Finnish Administrative Court confirms the favourable decision granted to Fortum on Belgian financing company taxation

FORTUM CORPORATION PRESS RELEASE 16 May 2016

The Administrative Court in Finland on 16 May 2016 has rejected the Tax

Recipients’ Legal Services Unit’s (VOVA) appeal regarding the tax assessment
imposed on Fortum in December 2013 for the year 2007. Thus the favourable
decision granted to Fortum by the Board of Adjustment of the Large Taxpayers’
Office in 2014 remains in effect.

According to the tax assessment given in December 2013, the additional taxes
including penalties and late payment interest would have amounted to EUR 136.4
million. Fortum has not made a provision, as based on existing legal analysis
the decisions should be ruled in Fortum's favour.

Fortum’s Reijo Salo, Vice President, Corporate Tax, says that the decision now
received is in line with the principle adopted by the Supreme Administrative
Court in June 2014. According to the Supreme Administrative Court’s precedent
in June 2014, under transfer pricing rules, the nature of business cannot be
re-characterised for tax purposes, but can only adjust the pricing of goods or
services.

“For companies it is very important that tax policies are consistent and
predictable,” Salo continues. “According to international taxation principles,
taxes are to be paid in the country where the revenue is earned, and the same
revenue cannot be taxed multiple times.”

VOVA can apply for the right to appeal to the Supreme Administrative Court.

Fortum Corporation
Corporate Communications


Further information:
Reijo Salo, Vice President, Corporate Tax, tel. +358 50 452 4443

Background information:
The Finnish tax authority levied the taxes in 2013 based on the revenue earned
by Fortum’s Belgian subsidiary in 2007. The same revenue has already been taxed
in Belgium in accordance with Belgian tax legislation. Fortum appealed the
additional taxes, and the Board of Adjustment approved the appeal on 21 August
2014. VOVA appealed the Board of Adjustment’s decision to the Administrative
Court.

VOVA’s appeal regarding the non-taxation of interest income for Fortum’s
Belgian and Dutch financing companies in 2008–2011 is pending before the Board
of Adjustment.

Read more:
Fortum's Interim Report January-March 2016, Note 22: Legal actions and official proceedings: http://apps.fortum.fi/investors/Fortum_Interim_Report_Q1_2016.pdf 

Fortum's tax footprint is available online:
http://apps.fortum.fi/gallery2/Fortum_as_a_Taxpayer.pdf 

Related press releases:
Press release 2 September 2014: The Board of Adjustment approved Fortum’s appeal on additional taxes in Finland for 2007

http://www.fortum.com/en/mediaroom/Pages/the-board-of-adjustment-approved-fortums-appeal-on-additional-taxes-in-finland-for-2007.aspx  

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