EU legislation
Finnish Government in favour of simplifying EU tax legislation

In June, the European Commission published a proposal for a directive that includes extensive amendments to EU legislation on direct taxation. The Government supports the goal of creating a robust, effective and fair framework for corporate taxation, but underlines the need for a balanced regulatory approach that provides sufficient protection to the tax base.

The proposal, called the Taxation Omnibus, aims to simplify tax rules, support the growth of businesses and strengthen the EU’s competitiveness. The proposal would expand the tax exemption for dividends, interest and royalties paid in the EU and ease the Anti-Tax Avoidance Directive particularly with respect to its provisions on the entitlement to deduct interest and on Controlled Foreign Companies . It would also expand opportunities to carry out business reorganisations without tax consequences and improve access to dispute resolution procedures.

Finnish Government emphasises need for balance between simplification and tax base protection 

The Government is in favour of simplifying legislation and easing the administrative burden on tax authorities. One of the Government’s priorities is that any amendments strike a balance between the goal of simplification and the need to combat tax evasion. Amendments must lead to a genuine simplification of taxation without adding regulatory complexity. 

The Government also considers it important that the impact of simplification on tax revenues is reasonable in proportion to the benefits obtained. For example, expanding the tax exemption for dividends would be a major change in Finland. Doing so could give rise to significant losses of tax revenue in Finland and could have extensive repercussions on the entire Finnish dividend taxation system. 

The Government also welcomes the simplification of legislation on tax evasion, but here too, emphasises the need to find a balanced solution that provides sufficient protection to the tax base. The Government’s view is also that legislation concerning Controlled Foreign Companies remains an important deterrent with respect to combatting tax evasion by small and mid-sized enterprises.

The Government submitted a Union communication to Parliament on the proposal on Thursday 3 September. A Union communication is used in EU affairs whenever there is a matter concerning an EU legislative proposal or other proposal that falls within Parliament’s competence.

Inquiries:
Laura Puro, Ministerial Adviser, tel. +358 295 530 127, laura.puro(at)gov.fi