EU mutual pension insurer may deduct reserves from Finnish dividends

A mutual occupational pension insurer from another EU state may deduct transfers to compensation and premium reserves from the total amount of Finnish dividends linked to its pension insurance businessVero. Measured by funds, 97 per cent of the applicant's activity was pension insurance, and it invested its funds as a whole, so its income from Finland was not directly attributable to any single product. The applicant offered collectively agreed pensions and also other insurance products built on collective agreements, operating under its home-state legislation.

The Central Tax Board equated the applicant's situation with that of a Finnish mutual pension insurerVero. The applicant and Finnish mutual pension insurers pursue the same goal and task as providers of occupational pension insuranceVero, so how the pension amount is determined, or whether the applicant's products match Finnish pension products in every respect, does not matter. The applicant's activity was largely equated with a Finnish mutual pension insurer offering statutory pension insurance and in part with other mutual insurers.

Finnish mutual pension insurers are liable to income tax but deduct statutory transfers to compensation and premium reserves under 8 § 1 mom. 10 punktenVero, and 48 a § reserves matching transfers to the non-allocated supplementary insurance liability. Under Article 63 of the Treaty on the Functioning of the European Union and judgments C-342/10 and C-641/17, the applicant is equated with a Finnish mutual pension insurer insofar as the Finnish dividends are allocated to cover pension liabilitiesVero: there are then no objective differences justifying taxing the applicant's Finnish incomeVero, since Finnish pension insurers de facto pay no tax on their incomeVero.

The deduction follows the accounting. The applicant booked an increase in liabilities only where an employee's future pension was guaranteed; the return-based part of premium-based cover was paid to the insured from a fund forming part of its own capital. The fund's surplus could not fund index increases or premium reductions of defined-benefit pensions, could be distributed as surplus rebates if overfunded, served as a risk buffer, and could not be paid out as ordinary dividends. Transfers of results to the fund were held to serve largely the same purpose as a Finnish insurer's transfers to compensation and premium liability, except where funds are distributed as surplus rebatesVero.

An amount matching the dividend share transferred to the statutory compensation and premium liability under 8 § 1 mom. 10 punkten is therefore deductible from total pension-business dividends, with own-capital fund bookings for the year equated where not distributed as surplus rebatesVero. For the other insurance products, deduction for transfers to compensation and premium liability is likewise available where dividends relate to future compensationVero; since Finnish income was not directed to specific liabilities or booked separately, that share is set by product turnover. Under C-156/17, the applicant may be required to document the deduction's amount and grounds to SkatteförvaltningenVero.

The advance ruling covers tax years 2026 and 2027Vero. The decision is published as a summary only and is not final.

Legal basis is Lagen om beskattning av begränsat skattskyldig för inkomst 3 § 1 and 7 mom. and 7 § 1 mom. 3 punkten b, Lagen om beskattning av inkomst av näringsverksamhet 7 § 1 mom., 8 § 1 mom. 10 punkten and 48 a § 1 mom., with Articles 63 and 65 of the Treaty on the Functioning of the European Union and judgments C-342/10, C-641/17 and C-156/17.