KHO grants transfer relief in full despite mostly passive assets

Korkein hallinto-oikeus has granted generation-transfer relief (sukupolvenvaihdoshuojennus) in full on inherited shares in a company whose assets consisted overwhelmingly of non-business property, holding by 3–2 that there were no grounds to apportion the relief by opening the company's balance sheetFinlex. In the same judgment the court awarded the heir 1,500 euros in compensation for delayed proceedings. The decision is KHO:2026:72.Finlex

A had inherited shares in X Oy, and it had been finally resolved that A was entitled to sukupolvenvaihdoshuojennus in inheritance taxation. Remaining was whether the relief should cover all of the inherited shares where the real-estate and rental activity carried on by X Oy could not be regarded as business activity (yritystoiminta)Finlex and the connected assets formed over 80 per cent of the company's total assetsFinlex. The court held that there were no grounds to depart from the starting point that the basis for the relief is generally the tax value of a limited company's share as suchFinlex, and granted A the relief on all of the inherited sharesFinlex.

The figures were established as follows. Real-estate and rental assets accounted for about 87 per cent of all company assets at balance-sheet valuesFinlex and about 85 per cent at fair valuesFinlex, while the horse business — on whose account X Oy counted as an enterprise under Perintö- ja lahjaverolaki 55 § — represented about three per cent and eight per cent respectively. After reassessment the Tax Administration had confined the relief to 93,820 eurosFinlex instead of the 267,460 euros first grantedFinlex; the oikaisulautakunta and the hallinto-oikeus had upheld that apportionment.

The reasoning turns on what inheritance tax targets. The tax is imposed on the shares, not directly on the company's assets; valuing company assets is only the means of determining the relieved value of the shares under 55 § 2 momentti. Read so, the last sentence of that momentti naturally means that a limited company's yritysvarallisuus means all of its assets. The finance committee reports (VaVM 5/2004 vp, VaVM 44/2005 vp) express the legislature's intent that the basis is generally the share's tax value as such; the committee named material changes in the asset mass (KHO 2002:17) and arrangements made only for a tax benefit as departure situations, and neither was present here.

The court distinguished KHO 2018:163, where the starting point had been departed from: there the assets had consisted almost entirely of non-business assets and a doctor had intended to transfer shares to children neither trained in nor working in the field. Those special circumstances were absent, so there was no basis for taseen avaaminen. Two justices dissented: the real-estate assets, not shown to be needed for the horse business, were not assets within 55 § 1 momentti 2 kohta and should have been excluded under 55 § 2 momentti, since relief directed principally at assets serving no business purpose contradicts the provision's purpose.

On delay compensation, the proceedings lasted about six years and nine months from the oikaisuvaatimus of 5 December 2018 to the hallinto-oikeus judgment of 8 September 2025, with just over two years in the hallinto-oikeus and no steps recorded after November 2023. The court held the hallinto-oikeus should have had regard to the proceedings' overall length when queuing the case, and found a one-year delay attributable to the stateFinlex: 1,500 euros, with no uplift as the matter was not of special significance. The compensation is paid from state funds by Valtiokonttori.

Legal basis: Perintö- ja lahjaverolaki 55 § 1 ja 2 momentti and 57 §; laki oikeudenkäynnin viivästymisen hyvittämisestä 3 § 1 momentti, 4 §, 5 § 2 momentti and 6 § 2 momentti.