The matter concerned the definition of interest income in the context of ATAD interest deduction limitations and, indirectly, the definition of interest expenses. The Central Tax Board and the Supreme Administrative Court confirmed that fees and expenses paid for factoring services are considered to constitute interest income for the service provider. Consequently, they should also be regarded as interest expenses for the client that uses factoring.
The ruling clarifies the tax treatment of factoring and also the definition of interest income/expenses in the context of ATAD interest deductions in Finland.
Central Tax Board ruling 2022/23 was published on 29 April 2022, and the Supreme Administrative Court’s ruling was handed down on 11 May 2023 (not published).