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KHO:1997:25 AI generated

Foreign currency gains from stock sales are taxable in Finland if the intent was to convert profits back to Finnish currency.

Case Number KHO:1997:25
Court / Authority
Jurisdiction Finland (FI)
Decision Date
Outcome Allowed / Granted
Open official source Machine-readable Markdown (.md)

Legislator summary

AI generated

The Supreme Administrative Court ruled that gains from selling foreign currency stocks are taxable in Finland when the taxpayer intends to convert the proceeds back into Finnish currency. The court found that the taxpayer's plan to reinvest USD proceeds into foreign assets for eventual conversion to Finnish marks created a taxable event upon the initial sale. Consequently, the tax authority's claim for taxation of the capital gain was upheld despite the absence of immediate currency fluctuation profits.

Legislator headnote

AI generated

Verolaki 1995; Verolaki 1996: Gains from the sale of foreign currency stocks are taxable in Finland if the taxpayer's intent is to convert the proceeds into Finnish currency, establishing that the purpose of the transaction determines the taxability of the capital gain.

Keywords

AI generated
foreign currency gains capital gain taxation taxable event reinvestment intent currency conversion tax liability stock sale proceeds

Cited Legislation

AI generated
Verolaki 1995
Verolaki 1996
AI generated
admin_2021_hameenlinna__426
Court held currency fluctuation between investment and redemption dates must be considered for life insurance income calculation under Finnish tax law.
kho-precedent_1998_11
Currency fluctuation gains on USD to JPY swaps are not realized taxable income until the transaction is completed.
ECLI:FI:KHO:2018:55
US 401(k) withdrawals taxed as capital gains; after-tax principal exempt, pre-tax principal taxed under six-month rule.
kho-precedent_2011_45
Supreme Administrative Court dismissed appeal on foreign tax credit calculation under Finnish Income Tax Act and tax treaty.
kho-precedent_2015_178
Currency loss from closing a foreign currency account is not deductible under Income Tax Act s. 54b unless from a loan obligation.

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Full text

A oli myynyt omistamansa yhtiön osakkeita ja saanut kauppahinnan USA:n dollareina, jotka hän oli tallettanut veronalaiselle tilille suomalaiseen pankkiin. A:n tarkoituksena oli sijoittaa osa dollareista ulkomaisiin dollarimääräisiin sijoituskohteisiin, jotka myytäisiin myöhemmin Suomen markkoina saatavaan kauppahintaan. Sijoituskohteiden myynnistä saatavaa luovutusvoittoa tai -tappiota laskettaessa sijoituskohteiden hankintameno tuli laskea noita kohteita hankittaessa käytetyn dollarimäärän ja dollarin senhetkisen kurssin mukaan. Erillistä kurssivoittoa tai tappiota ei luovutuksessa syntynyt.

Äänestys 3-2.

Ennakkotieto vuosille 1995 ja 1996.