Sofia Ropo

Advised taxpayers who were subject to punitive tax increases due to non-deductible interest expenses not being disclosed on the primary sheet of their tax returns. The amounts of non-deductible interests were disclosed on appendix sheets to the tax return. The tax authorities and the court of first instance held that the purpose of the punitive tax increase rules, which were reformed in 2018, was to acknowledge the summary nature of taxation processes and therefore these rules laid specific emphasis on the accuracy of the information provided by the taxpayers on their mandatory tax disclosures and, as a consequence thereof, the punitive tax increases had to be levied with the applicable maximum rate of 2% of added income although correct information was filed on appendix sheets to the tax returns.

Our clients sought a leave to appeal to these decisions from the Supreme Administrative Court and argued that in the legal praxis of the European Court of Human Rights punitive tax increases have been deemed to be analogous with punishments under the penal code and, as such, the general human rights principles are applicable to them. As a consequence of this, punitive tax increases should not be levied merely based on objective errors on tax returns without regard to the subjective negligence of the taxpayer (or the lack thereof).

The Supreme Administrative Court’s majority reasoned that the subjective ratio legis of the 2018 reform of punitive tax increases was indeed intended to protect the summary procedure of tax assessment and to lay a strict responsibility on taxpayers for the information disclosed on their tax filings. However, taking into account the Finnish Constitution (which has implemented the aforesaid principles of the Human Rights Convention), punishments cannot be imposed without regard to the subjective negligence of the taxpayer. The Court held that our clients had reasonably established that the non-disclosure on the primary sheet of their tax return was a product of human error without an intent to make a wrongful representation. The Court continued that, although the subjective ratio legis would impose a penalty without regard to subjective negligence, the rules also provided a possibility for the tax authority to refrain from levying the tax increase in full where such increase would be unreasonable because of specific reasons. The Court held that, taking into account the total content of the law, a human error, such as the one at hand in these cases, may constitute a situation where it is unreasonable to levy a punitive tax increase in full, although strictly speaking it is against the subjective ratio legis,  and the amount of tax increases was mitigated to half of the original amount. The outcome of the decision thus constituted what in Finnish jurisprudence is determined as application of law in accordance with the objective ratio legis, i.e. what the legislator would have intended had it known the context of the situation and the interaction of the total legal system in the situation. One of the justices voted against the majority and would have overturned the tax increase totally instead of halving it with similar reasoning and also by paying attention to the significant investments that the tax authority has made to automated IT systems within the past decade with a publicly announced purpose to, among other things, better analyse information on tax disclosures and reduce the burden of tax compliance from taxpayers.

Parties

Accel-KKR, Aico Group, Juuri Partners

Transaction

Accel-KKR’s majority equity investment in Aico Group

Deal Value

Value not public

Role

Counsel to Accel-KKR, a global technology-focused investment firm

Parties

YIT Oyj (Seller), Renta Oy (Buyer), YIT Kalusto Oy (Target)

Transaction

Sale of fleet and equipment business and related arrangements

Deal Value

EUR 37 million

Role

Counsel to YIT

Parties:

YIT

Transaction:

Counsel to YIT in the disposal of its wind and solar business, comprising of 2.3 GW renewable energy projects and a team of 16 employees.

Deal value:

Value not public

Role:

Counsel to YIT

Hannes Snellman advises NYAB Plc on its re-domiciliation and transfer of listing from Finland to Sweden. The re-domiciliation to Sweden is planned to be executed as a cross-border conversion, pursuant to the so-called EU Mobility Directive, whereby NYAB Plc, without being dissolved or liquidated, would be converted from a Finnish to a Swedish public limited liability company with its registered office in Sweden.

Parties

Sampo plc

Transaction

Counsel to Sampo plc on its dual listing of its Class A shares on Nasdaq Stockholm in the form of Swedish Depository Receipts

Deal Value

Market capitalisation of approximately EUR 24.7 billion as of 31 October 2022

Role

Counsel to Sampo plc

Parties

Orange Capital Partners (Buyer), Starwood Capital Group and Avara Oy (Sellers)

Transaction

Hannes Snellman acted as counsel to Orange Capital Partners in the acquisition of a residential portfolio of 2,200 apartments located across 16 cities from Starwood Capital Group and Avara Oy

Deal Value

Value not public

Role

Counsel to Orange Capital Partners

Parties:

Applied Materials Inc. (buyer), Picosun Oy (target)

Transaction:

The acquisition of Picosun Oy, an innovator in atomic layer deposition (ALD) technology, primarily for specialty semiconductors.

Deal Value:

Value not public

Role:

Finnish counsel to Applied Materials Inc.

Parties

Basware Corporation (target), a consortium consisting of Accel-KKR, Long Path Partners, and Briarwood Chase Management (buyer)

Transaction

Counsel to the offeror consortium of Accel-KKR, Long Path Partners, and Briarwood Chase Management in the tender offer for all outstanding securities in Basware Corporation.

Deal Value

EUR 620 million

Role

Counsel to the consortium

Parties

Orange Capital Partners and another global investor (Buyers), Morgan Stanley (Seller)

Transaction

Orange Capital Partners' and another global investor's acquisition of a residential portfolio with 37 assets and 1,900 apartments from Morgan Stanley

Deal Value

Value not public

Role

Counsel to Orange Capital Partners and another global investor