Finnish tax authorities have found dozens of companies set up for tax evasion

Finnish The Tax Administration has identified dozens of companies that have helped investors evade taxes at the expense of Finland.

The Tax Administration revealed last week that a company offering systematic tax evasion services robbed the country of about 80 million euros in revenue from tax withholding on dividends between 2018 and 2021.

Katja PussilaThe Tax Administration’s Head of Risk Management, explained that the work is very professional and systematic.

“The company was founded with a business model to avoid tax withholding. The founders include both Finnish and foreigners. We started some inspections and based on them May place additional tax orders, “she commented. press release On thursday.

The National Investigation Agency (KRP) has announced that it is investigating tax evasion cases as an exacerbated tax fraud.

The Tax Administration believes that as many as 700 million shares may have been exchanged between investors solely for the purpose of avoiding tax withholding on dividends. The value of suspicious securities transactions is about 9 billion euros annually, According to YLE..

Arrangements are fairly complex and diverse, but fraudsters usually set up tax treaties with their country of residence and Finland, which are not responsible for withholding dividend payments. Such countries include France, Ireland, United Arab Emirates and the United Kingdom.

The company’s sole purpose was to enable tax evasion by managing its shares during the dividend payment period.

Shareholders of the company paying the dividend first temporarily transfer the shares to the bank. The bank then looks for a company that has been set up to avoid taxes in the market and sells the shares under a derivative agreement that provides for the company to sell back the shares at a later date.

This will pay dividends to companies located in countries that have a beneficial tax treaty with Finland. The shares will eventually be returned to the original owner through the bank under a derivative agreement.

The Tax Administration has refused to identify where and how data about transactions was collected. According to YLE..

“I don’t want to give the companies doing business in this area the details of the sources and methods on which the investigation was based,” Psila explained in detail to the public broadcaster.

The data show that transactions related to dividend payments have increased 10-fold in some securities accounts compared to other times.

“What’s particularly interesting is that accounts that are inactive at other times receive a significant amount of stock, just as dividends are set to be paid. It’s disappearing from, “she said.

Similar arrangements have been set up elsewhere in Europe.

For example, in Denmark and Germany, states are tax refunded on stock transactions from companies and investors around the world. Research shows that shares are actually owned by a single shareholder, but through many investors to ensure that more people receive tax refunds from the same transaction. Was revealed to have been recycled.

According to Pussila, a test in Finland also found a company that was set up to circumvent tax laws in other countries.

“We passed information about these companies to the authorities in the country in question,” she said.

Aleksi Teivainen – HT