Changes to dividend taxation and to valuation of corporate assets in share exchange situations

The parliament passed the legislative changes to the taxation of dividend income and to how the assets of a company distributing dividends are valued in a situation where the company has carried out a share exchange. The changes apply only to limited situations where a company distributing dividends has been the acquiring party in a share exchange between associated parties. The above changes to the act on the valuation of assets in taxation (Laki varojen arvostamisesta verotuksessa 1142/2005) are applied in the assessment of shares acquired in a share exchange between related parties on or after 1 January 2017.

In the acquiring company’s calculation of net worth, the shares acquired will in future be valued to the mathematical value that they had before the share exchange. First and foremost, this change affects the way the company’s net worth is calculated. Net worth, in turn, affects how a dividend is divided into a capital-income portion and an earned-income portion for purposes of tax assessment. Because of this, the change will also have an indirect effect on dividend recipients’ taxation in cases where the dividend recipient is a natural person.  

Effects on limited liability companies’ tax returns in tax year 2025

Above all, the legislative amendments affect the valuation of corporate assets. If a share exchange fulfils the conditions laid down in the amendment, the value of the shares must be reported in a new way in future.

The changes will first affect companies whose accounting year ends on or after 8 December 2025. The Tax Administration will update the instructions for completing the tax return in the first few months of 2026. The Tax Administration’s detailed guidance will also be updated.

Effects on dividend recipients’ taxation in tax year 2026

If a company distributing dividends has acquired shares in a related-party share exchange but has not valued the shares in the new way in its calculation of net worth, the Tax Administration will adjust the company’s mathematical value. The adjustment of the mathematical value will affect the capital-income and earned-income portions of natural persons and deceased persons’ estates. The changes to the taxation of dividends paid to natural persons and estates will be made in the tax assessment of 2026. The change concerns all dividends that can be drawn on or after 1 January 2026. 

Changes to the acquisition cost of shares 

In share exchanges between associated parties, the acquisition cost of the target company’s shares will in future be the mathematical value that the shares had before the share exchange. This change will affect the taxation of share transfers and apply only to share exchanges conducted on or after 1 January 2026.  

Other changes

Other effects of the legislative amendments:

• The maximum amount of cash consideration allowed in a share exchange situation was raised, and cash consideration can now also be used in situations where the subscription price of consideration shares is not recorded in the share capital but in a reserve for invested non-restricted equity.
• The scope of the provisions on the exchange of shares laid down in the act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968) was expanded to also apply to certain non-EEA countries.
• The act on the valuation of assets in taxation was amended to allow a company to seek adjustment of the reference value of its own share.

Read more:

Government proposal HE 125/2025 vp (available in Finnish and Swedish, link to Finnish)