gift tax. It is permissible to include a request for relief in the text of the deed of gift.
Further, an advance ruling that relates to inheritance taxation can be requested. You can include a request for relief in the deed of estate inventory. “Further information: transfer of assets to members of the next generation” – Lisätietoa sukupolvenvaihdoksesta (detailed guidance in Finnish and Swedish, link to Finnish)
If you continue the decedent’s farming or business operation, you can request extended time for payment in the gift tax return or in the deed of estate inventory. Read more about paying inheritance taxes
If a business entity or a farm is transferred to members of the next generation, the Tax Administration determines a fair market value, valid at the date of the transfer. “Fair market value” refers to the probable selling price of the property concerned. Guidance for gift valuation
However, if a transfer to the next generation takes place and a relief from gift tax is granted to you when you receive property, the calculation of gift tax is based on a reduced value. Read more about how the Tax Administration adjusts the values when assessing the taxes when assets are transferred to members of the next generation:
- Limited-liability company: transfer of assets to members of the next generation
- Partnership entities and the self-employed: transfer of assets to members of the next generation
- Farms: transfer of assets to members of the next generation
Read more about the valuation of farms and business property in “Valuation of assets” — Varojen arvostaminen (detailed guidance in Finnish and Swedish, link to Finnish).
Please note: you cannot ask for an advance ruling only on the question of how much an asset’s fair market value is.