Nokian Tyres’ tax ruling overturned

In December 2013 and January 2014, Finland’s Tax Administration ordered Nokian Tyres plc to pay additional taxes totalling €100.3 million following a reassessment of the 2007 to 2010 tax years. The tyre maker appealed this decision and now reports that The Board of Adjustment within Finland’s Large Taxpayers’ Office has annulled the reassessment decision and returned the matter back to the Tax Administration for reprocessing.

The Large Taxpayers’ Office carried out a transfer pricing tax audit covering the years 2007 to 2011 to investigate whether the intercompany transactions between Nokian Tyres plc and its subsidiaries were based upon market prices. The reassessment decision for 2011 has not yet been received. Explaining its decision for the years between 2007 and 2010, the Tax Administration stated that Nokian’s transfer pricing with its subsidiaries in Russia was not market-based, and therefore ruled that a significant part of the Russian subsidiaries’ profits should be added to Nokian Tyres’ taxable income in Finland.

As a result of the decision’s annulment, Nokian Tyres plc will return the €100.3 million to its first quarter 2015 financial statement and result. The additional taxes were recorded in the company’s 2013 financial statement and result. Nokian Tyres also expects the Tax Administration to immediately return the €43.1 million it has already received.