An office of the Finnish Tax Administration in Helsinki on 2 August 2023. Helsingin Sanomat on Wednesday revealed that 494 Finnish senior executives have moved from Finland to Switzerland, a move that enables them to avoid taxes on supplementary pensions and investment profits. (Eelis Berglund – Lehtikuva)
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MINNA OJALA, a ministerial advisor at the Ministry of Finance, has told Helsingin Sanomat that ministry officials will hold internal discussions about the need to reform the pension treaty between Finland and Switzerland.
Ojala spoke to the newspaper after it had reported, citing data retrieved from the Finnish Trade Register, that 494 senior corporate executives have changed their domicile from Finland to Switzerland.
Among the executives are chief executives of publicly listed companies who are able to report millions of euros in supplementary pensions without being liable for taxes in Finland. The re-location may also be a way to avoid or significantly reduce taxes on investment returns and the profits of business sales.
Supplementary pensions are effectively wages the payment of which has been deferred until retirement age.
As the Finnish—Swiss tax treaty does not have the common three-year rule that would retain the right to tax with the country of origin for the three years that immediately follow the re-location.
The Finnish Tax Administration has noticed that Finnish nationals re-locate to Switzerland before receiving substantial capital gains. Taneli Lallukka, a senior specialist at the Tax Administration, said to Helsingin Sanomat that such gains are largely exempt from taxes in Switzerland.
The change of domicile, of course, is not necessarily indicative of an attempt to reduce the tax burden, the newspaper reminded.
Switzerland is nonetheless a more popular destination for Finnish chief executives, board members and other senior executives than, for example, France (244) or the Netherlands (217).
Ojala on Thursday stated to the newspaper that the tax department will probably discuss the issue internally and with the political leadership early next year. If it is determined that a new tax treaty is warranted, the ministry will appoint a negotiating committee to make contact with the relevant authorities in Switzerland.
“Then we’d try to agree on a time for the negotiations. That’s a completely normal negotiation procedure for state treaties,” she said.
Ojala is the head of the international tax affairs unit at the Ministry of Finance.
Helsingin Sanomat on Wednesday wrote that among the corporate executives who have moved from Finland to Switzerland are Jan Fazer, one of the largest shareholders of Fazer, Kari Kauniskangas, an ex-CEO of Fiskars, Matti Lievonen, an ex-CEO of Nokia, Jussi Pesonen, the CEO of UPM, Heikki Rotko, an ex-CEO of MTV, and Kari Stadigh, a former board chairperson at Sampo.
Pesonen said to the newspaper that taxation was not the reason behind his move.
“If that had been the reason, I would’ve moved a lot earlier. I’ve paid so much in taxes that those kinds of things don’t really matter to me any more. The reasons lie somewhere else entirely, and they’re personal,” he remarked.
Finland has recently re-negotiated its tax treaties with both France and Spain. It terminated its tax treaty with Portugal in 2019, after the re-negotiated treaty had been rejected by the Portuguese parliament, bringing the earnings-related pensions of hundreds of people back within the purview of the Finnish Tax Administration.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
