Finland Supreme Administrative Court Clarifies Business Interest Deduction for Shareholder Loan

The Finnish Supreme Administrative Court April 4 posted online Decision No. KHO:2023:31, clarifying the deductibility of interest paid on a shareholder loan used to finance an acquisition. Most of the taxpayer’s share capital is owned by a fund with three nonresident partners. The Finnish tax agency denied the deduction, based on the taxation of cross-border hybrid arrangements under Finish law. The Supreme Administrative Court agreed, and held that the deductibility of interest can be denied, because: 1) the company and the fund are both domestic legal entities; 2) the fact that company and the fund are related to each other ...