In Finland, there is no separate legislation on the JPA. Finland may conclude a withholding tax agreement with states with which it has concluded a tax treaty (a convention for the avoidance of double taxation of taxes on income and capital gains). An ABS is based on the cartel procedure established in tax treaties between Finland and other states, which eliminates international double taxation between states parties. The mutual agreement procedure is based on Article 25 of the Model Agreement published by the OECD (Organisation for Economic Co-operation and Development). The competent authority shall inform the taxable person of the outcome of the negotiations. Many states require the taxpayer to approve the agreement before it becomes binding. Tax authorities may not always agree with your company`s pricing agreements and policies, which can lead to audits and adjustments. Economic double taxation may also occur when adjustments are made in one country without appropriate adaptation in the other relevant legal order. The uncertainties associated with these issues can make it difficult for your group to manage their effective tax rate and result in greater tax risk than expected. An advance pricing agreement (APA) is a prior agreement between a taxable person and a tax department on an appropriate transfer pricing method (TPM) for a number of transactions that are being negotiated over a given period (so-called “hedged” transactions).
APAs – in the sense mentioned above – find their legal basis in the respective double taxation conventions (SAAs), in the respective articles on mutual agreement procedures. Germany has concluded DTAs with more than 90 countries around the world. Most of these DTAs follow the OECD`s draft international agreement.