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KHO:1997:74 AI generated

Court rejects farm income deduction for rental payments when business structure lacks genuine agricultural character.

Case Number KHO:1997:74
Court / Authority
Jurisdiction Finland (FI)
Decision Date
Outcome Dismissed
Open official source Machine-readable Markdown (.md)

Legislator summary

AI generated

The Supreme Administrative Court dismissed the taxpayer's claim to deduct rental payments made to a company owned by his spouse and children. The court found that the arrangement, where the taxpayer sold buildings to the company and then rented them back, did not reflect the true nature of his agricultural business. Consequently, the rental expenses were not recognized as valid deductions for farm income, and the company was not taxed on the reported rental income.

Legislator headnote

AI generated

Verotuslaki 56 §; The court held that rental expenses incurred by a taxpayer in a circular transaction with a related company do not constitute valid farm income deductions if the overall arrangement lacks the genuine character and purpose of agricultural business operations.

Keywords

AI generated
farm income deduction related party transaction circular transaction agricultural business purpose tax avoidance scheme Verotuslaki 56 rental expense disallowance

Cited Legislation

AI generated
Verotuslaki 56 §
AI generated
appeal_1977_helsinki__201
Tenant's claim for damages for inability to use rented room as office dismissed due to landlord's permit application.
admin_1991_kuopio-county__144
Court ruled that renting a farm addition to parents was not income-generating business due to family ties.
ECLI:FI:KHO:2022:55
Landlord held secondary waste liability for chemicals and yard cleanup after tenant failed to comply.
admin_2013_turku__88
Joint owners of a share apartment are taxed individually on their share of rental income, not as a partnership.
admin_1989_uusimaa-county__970
Court ruled that rental income must be allocated to owners according to their shareholding percentages when no separate agreement exists.

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Full text

A oli harjoittanut omistamallaan tilalla maatilataloutta yhdessä puolisonsa B:n kanssa. A oli myynyt B:n ja puolisoiden lasten perustamalle C Oy:lle tilallaan sijaitsevan konevarastohallin ja tuotantorakennuksen. A oli myös vuokrannut näihin rakennuksiin liittyvän maa-alueen C Oy:lle. C Oy oli puolestaan vuokrannut takaisin A:lle kysymyksessä olevat rakennukset niihin liittyvine maa-alueineen. Kyseisen järjestelyn ei katsottu vastanneen asian varsinaista luonnetta ja tarkoitusta ja näin ollen A:n harjoittaman maatilatalouden tulon vähennykseksi ei hyväksytty C Oy:lle suoritettuja vuokramenoja eikä C Oy:tä verotettu sen ilmoittamista vuokratuloista. Verovuosi_1991.

Äänestys 5+1-2.

VerotusL 56 §