Finland: Guidance on Pillar Two global minimum tax
Key elements of the Minimum Tax Act and additional clarifications on general application of Pillar Two rules
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April 1, 2025
The Finnish Tax Administration in March 2025 released new guidance concerning the Minimum Tax Act. The Finnish Pillar Two legislation, effective since December 31, 2023, was amended at the end of 2024 to incorporate additional elements from the OECD Administrative Guidance.
The guidance issued on March 10 outlines the key elements of the Finnish Minimum Tax Act. The subsequent guidance on March 12 provides further clarifications on the general application of the Pillar Two rules, incorporating the OECD June 2024 Administrative Guidance. Key points include:
- Deferred tax liabilities (DTL) recapture: The guidance introduces a five-year recapture rule for DTLs, as per the OECD June 2024 Administrative Guidance. Other elements of the OECD guidance were not addressed, but the Finnish Tax Administration noted that additional aspects might be directly incorporated into the legislation.
- Disclosure of deferred tax: The guidance specifies that pre-regime deferred tax assets (DTAs) and DTLs related to the transition year are relevant for Pillar Two purposes, regardless of their inclusion in separate or consolidated financial statements or disclosure in local financial statement notes, in accordance with Finnish GAAP. All DTAs and DTLs must be reliably and consistently traceable to the relevant entity.
- Prior-year adjustments: The guidance explains the treatment of tax adjustments made before and after the filing of the GloBE Information Return (GIR). Adjustments for prior periods made before the GIR filing must be reflected in the effective tax rate of that period. Adjustments made after the GIR filing follow regular prior-year adjustment rules, similar to Article 4.6 of the OECD GloBE Model Rules. The guidance also applies these rules to changes in uncertain tax positions.
Read an April 2025 report prepared by KPMG’s EU Tax Centre