Transfer Pricing in Finland

The legal framework

Finland runs one of Europe's most compact transfer pricing codes. Section 31 of the Act on Assessment Procedure (VML, 1558/1995) supplies the arm's length rule; sections 14 a to 14 e carry documentation and country-by-country reporting; sections 32 and 32 a set penalties; section 75(2) permits corresponding adjustments; sections 85 and 85 a govern advance rulings. There is no standalone transfer pricing statute, and everything it leaves untouched — methods, comparability, intangibles, services, financing, cost contribution arrangements — runs through the OECD Guidelines as an interpretive source, a status confirmed in the preparatory works (HE 107/2006, HE 142/2016, HE 188/2021) and in KHO 2013:36.

The decisive recent change is the rewrite of section 31 by Act 1142/2021, in force for tax years beginning on or after 1 January 2022. It added a subsection 2 requiring a related-party transaction to be delineated according to its actual substance, and a subsection 3 allowing a delineated transaction, exceptionally, to be disregarded and replaced. That reverses KHO 2014:119, which held the earlier provision conferred no recharacterisation power, forcing the authority onto the general anti-avoidance rule in section 28. Structure is now attackable inside section 31 itself.

Section 31(4) treats parties as associated on direct or indirect holdings above 50% of shares or votes, the right to appoint more than half the board, common control, or the ability otherwise to exercise factual control. That last limb is open-textured: test it before assuming a joint venture or minority stake sits outside. Two regimes outside transfer pricing bite on the same facts — the interest deduction limitation in sections 18 a and 18 b of the Act on the Taxation of Business Income, and the hybrid mismatch legislation.

Methods, comparables and benchmarking

Finnish law prescribes no transfer pricing methods. Finland's OECD country profile answers "no" to statutory methods and leaves every method box blank, which is easily misread: CUP, resale price, cost plus, TNMM and profit split are all available, simply not codified. Selection follows the most appropriate method standard with no hierarchy, and nothing special applies to commodities. The absence of a statutory anchor cuts both ways — there is no domestic text to invoke against an examiner who prefers a different method, so the case turns on facts and functional analysis.

Finland expresses no preference for domestic over foreign comparables, so pan-European searches are acceptable where the sets are reliable, and undisclosed comparables may not be used in assessment. Note also section 21 VML, headed Vertailutietotarkastus, which lets Verohallinto audit one taxpayer purely to gather comparative information for taxing another — a power that quietly qualifies the no-secret-comparables position.

Guidance VH/44/00.01.00/2022 defines the interquartile range and confirms that statistical tools may narrow a range where comparability defects persist. Comparability adjustments are not mandatory domestically, and no refresh cycle is prescribed: the three-year search with annual financial updates is practice, not rule. Chapter X governs financial transactions, mediated by position paper VH/5755/00.01.00/2021, which separates clarifications capable of applying to earlier years from genuinely new interpretive recommendations that cannot.

Documentation: what Verohallinto expects

The obligation in sections 14 a to 14 c reaches every enterprise that is not an SME within Commission Recommendation 2003/361/EC — in practice at least 250 employees, or turnover above EUR 50 million with a balance sheet total above EUR 43 million, in two consecutive financial years. It is tested at group level, on the ultimate parent's consolidated figures and headcount, so a modest Finnish subsidiary of a large multinational is squarely in scope. Only cross-border transactions and a foreign enterprise's dealings with its Finnish permanent establishment are covered; purely domestic transactions fall outside documentation, though the arm's length standard still applies to them.

The master file under section 14 b(1) tracks Annex I to Chapter V, and the local file under section 14 b(2), nine statutory paragraphs long, follows Annex II. Section 14 b(5) then grants two reliefs that are often collapsed into one. The master file is dispensed with only where the taxpayer's transactions with each and every related counterparty stay at or below EUR 500,000 in the tax year — the statute says "jokaisen", so one relationship above the threshold restores the master file for the whole taxpayer. The local file relief is the narrower, per-relationship one: for a counterparty at or below EUR 500,000 the file need not carry a functional analysis, a comparability analysis with comparables data, or a description of the method and its application.

Documentation is never filed. It must be produced within 60 days of a request, and no request may be made earlier than six months after the accounting period closes; supplementary material is due within 90 days. There is no statutory finalisation date, which is precisely why the file should be built to be handed over in 60 days rather than written in them. Form 78 (3054) is annexed to the corporate income tax return, due four months after period end through MyTax, and covers foreign related-party transactions only. Country-by-country reporting starts at EUR 750 million of consolidated net sales, notification due by the last day of the period and the report within twelve months. A separate public report on income tax information goes to the PRH Trade Register within twelve months and onto the company's website for five years, in iXBRL for periods beginning on or after 1 January 2025.

Audits, penalties and the enforcement climate

Casework sits with the Transfer Pricing Unit, which vero.fi's English pages still locate in the Large Taxpayers' Office even though Verohallinto's current Finnish organisation places large-corporate work inside the Taxation Unit. The pattern is familiar: a documentation request that does not always become an audit, review of the material, interviews with operational staff, a functional analysis of where decisions are actually taken and how intangibles and risk sit, then comparability, then a decision after the taxpayer is heard. The reassessment window is three years generally but six for transfer pricing and other cross-border related-party matters — a long tail that argues for keeping contemporaneous evidence, not just conclusions.

Two penalties operate independently. Failing to present documentation on time, or presenting materially defective material, attracts a charge of up to EUR 25,000 under sections 32 and 32 a. Separately, income added on assessment carries a tax increase of 2% of the addition as standard, rising to 3-10% for repeated failures or manifest disregard, falling to 1% where the question is genuinely open to interpretation and to 0.5% for taxpayer-initiated correction after assessment closes, with a EUR 150 minimum for entities. Finland has no formal documentation-based penalty shield; the 1% rate is the real reward for a well-reasoned file, which makes candour about difficulty a tactical asset rather than a weakness.

Verohallinto found EUR 520 million of undeclared tax across all control activity in 2024, up from EUR 414 million, and over EUR 1 billion in 2025. Those are whole-of-administration figures, not a transfer pricing benchmark: no separate transfer pricing total is published.

Dispute resolution and advance certainty

Finland has no APA legislation: an APA is reachable only bilaterally or multilaterally under a treaty's mutual agreement article, so there is no APA without a treaty partner, and each competent authority needs its own application. Verohallinto encourages pre-filing contact and expects the functional analysis, proposed method, critical assumptions and economic data up front. The covered period is negotiated case by case, no fee or entry threshold is published, and Verohallinto acknowledges that processing routinely exceeds the EU-recommended 18 months.

Unilateral certainty comes from preliminary and advance rulings under sections 85 and 85 a VML. A ruling binds Verohallinto where the taxpayer invokes it and the facts match, is valid at most until the end of the calendar year following issue, and binds no foreign authority; fees are EUR 800 for a basic income tax ruling and EUR 2,300 for a complex one. Below that sit the pre-emptive discussion, which yields a written memorandum rather than an appealable decision, and Cross-Border Dialogue, which convenes two or more authorities with the taxpayer but does not substitute for a ruling or an APA.

MAP runs on three tracks: the Act on the International Tax Dispute Resolution Procedure (530/2019) implementing Directive (EU) 2017/1852, the EU Arbitration Convention 90/436/EEC, and the treaty article. Under the Act the application is due within three years of first notification of the action and the competent authority has six months to admit it; treaty limits vary. MAP is free, filed to MAP@vero.fi, and the assessed tax stays enforceable throughout. Domestically the route is a claim for adjustment to the Assessment Adjustment Board within three years, then the administrative court, then the Supreme Administrative Court with leave; a domestic appeal does not extend MAP deadlines, so run both.

Pillar Two and what changes in 2026

Finland implemented Directive (EU) 2022/2523 through the Act on the Minimum Tax for Large Groups (1308/2023), effective for financial years beginning on or after 31 December 2023, amended by Act 917/2024 and again by Act 187/2026, which absorbs the 2024 and 2025 OECD administrative guidance, simplifies the computation, extends the safe harbours and permits advance rulings on minimum tax questions. Groups above EUR 750 million of consolidated revenue in at least two of the four preceding periods file a GloBE Information Return, a filer notification and a top-up tax return, normally 15 months after period end and 18 months for the first reporting year — 30 June 2026 for periods ending in 2024, with MyTax filing open since 30 January 2026.

Two other movements matter. Finland has not adopted the simplified and streamlined approach, so Amount B is unavailable for a Finland-tested distributor, though Finland will respect the outcome where a covered treaty-partner jurisdiction applies it. And on 28 April 2026 the Ministry of Finance consulted on cutting the corporate rate from 20% to 18% for tax year 2027 and extending loss carry-forward to 25 years. The consultation closed on 25 May 2026 and the measure is unenacted as at August 2026, but a cut of that size changes the value of every euro of profit booked in Finland.

How practitioners should respond

Treat the OECD Guidelines as the operative rulebook but plead them the Finnish way, through section 31 and the preparatory works, not as free-standing authority. Post-2022 exposure is structural rather than arithmetical: delineation and disregarding put the group's contractual architecture in issue, so the file needs contemporaneous evidence of who took decisions and who could bear the downside, not a narrative assembled afterwards to fit a benchmarking result.

Three disciplines carry most of the operational weight. Test the EUR 500,000 threshold against every counterparty each year, because one growing relationship both pulls that relationship into full local file content and, because the master file limb requires all counterparties to stay under, restores the master file obligation for the whole taxpayer. Price financing against the logic of KHO 2021:66 — group creditworthiness and implicit support — but anchor it in a properly delineated service rather than asserting synergy. And where a position is genuinely arguable, document why: that record is what supports the reduced 1% increase if the assessment goes against you.

Then choose the certainty instrument deliberately. A preliminary ruling is fast and cheap but binds only Finland; a bilateral APA is the only route that actually removes double taxation, at the cost of time; a pre-emptive discussion buys a documented administrative view without an appealable decision. Whichever is taken, verify the statutory text on Finlex and check current Verohallinto guidance before relying on any summary — the OECD profile is self-reported, and the core documentation guidance has stood unrevised since April 2022.