Pre-emptive discussion – a useful tool in solving complex tax matters

Pre-emptive discussion (in Finnish: ennakollinen keskustelu) is a relatively new addition to the group of solutions available for taxpayers with relevant tax matters that are subject to interpretation. Based on recent multiple experiences, the pre-emptive discussion is in practice very well-functioning tool and may be a good alternative e.g. to common advance ruling process.

Pre-emptive discussions were started by Large Taxpayer's Office (Konserniverokeskus) in the year 2016 and in 2018 the Finnish Tax Administration introduced pre-emptive discussions as a possibility for other corporate clients. In practice, pre-emptive discussions may cover multiple types of tax, and discussions can be initiated typically even on a faster schedule than when utilizing the written procedure alternatives.

Typically, a pre-emptive discussion is initiated by a taxpayer that contacts the Finnish Tax Administration with an intention to receive guidance on how to proceed with a certain tax matter. In order to ensure that guidance can be received in due time, the contact should be established in timely manner, which should be at least a couple of weeks before the planned restructuring or other planned action for which the guidance is needed. In the process of contacting the tax authorities it is recommendable (and in most cases, practically mandatory) that a written description of the matter is delivered to the tax authorities before the actual discussion, normally by e-mail. During the meeting with tax experts it is possible for a taxpayer to present well-founded arguments supporting e.g. a form that is chosen for the matter at hand.

The outcome of a pre-emptive discussion depends on the subject of the discussion in question and can vary from oral advice to a written memorandum on which the facts of the matter and tax authorities' interpretation of them are stated. In the latter scenario, protection of legitimate expectations applies, provided that the tax authorities receive correct information of the matter at hand.

Bird & Bird's Finnish tax team has engaged in numerous pre-emptive discussions with our clients and the tax authorities. In 2018 we assisted our client relating to the very first pre-emptive discussion in The Corporation Taxation Unit of Southern Finland. Based on our experiences, pre-emptive discussion is suitable for a plethora of different scenarios. In practice, we have utilized pre-emptive discussion e.g. when planning complex transactions on a short time scale, and in situations where the question has been about massive-scale intra-group restructurings.

In conclusion, pre-emptive discussion has been a welcome addition to the proceedings available for taxpayers. Most importantly, multiple ways of preventing tax problems in beforehand and decreasing of tax uncertainty are warmly welcomed among tax advisors and their clients.

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