Irish Unit Trust granted Finland treaty benefits
Finnish Tax Administration refunds WHT on Finnish source dividends
In its recent decision, the Finnish Tax Administration accepted tax treaty benefit claim of an Irish Unit Trust claiming WHT refund on Finnish source dividend income. The Unit Trust in question was an open-ended Unit Trust established in accordance with the UCITS Directive and it had received portfolio dividends from Finnish publicly listed companies. These dividends had been subject to Finnish domestic WHT of 28%.
Under the provisions of the Double Tax Convention concluded between Finland and Ireland, Finland has relinquished its source state taxing right on dividend income. Consequently, Finland is restricted to impose tax on dividend income provided that the income recipient qualifies as a person resident of Ireland and is considered to be the beneficial owner of the dividend income.
During the refund claim process, the Finnish Tax Administration requested additional information on the certificate of residence (CoR) issued by the Irish Revenue Commissioners. The Finnish Tax Administration questioned whether the Trustee rather than the Unit Trust, based on the wording of CoR, should be the entity claiming treaty access. Eventually the Tax Administration decided the case in favor of the taxpayer. Finnish Tax Administration granted treaty access to the Irish Unit Trust and the WHT of 28% imposed under Finnish domestic law was refunded.
Although this unpublished decision in question is issued by the Finnish Tax Administration which represents the first instance of appeal in the Finnish WHT refund procedure, it significantly improves the opportunities for Irish Unit Trusts to claim WHT refund under the provisions of Finland-Ireland DTC.