The Finnish Tax Administration announced on 10 September 2026 that the newly signed Protocol amending the 2010 Income Tax Treaty between Finland and France will enter into force on 1 January 2027. The Protocol, ratified by both parliaments in June 2026, incorporates BEPS Action 6 anti-abuse provisions, updates the dividend/interest/royalty withholding tax matrix, and introduces a mandatory binding arbitration clause (MAP Article 25(5)). It replaces the 2010 treaty’s Article 10-12 withholding rates and adds a principal purpose test (PPT) preamble statement.
Key Takeaways
- Reduced Withholding Rates: Dividends paid to beneficial owners holding ≥10% voting power drop to 0% (from 5%); portfolio dividends to 10% (from 15%). Interest and royalties fall to 0% across the board, subject to anti-conduit rules.
- Principal Purpose Test & LOB: The PPT denies treaty benefits where obtaining them was one of the principal purposes of an arrangement, unless granting benefits aligns with the treaty’s object and purpose. A simplified limitation-on-benefits (LOB) clause applies to pension funds and listed companies.
- Mandatory Binding Arbitration: Unresolved MAP cases after 24 months must be submitted to binding arbitration upon taxpayer request. The arbitration panel’s decision is final and binding on both competent authorities, enhancing certainty for cross-border disputes.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement