No transfer tax payable on purchase of shareholder loan receivables – landmark decision by the Finnish SAC

The Supreme Administrative Court of Finland (SAC) published a ruling (KHO 2019:121) earlier today regarding the Finnish transfer tax on a purchase of shareholder loan receivables. In accordance with the SAC’s new ruling, transfer tax is not payable on a purchase of shareholder loan receivables, even if the shareholder loan receivables are purchased in connection with the acquisition of the shares in the debtor company. This is a significant change to the currently established tax practice which was based on a clear statement in the legislative material.

In the applicable case the buyer bought the shareholder loan receivables of the vendors in connection with the acquisition the shares in the debtor company. The sale price of the loan receivables was significantly higher than the nominal sale price allocated to the actual shares in the debtor company. The acquisition of the shares and the loan receivables was agreed under a single share purchase agreement.

The ruling

The SAC ruled that loan receivables are not such securities or other financial instruments as referred in the Finnish Transfer Tax Act. The SAC held that the law cannot be interpreted against its semantic wording. From a civil law perspective, the purchase of the loan receivables has been a separate transaction in relation to the share transfer. Finally, the SAC ruled that the acquisition of the shareholder loan receivables was not comparable to the buyer assuming liability for such loans to the benefit of the vendors that could be taken into account in the transfer tax base for the shares. Therefore, the transfer of loan receivables is not subject to Finnish transfer tax.

Key takeaways

The new ruling has a major effect on upcoming transactions where shareholder loan receivables would be transferred to the buyer in connection with the share purchase. In the future, it should be carefully considered whether the shareholder loan receivables could be directly purchased from the vendor, instead of refinancing them through the target company. Further, the new ruling enables the possibility to apply transfer tax refund for any transfer tax previously paid on purchase of shareholder loan receivables until the three year refund period expires. In respect of transactions executed during 2014-2016, the refund period is five years, i.e. until the end of 2019. Therefore, it would be important to review past transactions to see if there are any potential to claim transfer tax refund. We are happy to tell you more about the case and to assist in recovering any excess transfer tax.


Mika Ohtonen 
Andreas Bussman 
Principal Associate