The Finnish Supreme Administrative Court confirmed today that a Finnish company can be transferred under a US parent tax neutrally through a merger procedure. The court also confirmed in another case that a traditional exchange of shares transaction is regarded as a taxable sale when the shares in a Finnish company are transferred to a US company. As a conclusion, a “Delaware flip” needs to be carried out by way of a merger in order to benefit from a tax deferral in Finland.
The court case dealt with a share flip to the US, but the same is possible with other countries, e.g., the UK and Switzerland. Moreover, as the merger method is beneficial with respect to transfer taxes, it might be a better option than the exchange of shares within EU countries as well.