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The Government is preparing changes to the taxation of share exchanges / Update 29.9.2025

Update 29.9.2025:

Government proposal on share exchanges published with amendments (HE 125/2025)

We previously wrote about the government’s proposed changes to share exchange arrangements and the feedback the proposal received during the consultation process. The proposed amendments would affect even thousands of entrepreneurs who have carried out a share exchange since 1.1.2017 – regardless of the reason for the arrangement.
You can read more about the earlier stages of the legislative process in our previous updates (below).

After the public consultation round, the government proposal has now been significantly amended and will proceed to Parliament for consideration. From the perspective of an entrepreneur who has carried out a share exchange, the amended proposal still cannot be regarded as positive, but important and successful changes and clarifications have nonetheless been made based on the consultation feedback.

Key points of the government proposal:

  • Temporal application: The proposal does not suggest changes to the temporal scope of the Valuation Act affecting dividend taxation for share exchanges already carried out. The proposed changes  would still apply to share exchanges carried out after January 1, 2017, as was proposed in the original draft.
  • Valuation principles: The most important change concerns the valuation principle of shares in the net asset calculation of the acquiring company in a share exchange. Instead of the undepreciated acquisition cost prior to the exchange, the shares of the target company would be valued at their mathematical value prior to the share exchange. The widely criticized “punitive” element is therefore no longer included, meaning that in share exchanges the acquired shares will end up with the     same mathematical value as before the exchange. This change in net asset calculation would affect dividends withdrawable as of January 1, 2026. It should be noted, however, that transfer tax in a share exchange would still be calculated based on the fair market value of the shares.
  • Determination of acquisition cost: The provision on the acquisition cost of shares acquired in a share exchange has been amended so that the change would only apply to share exchanges  carried out on or after January 1, 2026. The acquisition cost of earlier share exchanges would remain unchanged. For share exchanges after January 1, 2026, the acquisition cost of the acquired shares would be their mathematical value prior to the exchange. This change in acquisition cost has implications for capital gains taxation if the acquired shares are sold in the future.

The amended proposal retains the earlier suggestions for increasing the maximum amount of cash consideration (up to 50%) and allowing tax-neutral share exchanges outside the EEA under certain additional conditions. Furthermore, limited liability companies would in future be able to apply for a change in the comparative value of shares. Based on the consultation feedback, the definition of related parties has also been clarified.

Despite the positive changes, the proposed legislative amendment will create review work for all companies that have carried out a share exchange since January 1, 2017. Particular care will be required in these companies when filling in tax returns, calculating tax-relieved dividends, and determining acquisition cost in any later share transfers.

For recommendations tailored to your specific situation, and for reviewing, for example, the profitability and tax implications of distributing additional dividends, we recommend discussing with our tax experts who are familiar with share exchanges and the proposed changes.

Update 27.8.2025:

We posted on 23.6.2025 about the Finnish Government’s proposed legislative changes that would affect previously completed exchange of share arrangements.
The changes would impact potentially thousands of entrepreneurs who have carried out an exchange of shares since the beginning of 2017—regardless of the reason for the arrangement.
You can read more about the proposal's content in our previous update.

The possibility to give comments for the proposal ended on Aug 15, 2025, and it received a substantial number of comments—35 in total. Below, we have compiled key insights from the statements.

Based on the comments received, it is clear that implementing the proposal in the planned timeline will not be straightforward. There are unresolved legal and administrative issues that must be addressed.

Ideally, these open questions should be resolved during the legislative process, rather than being left for courts to decide during potential tax disputes. We are actively monitoring the situation and will continue to inform our clients as the legislative process progresses.


Entrepreneurs who have carried out an exchange of shares are advised to consult with a specialist if needed.

23.6.2025:

The Government is preparing changes to the taxation of share exchanges – the impacts could reach thousands of entrepreneurs

The Finnish Government is preparing changes to legislation that would affect already completed share exchange arrangements. The aim is to prevent methods by which dividend taxes have been reduced through share exchanges. The changes would affect even thousands of entrepreneurs who have conducted a share exchange since the beginning of 2017.

Key changes:

1. Valuation principles: In share exchanges, the transferred shares would henceforth be valued at the original acquisition cost, not at fair value. This applies in situations where the parties are related. For example, a company created without capital would have a zero value, even though it may have accumulated assets. In this case, no dividend taxed as capital income could initially be distributed from the parent company, as the company's net assets would be zero after the share exchange. The changes would affect both the taxation of dividends and later capital gains taxation.

2. Maximum amount of cash consideration: The allowed amount of cash consideration used in share exchanges would increase from 10% to 50%, facilitating certain corporate arrangements.

3. Exchanges outside the EEA: Tax-neutral share exchanges would be possible under certain conditions also outside the EEA, such as to the United States or the United Kingdom.

Impacts:

The amount of dividends taxed as capital income that an entrepreneur who has carried out a share exchange after January 1, 2017, could withdraw would decrease significantly from the entry into force of the law. Changes in valuation principles would significantly weaken the use of share exchanges in corporate arrangements. Additionally, the change could violate the constitutionally protected principle of equality, as share exchanges made before 2017 would remain under the old rules. The values of accounting and taxation would differ from each other, which would cause additional administrative complexity. The impacts on, for example, the transfer tax and generational changes have not been sufficiently assessed.

Effective date: The proposal is open for public consultation until August 15, 2025, and it is intended to be processed in connection with the 2026 budget. The laws would come into effect as soon as possible. It is not yet certain whether the proposal will pass in its entirety as it stands. Due to the unanswered questions and potential constitutional challenges arising from the proposal, it is possible that there will be further changes to it.

Recommendation: Entrepreneurs who have conducted a share exchange after January 1, 2017, or are planning one, should closely monitor the situation and discuss potential implications with an expert.

Henri Pelkonen, Lawyer / Sarianne Mäkelä, Lawyer
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