Transfer pricing in Finland for small groups: what applies

Karma Accounts · Published 7 October 2026

If you own two companies, or an Oy with a subsidiary, every invoice between them is a transfer price (siirtohinta). Finnish tax law asks that it be set as two independent companies would set it. Most small groups need no formal transfer pricing documentation, but all must follow that rule, and the Tax Administration (Verohallinto) can correct a price that does not.

The rule: arm's length (VML 31 §)

The arm's length principle (markkinaehtoperiaate) is in section 31 of the Act on Assessment Procedure (laki verotusmenettelystä, VML). If related parties agree terms that differ from what independent parties would have agreed, and as a result a company's taxable income is lower or its loss larger than it would otherwise have been, the amount that would have accrued on arm's length terms is added to its income.

The Tax Administration says the section applies to domestic and cross-border transactions alike, and to dealings between a company and its permanent establishment. Each group company is taxed as if it were independent, and every flow counts: goods, services, intangibles and financing.

Under VML 31 § 4 mom., the parties are related if one controls the other, or if a third party, alone or with its close associates, controls both. Control means owning, directly or indirectly, more than half of the capital or the votes, having the right to appoint more than half of the board, or managing the company jointly or otherwise actually controlling it. So a parent and its subsidiary are related, and so are two sister companies that you control.

Documentation: who must prepare it

The documentation duty (siirtohinnoitteludokumentointi, VML 14 a–14 c §) is narrower than the arm's length rule:

It covers only related-party transactions where the other party is foreign, plus dealings between a foreign company and its permanent establishment in Finland. Transactions between Finnish companies need no documentation.
It does not apply to small and medium-sized enterprises. VML 14 a § defines one as a company with fewer than 250 employees, turnover of at most 50 million euros or a balance sheet total of at most 43 million euros, that also meets the SME criteria of Commission Recommendation 2003/361/EC, including the ones on independence. One of the two money limits may be exceeded, but not both.
The figures are counted for the whole group, in practice from the ultimate parent's consolidated accounts. A small Finnish company in a large international group is not an SME. When the companies are related only because the same individuals own them, each company is assessed on its own figures.

Your situation	Formal documentation	Arm's length pricing
Only Finnish companies	not required	required
Cross-border, group is an SME	not required	required
Cross-border, group is not an SME	required	required

Documentation is not filed with the tax return. When the Tax Administration asks for it, it is due within 60 days, but not earlier than six months after the end of the month in which the financial period ended (VML 14 c §). Where all transactions with a counterparty total at most 500 000 euros a year, lighter content is enough (VML 14 b § 5 mom.). Failing to provide it, or providing it substantially incomplete, can bring a tax increase of up to 25 000 euros.

Exempt is not the same as free

The Tax Administration's guidance is explicit: exemption from documentation is not exemption from the arm's length principle. If it examines an exempt company's related-party transaction, the company must give the explanation it asks for, which can cover the same information documentation would. In practice, be ready to show how each price was set.

The guidance also says Finland does not allow taxable income to be reduced just by filling in the tax return differently. A price correction must go through the books, for example as an adjusting entry, and that entry is deductible if it is itself at arm's length. Check intercompany prices before the year is closed, not after.

The usual flows in a small group

Management fees and shared services. One company often runs bookkeeping, HR or management for the others. Intercompany services rarely have market comparables, so the Tax Administration says they are usually priced as the cost of providing them plus a mark-up, with direct and indirect costs in the cost base. The charge follows how much each company used the service; where use cannot be tracked, a more general key such as turnover can suit low-value administrative services. Activities that benefit only the owners (shareholder activities) are not chargeable services.
Shared staff and premises. Recharging a salary or a share of the rent is a service too: agree the basis and apply it every month.
Loans and interest. The lender must get an arm's length return and the borrower pay arm's length interest, judged on the borrower's creditworthiness and the terms. Money lent to you personally is a shareholder loan, with rules of its own.
Goods. If you sell the same goods to outside customers, that price is the natural comparison for the group price.

An illustrative example

Invented, round figures; the 5 % mark-up is only for the arithmetic, as the right one depends on the service. A parent runs bookkeeping and HR for two subsidiaries at a cost of 100 000 euros a year, its own shareholder work left out. With the mark-up it charges 105 000 euros. Timesheets show subsidiary A used 60 % of the time and B 40 %, so A is invoiced 5 250 euros a month and B 3 500, plus VAT, and the parent compares actual costs with the charges before closing the year.

Good practice

A written intercompany agreement for each flow: the parties, the service or loan, the price or method, invoicing and payment terms. The Tax Administration says what group companies agree should be laid down in written agreements.
One method, used consistently, such as cost plus for services, with the cost base and allocation key written down.
Invoices issued every month and the intercompany balances matched on both sides every month, so a difference is found while it is small.
VAT like any other sale. In Finland a VAT group (verovelvollisuusryhmä) is open only to companies mainly in VAT-exempt financing or insurance business, so an ordinary group invoices with VAT, at 25.5 % for most services.
The year-end. A small or micro company discloses in its notes its material transactions with group companies and other related parties (intressitahot) that were not made on normal commercial terms, with a description, the value and the nature of the relationship (the small and micro company decree, PMA 3:10). A parent Oy must prepare group financial statements, but a small group need not, as long as no group company is a public-interest entity (Accounting Act, KPL 6:1); our article on consolidated financial statements gives the size limits.

When to get a proper transfer pricing study

Even where documentation is not required, we suggest a proper study by a transfer pricing specialist when there are cross-border flows (the other country may have its own rules, sometimes with documentation due with the tax return), when the amounts are large, when a loss-making company pays fees or interest to a profitable one, or when intangibles, royalties or a restructuring are involved.

What we do

For groups we keep the books of each company, match intercompany invoices and balances every month, and prepare the eliminations and the group financial statements when the group needs them. Group work is priced by written quote after we have seen the structure. See limited company accounting, what moves the price, or request a quote. If the money is going to you rather than between companies, read salary or dividends.

Sources

Please note: this is general information about Finnish rules, not advice for your own situation, and the rules change. Ask us before you act on it.

Your Oy's books and year-end

Bookkeeping, VAT, the financial statements and the tax return for 199 € a month plus VAT up to 240 000 € of turnover, 249 € up to 500 000 € and a written quote above that. See accounting for limited companies.

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