Guidance on tax on insurance premiums

The guidance is being updated.

This is an unofficial translation. The official instruction is drafted in Finnish and Swedish languages.

1 General

Provisions on the tax on insurance premiums are laid down in the Act on Taxation of Certain Insurance Premiums (Act on the Tax on Insurance Premiums; 664/1966). Provisions of the Value Added Tax Act (1501/1993) apply, as applicable, to such matters as the payment of the tax, notification obligation, implementation of taxation and the tax representative (section 7 of the Act on the Tax on Insurance Premiums).

The liability to pay the tax on insurance premiums requires that the taxpayer meets certain obligations.  The taxpayer must register as a party liable to pay the tax, submit notification of changes to the basic information (accounting period, line of business, address, etc.) and also provide notification of the termination of the operations. These notifications must be submitted on the start-up notification (forms Y1/Y2/Y3) or on the notification of amendments or termination of business (forms Y4/Y5/Y6). Forms are available at www.ytj.fi/english/services/Notification-forms. The taxpayer must calculate and pay the tax each month on his own initiative. The taxpayer must also provide the Finnish Tax Administration with a  tax return.

The matters concerning the tax on insurance premiums of insurance companies referred to in the Act on Insurance Companies (521/2008) and the Act on Pension Insurance Companies (354/1997) and the permanent Finnish places of business of similar foreign insurance companies are the responsibility of the Large Taxpayers' Office.

The matters concerning the tax on insurance premiums of other taxpayers are the responsibility of the Finnish Tax Administration unit in whose area the taxpayer's municipality of residence is located.

2 Insurance operators in Finland

Finnish insurance companies, other Finnish insurance establishments (such as pension foundations and pension funds) and foreign insurance companies can carry on  insurance business in Finland. The operations of these companies and establishments are governed by a number of acts, such as the Act on Insurance Companies (521/2008), which applies to Finnish insurance companies, the Act on Foreign Insurance Companies (398/1995), which applies to foreign insurance companies, the Insurance Brokers Act (251/1993), which contains provision on the operations of insurance brokers, and the Insurance Contracts Act (543/1994), which lays down provisions on insurance contracts.

Supervision of the insurance companies, other insurance establishments and insurance brokers operating in Finland is the responsibility of the Financial Supervisory Authority. The decisions concerning the establishment and licences of insurance companies are made at the Ministry of Social Affairs and Health.

2.1 Finnish insurance operators

Under the Insurance Companies Act (1062/1979), an insurance company may operate as a mutual insurance company or as a limited liability insurance company (chapter 3, section 1 and 2 of the Insurance Companies Act). A mutual insurance company is owned by the policyholders and, as laid out in the articles of association, the holders of the guarantee capital. A limited liability insurance company is owned by the company's shareholders. Before an insurance company starts operations, it must apply for a licence from the Ministry of Social Affairs and Health. Provisions on the operations of Finnish insurance associations are laid down in the Insurance Associations Act (1250/1987).

2.2 Foreign EEA insurance company

Provisions on the right of foreign insurance companies to undertake insurance business in Finland are laid down in the Act on Foreign Insurance Companies (398/1995).

A foreign EEA insurance company means a company that has its head office in a country belonging to the European Economic Area (section 2 of the Act on Foreign Insurance Companies). The European Economic Area consists of the EU Member States, Norway, Iceland and Liechtenstein.

A foreign EEA insurance company may establish a branch in Finland or carry on  insurance business in Finland on the basis of the freedom to provide insurance services.  Under the 'single licence' principle of the insurance directives of the European Union, a foreign EEA insurance company does not need to apply for a licence from the Finnish authorities for establishing a branch in Finland or for starting insurance business in Finland from a foreign place of business.  However, before establishing a branch or starting insurance business in Finland on the basis of the freedom to provide insurance services, the foreign EEA insurance company must provide the Finnish authorities with a notification. Provisions on the notification procedure are laid down in the Act on Foreign Insurance Companies. (See 5.3 Foreign EEA insurance company).

The Financial Supervisory Authority, which operates in the administrative branch of the Ministry of Social Affairs and Health, keeps a register of all those EEA insurance companies that have a branch in Finland or that have submitted the notification of the free provision of insurance services.

A foreign EEA insurance company that carries on  insurance business in Finland from a foreign place of business on the basis of the freedom to provide insurance services and that is liable to pay the tax on insurance premiums in Finland must have a tax representative domiciled in Finland. (Section 2(3) of the Act on the Tax on Insurance Premiums). See chapter 5.3.1 Tax representative

2.2.1 Branch

The opening of a branch in Finland is considered as the undertaking of insurance business in Finland on the basis of the right of establishment.

Before a foreign EEA insurance company can establish a branch in Finland, the Financial Supervisory Authority must receive a notification of the establishment of the branch with the required annexes from the insurance supervisory authority in the insurance company's domicile  (Chapter 2 of the Act on Foreign Insurance Companies).

Within two months of receiving the notification, the Financial Supervisory Authority must notify the authority in question of the conditions that must be met in the public interest in order to undertake insurance business in Finland. The branch may commence insurance business in Finland after the foreign EEA insurance company has received notification of the conditions from the insurance supervisory authority in its domicile.

The branch may, however, commence insurance business at the latest within two months of the insurance supervisory authority in the domicile notifying the insurance company of the sending of the information pertaining to the opening of the branch to the Financial Supervisory Authority.

2.2.2 Freedom to provide insurance services

A foreign EEA insurance company may start the free provision of insurance services in Finland once it has received notification from the insurance supervisory authority in its domicile that the authority has sent notification of the commencement of the free provision of insurance services to the Financial Supervisory Authority (Section 11 of the Act on Foreign Insurance Companies).

Free provision of insurance services means that a foreign EEA insurance company operating from a foreign place of business concludes non-life insurance contracts relating to insurance risks located in Finland or life assurance contracts with natural persons residing in Finland or companies operating in Finland (Section 5 of the Act on Foreign Insurance Companies).

Thus, free provision of insurance services does not require the company to actively market its services in Finland as free provision also covers the following situations:

• A Finnish policyholder takes out an insurance policy at a foreign EEA insurance company on  its own initiative or with the assistance of an insurance broker.
• A foreign EEA insurance company (such as a Swedish insurance company) provides insurance coverage for its customer's (such as a Swedish company) property or liabilities located in Finland. The risk located in Finland is defined in the Act on Foreign Insurance Companies.

Under section 6 of the act, the insurance risk is located in Finland in the following situations:

1. The object of insurance is a building or a piece of real estate located in Finland. If the object of insurance consists of a building with its movable property, the risk concerning the movable property is also located in Finland if the movable property is insured on the same policy as the building.
2. The object of insurance is a vehicle registered in Finland.
3. A risk related to travel or a holiday is deemed to be located in Finland if the insurance contract relating to the risk has been concluded for a maximum period of four months and the policyholder has taken out the policy in Finland.
4. In cases other than those referred to in sections 1-3 above, the risk is deemed to be located in Finland if the policyholder has a permanent place of residence in Finland. If the policyholder is a legal person, the risk is deemed to be located in Finland if the legal person has a place of business in Finland to which the insurance policy relates.

The country in which the risk is located is also of crucial importance concerning the taxation right of the Member States.  The third non-life insurance Directive of the European Communities (92/49/EEC) contains provisions on indirect taxes that are applicable to insurance contracts. Under the Directive, insurance contracts are subject to the indirect taxes (including taxes on insurance premiums) and parafiscal charges on insurance premiums in the Member State in which the risk is situated.

2.3 Insurance company established outside the EEA

An insurance company established outside the EEA (insurance company from a third country) means a foreign insurance company whose domicile  is not part of the European Economic Area (Section 2 of the Act on Foreign Insurance Companies).

An insurance company from a third country must obtain a licence by the Ministry of Social Affairs and Health before it can carry on  insurance business in Finland. In order to obtain a licence, the company must establish a branch in Finland.

2.4 Insurance brokers (insurance intermediaries)

Provisions on insurance brokers are laid down in the Insurance Brokers Act (251/1993). Under section 1 of the Act, an insurance broker means a person who, on a professional basis, brokers insurance policies offered by a large number of insurers that are independent of each other.  Insurance brokers must be independent of insurance companies. This means that insurance brokers may not act as tax representatives of foreign EEA insurance companies in Finland.

In Finland, insurance brokerage business may only be undertaken by natural persons or corporate entities that have been entered in the register of insurance intermediaries kept by the Financial Supervisory Authority. Foreign insurance brokers operating in Finland must also apply for registration before they can undertake their business in Finland.

However, the Insurance Brokers Act does not apply to agents operating as representatives of insurance companies. Furthermore, these agents do not need to apply for registration in the same manner as insurance brokers as they operate under the supervision and responsibility of the insurance companies.

3 On which insurance policies is the tax levied?

Under section 1 of the Act on the Tax on Insurance Premiums, a tax on insurance premiums must be paid to the State if the object of insurance is a property located in Finland or an interest related to activity practised in Finland or other interest in Finland. Thus, the tax on insurance premiums must be paid on property insurance and other types of insurance granted by non-life insurance companies such as liability insurance, legal expenses insurance, business interruption insurance and motor vehicle insurance.

The liability insurance contracts concluded by EEA insurance companies undertaking insurance business on the basis of the freedom to provide insurance services also specify the location of the risk in terms of insurance law by laying down the geographical area of validity of the insurance policy (See section 2.2.2 Freedom to provide insurance services)

However, the tax on insurance premiums is not levied on insurance premiums that are exclusively based on the following insurance contracts:

• personal insurance contracts (such as accident insurance, life assurance and pension insurance)
• insurance contracts concluded in accordance with the Patient Injury Act (585/1986)
• credit insurance and reinsurance agreements
• transport insurance contracts for goods to be exported from, imported to, or transported via Finland or
• insurance contracts for aircraft, seagoing vessels, or other transport equipment used primarily for international traffic.

4 Insurer or the policyholder as the party liable to pay the tax on insurance premiums

Provisions on the liability of the insurer/policyholder to pay the tax on insurance premiums are laid down in section 2 of the Act on the Tax on Insurance Premiums.

As a rule, insurers carrying on  insurance business in Finland are liable to pay the tax on insurance premiums. In other words, they are liable to pay taxes to the State on the taxable insurance premiums that they have collected on the basis of insurance contracts. In practice, however, the insurer is not the ultimate payer of the tax as it charges the policyholder both the insurance premium and the tax and pays the tax to the State. In addition to Finnish insurance companies/associations, foreign EEA insurance companies (branches in Finland/freedom to provide insurance services) and insurance companies from third countries, which are established outside the EEA (with branches in Finland) may also be liable to pay the tax on insurance premiums. A foreign EEA insurance company that carries on  insurance business in Finland from a foreign place of business on the basis of the freedom to provide insurance services and that is liable to pay the tax on insurance premiums in Finland must have a tax representative domiciled in Finland.

In certain situations, the policyholder (a private person or a company) may be liable to pay the tax on insurance premiums. The policyholder is liable to pay the tax when the insurance premium on which the tax is levied is paid to the insurer that does not carry on  insurance business in Finland.  In practice, this refers to a situation in which the insurance contract is concluded with a foreign insurance company established outside the EEA that does not carry on  insurance business in Finland (= does not have a branch in Finland). When for example a Finnish private person takes out an insurance for his/her property located in Finland in such an insurance company, the private person in question must register as a party liable to pay the tax on insurance premiums and pay the tax to the State.  In similar situations, a policyholder that is liable to pay the tax on insurance premiums may also be a Finnish or foreign corporate entity (company, association, foundation, etc.).

As the insurer or the policyholder is the party liable to pay the tax on insurance premiums, the insurance broker acting as the insurance intermediary can never be liable to pay the tax on insurance premiums.

Case law:

KHO 20.06.2002 T 1537:

The foreign parent company of an international group had taken out an insurance policy in a foreign insurance company for group companies established in different countries in which the group is operating (including Finland). This arrangement provided insurance cover for the interests of A Oy, the group's Finnish subsidiary, concerning its operations in Finland. The insurance contract with the foreign insurance company had been concluded by the group's foreign parent company, which also paid the insurance premiums to the insurance company.  In order to cover the costs arising from the insurance, the Finnish subsidiary A Oy paid its share of the costs to the group's foreign parent company, as invoiced by the parent company.

The Finnish subsidiary A Oy, which was an insured party and not a policyholder, was not obliged to pay the tax on insurance premiums on the charges that it had paid to the group's foreign parent company that were connected with the insurance policies in question.

In the decision concerned, the Supreme Administrative Court addressed the obligation of the subsidiary to pay the tax on insurance premiums. According to the Supreme Administrative Court's decision, the Finnish subsidiary was not obliged to pay the tax on insurance premiums on the charges that it had paid to the foreign parent company and that were connected with the insurance policies in question. This is because the Finnish subsidiary was an insured party and not a policyholder. Moreover, the company had paid its share of the insurance premiums to its foreign parent company acting as the policyholder and not to the insurer. At the same time, however, the case did not concern the liability of the policyholder (the foreign parent company) or the foreign insurance company that had provided the insurance to pay the tax on insurance premiums in Finland.

However, in this and other similar situations where property located in Finland, interest connected with business carried on  in Finland or other interest in Finland has been insured with an insurance contract, the tax on insurance premiums must be paid under the Act on the Tax on Insurance Premiums. In such cases, it must be determined whether the group's foreign parent company (policyholder) has concluded an insurance contract with a foreign EEA insurance company or with an insurance company established outside the European Economic Area.  If the group's foreign parent company concludes an insurance contract with a foreign EEA insurance company, the insurer (the insurance company in question) must register as a party liable to pay the tax on insurance premiums in Finland.   If the foreign parent company concludes an insurance contract with an insurance company established outside the EEA, the foreign parent company is, as a policyholder, obliged to register as party liable to pay the tax on insurance premiums in Finland.

In its judgement C-191/99 of 14 June 2001, the Court of Justice of the European Communities issued an opinion on the right of a Member State to levy taxes in the following situation:

The parent company established in the United Kingdom took out business liability insurance policies covering all operations of the group and global non-life insurance policies in an insurance company undertaking business in the same country. One of the group companies, which was wholly owned by a company, which in turn was wholly owned by the group company, was operating in the Netherlands.

According to the Dutch tax authorities, the tax levied in the Netherlands had to be paid on the insurance policies to the extent that it was a question of insurance policies covering risks located in the Netherlands.  The tax was imposed on the parent company operating in the United Kingdom.

The Court stated as follows:  Articles 2(c) and (d) and 3 of Second Council Directive 88/357/EEC of 22 June 1988 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239/EEC permit a Member State to levy insurance tax on a legal person established in another Member State in respect of premiums that this legal person has paid to an insurer also established in another Member State for insuring risks that are connected with the business operations of a subsidiary established in the country levying the tax and that is directly or indirectly owned by this legal person.  It makes no difference if the legal person which paid the premiums and the legal person whose business risks are covered are two companies in the same group linked by a relationship other than that of parent and subsidiary company.

In interpreting 'policy-holder‘ or 'Member State in which the risk is situated'‘ for the purposes of Article 2(d), final indent, of Directive 88/357/EEC, the way in which the premium relating to the risk insured is invoiced or paid within a group of companies is immaterial.

The third non-life insurance Directive of the European Communities (92/49/EEC) contains provisions on indirect taxes that are applicable to insurance contracts. Under Article 46(2) of the Directive, every insurance contract shall be subject exclusively to the indirect taxes and parafiscal charges on insurance premiums in the Member State in which the risk is situated as defined in Article 2(d) of Directive 88/357/EEC (second non-life insurance Directive). Thus, the country in which the risk is located is also of crucial importance as regards the taxation right of the Member States. According to  the judgement issued by the Court of Justice of the European Communities in the case C-191/99 referred to above, this principle also applies to situations where the policyholder is a company belonging to the same group as the insured that is not established in the Member State where the insured risk is located.

5 Registering as party liable to pay the tax on insurance premiums

The Finnish Patent and Registration Office and the Finnish Tax Administration jointly maintain the Business Information System (BIS) in which all information can be reported to one or both of the authorities in one single notice, (start-up notification (forms Y1 to Y3), or notification on amendments or termination of business (forms Y4 to Y6).

You can register as a party liable to pay the tax on insurance premiums on a start-up notification. If your company already has a business ID, you can register as the party liable to pay the tax on a notification on amendments or termination of business. There is a section on the Y form that you must complete if you are registering as a party liable to pay the tax on insurance premiums.

Forms (Y forms) and instructions for completing them are available from tax offices, the Finnish Patent and Registration Office, ELY Centres and at www.ytj.fi.

5.1 Finnish insurance operators

An insurance company/association or other insurance establishment must be entered in the registers kept by the Finnish Tax Administration on a start-up notification (form Y1). If the insurance company/association or other insurance establishment already has a business ID, it must register as a party liable to pay the tax on insurance premiums on form Y4.

5.2 Policyholders

There are situations where the policyholder is the party liable to pay the tax on insurance premiums. Thus, a Finnish or foreign corporate entity or private person may be liable to pay the tax on insurance premiums.

When a company that is not engaged in insurance business registers as a party liable to pay the tax on insurance premiums, the registration must be on a start-up notification that is in accordance with the type of enterprise in question. If the company already has a business ID, forms Y4/Y5/Y6 must be used.

Private persons must register as parties liable to pay the tax on insurance premiums on start-up notification form Y3. If the private person in question already has a business ID, the registration is on form Y6.

5.3 Foreign EEA insurance company

A foreign EEA insurance company that undertakes insurance business in Finland from a foreign place of business on the basis of the freedom to provide insurance services must have the following documents when registering as a party liable to pay the tax on insurance premiums:

1. Start-up notification (Y1/Y2/Y3) and any power of attorney issued for signing it.
2. The foreign equivalent of a trade register extract and a Finnish or Swedish translation showing the name, domicile, line of business, accounting period and the names of persons entitled to sign documents on behalf of the foreigner.
3. Articles of association, by-laws, partnership agreement or other similar regulations or a certified copy of the regulations and a Finnish or Swedish translation. If the foreign equivalent of the trade register extract referred to in section 2 has been submitted to the Finnish Tax Administration, the documents referred to in section 3 are not required.
4. If the start-up notification has been signed by a foreigner, the commitment or similar undertaking of the Finnish representative to act as the tax representative of the party liable to pay the tax on insurance premiums.
5. Power of attorney duly issued by the foreign corporate entity to the representative to act as the representative of the party liable to pay the tax on insurance premiums and in this capacity to sign the tax returns and notices concerning the tax on insurance premiums, and a Finnish or Swedish translation of this power of attorney.
6. The name, business ID code and contact information of the representative. If the representative’s line of business is related to something other than accounting and bookkeeping services, proof that the representative is competent to handle the duties of a representative in compliance with the law.

A foreign EEA insurance company that carries on insurance business in Finland on the basis of the right of establishment (establishes a branch in Finland) must submit the documents referred to in sections 1-3 to the Finnish Tax Administration.

The documents referred to above concerning foreign insurance companies must be delivered to a tax office, the Finnish Patent and Registration Office, an ELY Centre or they can be mailed to:

PRH - Tax Administration
Business Information System
P.O. Box 2000
FI-00231 HELSINKI FINLAND

5.3.1 Tax representative

A foreign EEA insurance company that undertakes insurance business in Finland from a foreign place of business on the basis of the freedom to provide insurance services must have a tax representative domiciled in Finland (section 2(3) of the Act on the Tax on Insurance Premiums and section 173 a of the Value Added Tax Act). The tax representative is approved by the Finnish Tax Administration unit that is responsible for taxes on insurance premiums that foreigners are liable to pay.

The representative must possess adequate expertise and competence for carrying out the tasks of the representative. As a rule, the representative must be entered in the Finnish Trade Register. Private persons are only approved as representatives in exceptional circumstances.

The representative is responsible for the meeting of the administrative obligations arising from the tax liability of the foreign party that has registered as a party liable to pay the tax on insurance premiums. As a rule, a party can only be approved as a representative if it undertakes to manage the accounting and other similar duties of the party liable to pay the tax. The representative must keep records of the operations and transactions of the foreign business so as to provide the essential information needed for determining the amounts of the tax. Such records are to be kept safe in Finland for the period defined in the accounting  rules of the Finnish Accounting Act.

The foreign party is responsible for meeting the notification obligation. If the foreigner has a representative in Finland, the obligation also applies to the representative.

At the request of the tax authorities, the representative must provide the accounting material of its principal for examination.

The representative is not responsible for the payment of taxes levied on the foreigner.

The tax representative referred to in this chapter does not mean the tax representative referred to in section 52 of the Act on Assessment Procedure (1558/1995).

5.3.2 Appointing a new tax representative

The representative can be changed by notifying the Finnish Tax Administration of the change in advance and by presenting the documents listed in sections 4-6 of chapter 5.3 above (Foreign EEA insurance company) for the new representative. The new representative must also have the approval of the competent Finnish Tax Administration unit. If the foreigner or the representative has notified the Finnish Tax Administration unit of the termination of the duties of the representative and the foreigner has not, despite requests, appointed a new representative approved by the Finnish Tax Administration, the Finnish Tax Administration will consider the tax liability of the foreigner as terminated and will remove it from the register of tax-liable bodies.

5.4 Insurance company located outside the EEA

An insurance company located outside the EEA must provide the Finnish Tax Administration with the following documents:

1. Start-up notification (Y1/Y2/Y3) and any power of attorney issued for signing it.
2. The foreign equivalent of a Trade Register extract and a Finnish or Swedish translation showing the name, domicile, line of business, accounting period and the names of persons entitled to sign documents on behalf of the foreigner.
3. Articles of association, by-laws, partnership agreement or other similar regulations or a certified copy of the regulations and a Finnish or Swedish translation. If the foreign equivalent of the Trade Register extract referred to in section 2 has been submitted to the Finnish Tax Administration, the documents referred to in section 3 are not required.
4. The operating licence granted to the company by the Ministry of Social Affairs and Health.

The documents referred to above must be delivered to a tax office, the Finnish Patent and Registration Office, an ELY Centre or they can be mailed to:

PRH - Tax Administration
Business Information System
P.O. Box 2000
FI-00231 HELSINKI FINLAND

6 Tax basis and the amount of the tax

From 1 January 2013, the tax on insurance premiums has been 24% and it is calculated on the basis of the accumulated or paid insurance premiums (sections 3 and 4 of the Act on the Tax on Insurance Premiums). In fire insurance, the fire protection fee of 3% is also considered when the basis for the tax is determined.

The insurer calculates the tax on the basis of the insurance premiums that it has collected during one month.

If the policyholder is liable to pay the tax on insurance premiums, the policyholder must calculate the tax on the basis of the insurance premiums that it has paid during the month.

No tax on insurance premiums needs to be paid on the fees charged by the insurance brokers (insurance intermediaries) from their customers. However, the practice has often been that the insurance company with which the insurance broker has concluded a contract authorised by the broker's customer, has charged both the insurance premium and the brokerage fee from the customer and then paid the fee separately to the insurance broker. If the insurance company charges the brokerage fee as part of the insurance premium, the fee must also be considered as part of the tax basis.

7 Provision of advice

The Finnish Tax Administration provides advice in matters concerning the taxation of insurance premiums both orally and in writing. For more information on the submitting of periodic tax returns and the payment of the tax, go to tax.fi/taxaccount. You can seek a preliminary ruling from the Finnish Tax Administration or the Central Tax Board. Both bodies charge a fee for issuing preliminary rulings. (Section 7 of the Act on the Tax on Insurance Premiums and sections 189 - 190 a of the Value Added Tax Act).

7.1 Guidance

The Finnish Tax Administration provides guidance in matters concerning the procedure both orally and in writing. Written guidance is provided free of charge and it may not be appealed.

For advice on matters concerning the taxation of insurance premiums, call the Finnish Tax Administration's nationwide telephone service at 029 497 014.

7.2. Preliminary ruling

On application, the Finnish Tax Administration issues preliminary rulings on how the law is applied to specific business transactions of the applicant. Preliminary rulings are only issued in matters that are important to the applicant. The application for a preliminary ruling must be in writing.

On application, the Central Tax Board may also issue preliminary rulings on the taxation of insurance premiums. A preliminary ruling can only be issued if the ruling is important on account of applying the law in other similar cases or on account of unified application of taxation or there are other important grounds for issuing a ruling on the matter. In his/her written application, the applicant must provide adequate information about the matter and specify the issue on which a preliminary ruling is sought.

A fee is charged for the preliminary rulings issued by the Central Tax Board and the Finnish Tax Administration. A preliminary ruling is issued for a specific period and it will expire by the end of the calendar year following the year in which it is issued at the latest. At the request of the person for which the preliminary ruling is issued, a preliminary ruling with legal force will remain binding for the period for which it has been issued. Preliminary rulings are only binding when the information given in the application for the preliminary ruling is correct.

8 Appeal procedure

Decisions of the Finnish Tax Administration can be appealed against to the Helsinki Administrative Court. Both the party liable to pay the tax and the Tax Recipients' Legal Services Unit may appeal against the decision of the Administrative Court to the Supreme Administrative Court if the Supreme Administrative Court grants a leave to appeal. (Section 7 of the Act on the Tax on Insurance Premiums and chapter 21 of the Value Added Tax Act. Corrections and appeals).

8.1 Appeal procedure

The party liable to pay the tax on insurance premiums may appeal against a decision concerning a registration measure, a preliminary ruling, debiting made on the basis of supervision, and refund, reassessment, corrective assessment and reconsideration decision. Appeals can be lodged in matters concerning debited taxes, surtaxes and tax penalties.

8.2. Corrective assessment

All claims for adjustment submitted to the Finnish Tax Administration by taxpayers are first treated as corrective assessment matters. If the Finnish Tax Administration concludes that the decision has been erroneous, the decision will be corrected and the appeal lodged by the taxpayer will lapse.  If the Finnish Tax Administration only accepts part of the claim presented in the appeal, it will send the rejected parts of the appeal to the Helsinki Administrative Court for decision.

The Finnish Tax Administration must, on its own initiative, adjust a decision that it has made if it is erroneous to the detriment of the taxpayer. Adjusting the decision does not require a claim by the taxpayer as the Finnish Tax Administration must also adjust decisions that have been found erroneous in other ways (such as errors discovered in an audit).

The Finnish Tax Administration may adjust the decision within three years of the end of the accounting period or on the basis of a claim submitted by the taxpayer during the period in question.

8.3. Appeal to the Helsinki Administrative Court

Decisions concerning the taxation of insurance premiums may be appealed against to the Helsinki Administrative Court in writing. The appeal document must be addressed to the Helsinki Administrative Court but it must be delivered to a tax office. To the extent that no adjustment can be made, the matter is considered as an appeal and the Finnish Tax Administration gives the matter to the Helsinki Administrative Court for decision.

The Tax Recipients’ Legal Services Unit has the right of appeal on behalf of the State and it must lodge its appeal within 30 days of the making of the decision. The taxpayer must lodge its appeal within three years of the end of the accounting period.  However, the appeal period is always at least 60 days from the service of notice of the decision. In matters concerning registration and preliminary rulings, the appeal period is 30 days from the service of notice of the decision. The preliminary rulings issued by the Central Tax Board can be appealed against directly to the Supreme Administrative Court within 30 days of the service of notice of the decision.

The appeal document must contain the following information:

• Name of the appellant
• Decision and each of its sections that are appealed against, the month and accounting period that the decision concerns
• Adjustments requested by the appellant
• Justifications  for the claim.

The appellant or the person preparing the appeal document must sign the appeal document. The profession, municipality of residence and postal address of the appellant and the person preparing the appeal document must also be given. The original or the officially certified copy of the decision that is appealed against must be appended to the appeal document. A proof of when the notice was served must also be appended to the document.

8.4. Further appeal to the Supreme Administrative Court

The decision of the Helsinki Administrative Court may only be appealed against to the Supreme Administrative Court if the Supreme Administrative Court grants a leave to appeal.

A leave to appeal may only be granted if

1. On account of applying the law in other similar cases or on account of unified application of case law it is important to give the matter to the Supreme Administrative Court for consideration.
2. On account of a manifest error in the matter, there are weighty grounds for giving the matter to the Supreme Administrative Court for consideration.
3. There are weighty economic or other grounds for granting a leave to appeal.

A leave to appeal may also be granted so that it only partially applies to the appealed decision of the Helsinki Administrative Court. The appeal must be lodged within 60 days of the service of notice of the decision of the Helsinki Administrative Court. The appeal document must be delivered to the Supreme Administrative Court or the Helsinki Administrative Court by the end of the appeal period. The Tax Recipients’ Legal Services Unit has the right of appeal to the Supreme Administrative Court on behalf of the state and it must observe the same appeal periods as the parties to the case.

9 Insurance services and value added tax

Sales of insurance services are exempt from value added tax (section 44 of the Value Added Tax Act). In value added taxation, insurance services mean, in addition to the insurance business carried on by insurance companies, insurance business undertaken by such bodies as insurance associations, insurance funds, unemployment funds and pension foundations. Reinsurance and insurance intermediation are also exempt from value added taxation.

This means that no value added tax needs to paid on the sales of insurance services (insurance premiums collected on the basis of insurance contracts).

Under the Value Added Tax Act, certain insurance technical services are also exempt from value added taxation. These are the processing of insurance applications, services directly linked with the management of an insurance during its period of validity, insurance financing services, calculation and decision-making concerning pensions and insurance benefits, services concerning the payment of and statistics on pensions and insurance benefits, services concerning the forecasting of pension liabilities and pension expenses, and the services concerning the assessment of insured losses. Under the general provisions of the Value Added Tax Act, value added tax must be paid on the insurance services other than those listed in the Value Added Tax Act.

Parties engaged in business activities on which value added tax must be paid cannot deduct the tax on insurance premiums contained in insurance premiums from their value added taxes. Even though several provisions of the Value Added Tax Act are applied to the taxation of insurance premiums the system of deductions is not applied to it. Thus, parties liable to pay the tax on insurance premiums must calculate and pay the tax on insurance premiums directly on the basis of accumulated or paid insurance premiums.