The Finnish Supreme Administrative Court today issued tax ruling KHO:2016:77 on the Finnish tax treatment of dividend income received by foreign EU-based life insurance companies. The ruling, issued in favour of Lombard International Assurance S.A., follows an application for an advance tax ruling, filed by the company in 2013.
The Court held that the levying of the 15% withholding tax on gross dividend income is incompatible with Finland’s obligations under EU law, namely the free movement of capital.
Repealing the previous tax ruling from the Central Board of Taxes, the Court held that, for the 2014 tax year, no withholding tax should be levied on paid dividend income to the extent that the dividend income, net of annual administration charges, gave rise to an increase in the insurer’s technical reserves which would be deductible for a domestic life insurance company. In respect of 2015, the Supreme Administrative Court has confirmed that the tax deduction is to be calculated in accordance with new legislation applicable to foreign pension insurance companies.
Lombard International Assurance S.A. welcomes the publication of the ruling, which will ultimately put the company on a level playing field with domestic life insurers.
Please do not hesitate to contact Markus Rikala, Country Manager Finland or your usual Lombard International Assurance representative, if you have any queries or require further information.