When is the incorporation of real estate units related to the social welfare and health care reform exempt from transfer tax?

The act on transfer tax has been amended to include a temporary tax exemption provision, effective as of 1 January 2024.

This provision concerns the incorporation of certain municipal facilities used for health care and wellbeing services into companies. The tax exemption is applicable to transfers conducted on or after 9 October 2023. These transfers are exempt from tax if they meet the conditions for tax exemption defined in § 43 a of the act on transfer tax (Varainsiirtoverolaki 931/1996). However, a transfer tax return must be filed, with the deed of transfer regarding the assets in kind as an attachment.

The transfer is exempt from transfer tax if:

• The incorporation takes place by the end of 2030.
• The transferor is a municipality or joint municipal authority alone or together with another municipality or joint municipal authority.
• The limited liability company that receives the transferred real estate is owned by the municipality or joint municipal authority alone or together with another municipality or joint municipal authority. The company may already exist, or it may be established for this purpose.
• No cash consideration is involved in the transfer. Instead, the municipality or joint municipal authority receives shares of the recipient company.
• The real estate unit to be transferred was mainly used by the municipality or joint municipal authority for social welfare, health care or rescue operations on 31 December 2022. In addition to the real estate unit, a part of the real estate unit or shares in the real estate company may also be transferred exempt from tax, if the requirements listed here are fulfilled.
• The transferred real estate unit had been rented out to the wellbeing services county as described in the legislation on the social welfare and health care reform.