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Finland: Ruling on life insurance saving agreement

The Finnish Central Tax Board (CTB) has given a preliminary ruling (KVL 34/2011) regarding taxation in connection with transfers of investments in life insurance saving agreement and capitalisation agreement where the taxpayer has the right to decide on which assets the policy funds are invested in.

Life insurance saving agreement refers to a life insurance policy that combines life insurance with the features of a savings and investment account. The gains from the investments accumulate tax-deferred. Capitalisation redemption agreement refers to an investment linked insurance with no specific insured. Like life insurance saving agreement, also in capital redemption agreement gains from investments accumulate tax-deferred.

In the matter before the CTB the taxpayer was planning to conclude either a life insurance saving agreement or a capitalisation agreement with an insurance company. In said agreements, the premium paid to the insurance company could be invested in different types of assets. The insurance company was the owner of the assets and also had the right to assign the assets and invest the received funds in other assets. The terms and conditions, however, stipulated additionally that it was possible to grant the policyholder an independent right to decide on the transfers and investments during the term of the policy.

The assignment of investments linked to the life insurance or the capitalisation agreement by the insurance company during the term of the policy was not considered to be a taxable transfer in taxation of the policyholder. According to the CTB the policyholder did not receive taxable income from said transfers nor did any tax-deductable loss arise although he or she would be entitled to decide on the investments independently.

Janne Juusela (

Borenius – Taxand

Tel: +358 9 615 333


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