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Finland: Guidance concerning intra-group services, determining arm’s length mark-up

Finland: Guidance concerning intra-group services

The Finnish tax administration issued an October 2017 bulletin that sets out its policy concerning the transfer pricing treatment of intra-group services and how to determine the arm’s length mark-up. This guidance follows a decision of Finland’s Supreme Administrative Court.


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In the case before the court, a Finnish multinational group parent company had established a cost-sharing arrangement for purposes relating to the transfer pricing of service fees. The participants of the cost-sharing arrangement charged their services to the system on a cost basis—i.e., no mark-up was added on top of the costs. The Finnish group parent company pooled costs from the entities involved in the cost-sharing arrangement and then allocated these costs to the cost-sharing arrangement participants. The services within the scope of this arrangement included supply chain, marketing, administration of trademarks, human resources, and international trading center service expenses.

The Finnish tax administration disputed the taxpayer’s system and, instead, considered that this arrangement was about a provision of intra-group services. 

The Supreme Administrative Court generally upheld the approach of the tax administration, but assessed the mark-up differently. The high court did not accept the 7% mark-up determined by the tax administration, a mark-up that was based on comparability analysis conducted by the Finnish tax administration. According to the court, a minor mark-up was to be added to the amounts of costs charged. In this case, the court approximated that arm’s length mark-up would not exceed 3%. The case identifying information is: KHO 2017:145 

Finnish tax administration guidance

The Finnish tax administration on 6 October 2017 issued a bulletin concerning the Supreme Administrative Court’s decision. According to the bulletin, following a review of its policy concerning transfer pricing of services, the tax administration’s position is as follows:

  • For low-value adding intra-group services, the Finnish tax administration will accept a minor mark-up that does not exceed 3%. 
  • The mark-up of 3% applies only if the services mainly include the provision of administrative services or similar services for the coordination and harmonization of the group’s operations.
  • The tax administration’s policy applies to both domestic and international transactions as well as to sales and purchases of services.
  • The policy is applied only for services that meet the classification of low-value adding services as described in the OECD Transfer Pricing Guidelines (2017) chapter 7.
  • Mark-up for other services will be determined on case-by-case basis.

Based on this new position, the Finnish tax administration has advised taxpayers to review their transfer pricing arrangements.


Read an October 2017 report [PDF 231 KB] prepared by the KPMG member firm in Finland


For more information, contact a KPMG tax professional in Finland:

Sanna Laaksonen | +358 20 760 3417 |

Eric Sandelin | +358 20 760 3693 |

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