Finland proposes broader tax-neutral restructuring rules

Merger and demerger consideration would become more flexible

The package would amend the Business Income Tax Act (360/1968). Revised sections 52a and 52c would raise the permitted cash element in a tax-neutral merger or demerger from 10% to 50% of the nominal value of the consideration shares, or of the corresponding paid-in equity where the shares have no nominal value. Section 52a would also cover a merger without consideration where the transferor’s shareholders own the recipient in the same proportions, including through a wholly owned company.^[1][2]

The bill adds a demerger-by-incorporation route

A new section 52c(2) would recognise a demerger by incorporation: one or more business units would pass to a newly formed company by universal succession and the transferor would receive the new shares. Housing and mutual real-estate company demergers would gain a tailored consideration rule preserving rights over the relevant premises. Where all companies involved in a demerger are listed, the original shares’ acquisition cost would be allocated according to relative fair values rather than net assets.^[1][2]

Negative-value transfers would remain within the continuity rules

Further changes would allow a tax-neutral business transfer even where the net tax value of the transferred assets, less liabilities and provisions, is negative. Revised section 52d(4) would give the consideration shares a negative acquisition cost. A corresponding amendment to section 6b(3) would bring that negative amount into taxable income on a later disposal even where the participation-exemption conditions otherwise apply. Sections 52(2) and 52e would expressly extend the restructuring rules to qualifying companies throughout the European Economic Area.^[1][2]

Group losses and share values would also change

The Income Tax Act (1535/1992) would also change. Revised section 123(2) would allow a recipient to inherit a merged or demerged company’s losses where both companies have belonged to the same group since the beginning of the loss year. The bill separately proposes that the mathematical value used for the 8% threshold on dividends from an unlisted company should be the latest value for the tax year.^[1][3]

The valuation rules would follow the reorganised structure

The fourth bill would amend the Act on Valuation of Assets for Taxation (1142/2005), notably sections 2, 5 and 9–13. It would recalculate share values in the year of a merger or demerger, recognise new shares only after Trade Register registration and prevent subscribed capital from being counted twice. Shares issued for a negative-net-value business transfer would have a mathematical value of zero.^[1][4]

Parliament must still approve the package

These are proposals, not enacted changes. Most would first apply for tax year 2027; the permanent Income Tax Act section 33b wording would start in 2028, with a temporary provision for 2027. For multinational groups, the principal effects would be greater flexibility in EEA restructurings, loss-preserving intragroup reorganisations and a wider cash component, but transactions should not assume that Parliament will enact the bill unchanged.^[1][5]