Change Of Generation – Minor Continuing The Business

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.

The change of generation of a limited liability company was meant to be implemented in the way that, the donee himself being a minor, a substitute for a trustee appointed by the Local Register Office would act in the company's board of directors on the donee's behalf until he becomes major and would be appointed as an ordinary board member.