References/12 Mar 2019

Borenius advised Nokian Tyres on a transfer pricing dispute

We advised Nokian Tyres on a transfer pricing dispute that was resolved on 5 March 2019 when the Supreme Administrative Court rejected the application for leave to appeal submitted by the Tax Recipients’ Legal Services Unit in relation to years 2007–2010. The decision handed down by the Administrative Court of Hämeenlinna in May 2018 gained legal force as a result of this decision.

In this decision, the Administrative Court overturned the Board of Adjustment’s tax reassessment decisions, the total value of which amounted to EUR 89.2 million. Additionally, the Administrative Court ordered the Tax Administration to partly compensate the legal costs faced by Nokian Tyres.

The dispute concerned the business model implemented between the parent company and its subsidiaries as well as the transfer pricing method applied to the identified transactions. Throughout the process, the company stood by its three main arguments.

Firstly, the company held that its transfer pricing had been conducted in accordance with the arm’s length principle as required by Finnish laws and the OECD Transfer Pricing Guidelines. Secondly, the company posited that the Finnish Tax Administration had not presented any appropriate grounds to justify disregarding the company’s transfer pricing documentation. Thirdly, the company argued that the Finnish Tax Administration’s reassessment decisions had been based on the so-called recharacterisation of legal transactions in the sense rejected by the Supreme Administrative Court.

The resolution in this case was not only favourable to the client but also important from the perspective of the principle of taxpayers’ freedom of choice, similarly to the recent precedent issued by the Supreme Administrative Court in December 2018 (KHO 2018:173).

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Einari Karhu




Sampo Viding

Senior Associate