Tax strategy and operating principles
Factors relating to taxation are addressed when planning FII's business activities and in the associated decision-making. Business decisions aim to take taxation into account as one factor in achieving the business targets and in ensuring a balanced position in terms of taxation.
Finnish Industry Investment’s tax strategy aims to support business solutions and to ensure their appropriate implementation also with respect to taxation. Private equity and venture capital investments involve a careful and thorough review of tax-related aspects in the preparation stage of both investments in funds and direct investments.
Finnish Industry Investment, in addition to investing in Finnish funds, also makes investments in foreign funds. The established practice in the private equity and venture capital industry is that funds are designed to be flow-through entities as regards taxation. This means that the fund itself is not liable to tax, but instead the income the fund generates is taxed at the investor level, according to the investor’s own tax status.
Under Finnish tax legislation, Finnish Industry Investment pays income taxes to Finland on the income it receives from foreign funds. This avoids double taxation. In handling its tax affairs, Finnish Industry Investment gives high priority to the thorough completion and timely submission of its tax returns, as well as to fulfilling all other requirements and obligations set by legislation.
Finnish Industry Investment’s business activities have produced a loss in recent years. Consequently, the company has no outstanding income taxes payable and the company has confirmed losses to offset against tax on future profits.
Principles applied in tax reporting
In the Annual Report the essential taxes and tax-like payments are classified by the type of tax. In line with the materiality principle, the following taxes have not been reported owing to their insignificant amount: asset transfer tax, excise duty, tax on certain insurance premiums, and withholding tax.
We have prepared the first consolidated financial statements applying IFRS standards for the financial year ending 31 December 2015. The consolidated financial statements include comparison data from the financial year ending 31 December 2014. The date of transition from FAS (Finnish Accounting Standards) accounting practice to the IFRS standards is 1 January 2014. Consequently, the comparison data from 2014 has been converted to reconcile it with the Finnish Industry Investment group’s structure based on IFRS standards.
|Key figures for taxation, TEUR||2015 Finland||2014 Finland|
|Net sales *||-||-|
|Profit/loss before taxes||108,357||-31,386|
|Number of personnel||31||31|
|* Finnish Industry Investment Ltd's group companies do not have any net sales|
|Taxes paid, TEUR||Finland||Finland|
|Taxes on income||2,779||0|
|VAT on services and purchases, not deducted **||453||422|
|**Finnish Industry Investment Ltd's group companies do not have any sales that are subject to value-added tax (VAT). For this reason, these companies cannot deduct or offset VAT from their purchases.|
|Taxes payable, TEUR||Finland||Finland|
|Employee tax payments (PAYE)||1,286||1,223|
|Taxes paid and taxes payable, total||5,304||2,355|