Krogerus successfully represented a client in a tax dispute confirming a tax neutral management roll-over in a private equity transaction

Krogerus' tax team has successfully represented a client in a tax dispute confirming the tax neutral treatment of a management roll-over. In the transaction, a foreign private equity investor acquired the majority of the shares in a Finnish target company. Whilst the majority of the sellers disposed of their shares for cash consideration, the CEO of the target was entitled to roll over the existing equity into the buyer's structure by way of two consecutive, post-closing share exchanges that were executed upon a separately exercisable option.

The Tax Recipients' Legal Services Unit appealed against the positive advance tax ruling confirming the tax neutral treatment of the roll-over and challenged the CEO's right to defer capital gains taxation. The Administrative Court dismissed the appeal and held that Section 52 f of the Business Income Tax Act applies to the share exchanges. Supported by valid commercial circumstances, the CEO's share exchanges were not regarded as part of the cash transaction carried out by the majority of the sellers and thus, the permitted cash consideration was not exceeded. The Administrative Court's decision is legally binding.

Krogerus team was led by Partner Samu Lassila and he was assisted by Senior Associate Jemiina Pohja.