The Legal 500

Introduction Robert S Peckar Peckar & Abramson, PC 3

Finland Aimo Halonen Mäkitalo Rantanen & Co Ltd 70

Written by Martin von Willebrand

The legal rules often play a key role when it comes to business models in software businesses and notably in free and open source software projects. This is particularly true when the project owner wants to maintain some level of control over the software and the project itself. The balance between control and freedom is achieved by legal tools and policies, such as licenses, compliance policies, contracts, trademarks, organization rules, contribution policies, only to name a few.

The Finnish CFC legislation implies that a Finnish company may be subject to income tax for its share of the profit of a CFC regardless of whether these profits are distributed by the CFC to its shareholders or not. A CFC is defined as a foreign corporation owned and controlled by a Finnish tax resident that pays income tax in its domicile at a rate less than 60% of the Finnish corporate income tax rate.

The Finnish Supreme Administrative Court decided on 7 March 2011 (KHO 2011:21) to request for a preliminary ruling from the Court of Justice of the European Union (ECJ) concerning the question whether a Finnish parent company may deduct the final tax losses of its Swedish subsidiary after a cross-border merger.

The European Commission presented on 16 March 2011 a proposal that calls for
a common system for calculating the tax base of business operating in the EU.
At the moment, a company active within the whole EU can be forced to comply
with up to 27 different national tax systems. The new Common Consolidated
Corporate Tax Base (CCCTB) seeks to reduce the administrative burden,
compliance costs and legal uncertainties by creating a "one-stop-shop" system
where the profits and losses across the EU could be consolidated.

By its decision 18 February 2011 (S09/3055) the Helsinki Appellate Court confirmed that an owner is entitled to rely on the quality assurance of a well-known construction company at an acceptance inspection. The court held that the owner is entitled to demand rectification of construction defects and to claim damages for deficiencies discovered during the guarantee period.

The Finnish Supreme Administrative Court (SAC) decided on 31 January 2011 (KHO:2011:10) to ask for a preliminary ruling from the Court of Justice of the European Union (ECJ) concerning the question whether a tax-neutral share exchange can be completed between a company residing in an EU country and a company residing in the European Economic Area (EEA) (such as Norway, Iceland and Liechtenstein).

In a unanimous yearbook decision the Finnish Supreme Administrative Court ruled that guarantee insurance is an adequate environmental permit security. Further, the Court, by referring to the free movement of financial services within the EU, stated that a party in an arrangement for security regarding adequate and proper security may be a financial institution based in another EU-country.

The Supreme Administrative Court has issued on 5 January 2011 a ruling concerning the change of generation relief of gift taxation (KHO 2011:1). In its ruling the SAC stated that the preconditions for the tax relief were not fulfilled since the donee was a minor and thus could not act as a board member in the company’s board of directors as provided for in Chapter 6 Section 10 of the Finnish Companies Act.

A practical cross-border insight into public procurement