We acted as the counsel for Finland’s transmission system operator Fingrid in a tax dispute concerning the real estate taxation of a reserve power plant.
We assisted Fingrid at all appellate levels. Finally, in June 2021, the Finnish Supreme Administrative Court (the SAC) issued a precedent in favour of Fingrid. The SAC ruled that a reserve power plant that is not producing electricity commercially should not be taxed at the same tax rate that applies to power plants, which is higher than the general real estate tax rate.
The SAC overruled the prior decisions in the case and accepted Fingrid’s claim that the general real estate tax rate should apply to the reserve power plant. This is a landmark decision in Finnish real estate taxation as the SAC’s precedent has now set general principles relating to the interpretation of Finnish real estate tax law.
Firstly, the precedent confirmed that the special tax rate regime should be interpreted narrowly as exceptions to the general real estate tax rate. Secondly, the case highlighted the importance of the actual purpose and use of the real estate when determining the applicable tax rate.