34 / 132
ACQUISITION PROCESS:
KEY STAGES
• Finland does not impose restrictions or reporting
requirements on foreign individuals or entities wishing to
carry out real estate transactions.
• In the province of Åland, however, only those with a right of
domicile are entitled to own or possess real estate. A permit
from the provincial government is required of those without a
right of domicile.
Purchase agreements
• The majority of real estate transactions involving professional
investors are arranged by real estate brokers and carried
out as auction processes. In such processes, purchase
agreements and process-related documentation follow
international standards.
• In real estate transactions involving domestic parties,
more simple purchase agreements and process-related
documentation are used.
• In a direct purchase of a real estate or a land lease that shall
be registered, the purchase agreement must comply with the
formalities of the Finnish Real Estate Code. With respect to
real estate purchases, the purchase agreement, as well as
the possible preliminary purchase agreement, must also be
notarised.
• The purchaser is responsible for registering the title to the real
estate with the Finnish Title and Mortgage Register.
COMMERCIAL LEASES
• Leases of premises used for commercial purposes are
governed by the Finnish Act on Renting of Business Premises.
• The Finnish Act on Renting of Business Premises is mostly
non-mandatory and, therefore, the terms of the lease
agreement may, in most parts, be freely negotiated.
• However, the Finnish Act on Renting of Business Premises
includes certain provisions that are mandatory and may not
be agreed upon to the detriment of the tenant.
• The mandatory provisions of the Finnish Act on Renting of
Business Premises also limit the usability of a pure triple net
lease or a bondable lease in Finland.
Duration of the lease
• Commercial leases are, in general, entered into either for a
fixed period or are in force until further notice.
• The term of a commercial lease may also be agreed to be a
mix of both elements (i.e. fixed for a certain period of time
after which the lease agreement will continue until further
notice).
• Tenants are covered by certain mandatory provisions of the
Finnish Act on Renting of Business Premises, which grant the
right for the tenant to terminate the lease agreement with
immediate effect, inter alia, if:
–– the use of the premises evidently endangers the health of
the tenant;
–– the premises or a part of the premises are no longer in the
possession of the tenant; or
–– if the landlord has materially breached the lease
agreement.
• It may be agreed that the tenant has a right to terminate
also on other grounds. The landlord may terminate the lease
agreement with immediate effect only as provided in the
Finnish Act on Renting of Business Premises.
Rent
• Rent can be freely negotiated.
• The market practice is to agree on a fixed rent that is payable
monthly. Rent is usually agreed to be increased (but often
not decreased) in accordance with the Finnish cost-of-living
index.
Transfer of lease agreements and subletting
• As a general rule, the tenant may not transfer its lease
without the landlord’s approval or unless the parties have
agreed otherwise.
• The tenant may sublet less than half of the leased premises
without the landlord’s consent unless otherwise agreed. The
tenant may not re-let more than half of the leased premises,
unless the parties have agreed otherwise or the landlord has
given its consent to it.
• The original tenant that has sublet or re-let the real estate
will, however, remain responsible for the fulfilment of its
obligations under the lease agreement.
TAX
Transfer tax
• Both direct purchases of real estate and purchases of real
estate companies are subject to transfer tax. Transfer tax is
payable by the purchaser, unless otherwise agreed.
• Direct acquisitions of real estate are subject to transfer tax in
the amount of 4 % of the purchase price, i.e. including land
and buildings. Direct acquisitions are also subject to a notary
fee and a fee for the registration of the title. The transfer of
a leasehold that shall be registered is also regarded as a real
estate for transfer tax purposes.
• Acquisitions of shares in an OREC, an MREC and a housing
company, but also in a company whose assets directly or
indirectly consist mainly of real estate in Finland, are subject
to transfer tax in the amount of 2 % of the purchase price of
the shares.
• In addition to the purchase price of the shares, with respect
to ORECs and MRECs, the transfer tax base also includes
shareholder loans on a pro rata basis. In addition, with respect
to MRECs and housing companies the transfer tax base
includes also debt share on a pro rata basis.
Real estate tax
• Real estate holdings (land and buildings) are subject to real
estate tax, which generally varies between approximately
0.8 % and 1.55 % between municipalities. The tax base
is the value of the real estate as determined by the Tax
Administration.
• Municipalities may determine the real estate tax rate within
the said range annually.
34 Investors Guide to Europe 2015