Finnwatch vs. KPMG Oy Ab

Date filed

21 February 2025

Keywords

Taxation

Countries of harm

Finland

Current status

Under review

Sector

Other

NCP

NCP Finland

Allegations

On 21 February 2025, Finnwatch filed a complaint against KPMG Oy Ab to the Finnish NCP. Finnwatch alleges that KPMG has breached Chapter XI (Taxation), paragraph 1 of the 2011 version of the OECD Guidelines: “In particular, enterprises should comply with both the letter and spirit of the tax laws and regulations of the countries in which they operate. Complying with the spirit of the law means discerning and following the intention of the legislature.” According to the complainants, KPMG marketed for several years and at least since 2022 aggressive tax arrangements in the form of share swaps to small business operators intended to significantly reduce the taxation of dividends. The arrangements caused Finland to forfeit tax income and the has harmed the reputations of those operators that have gone along with the arrangements. The complainants argue that the share swap arrangements designed by KPMG were not unlawful, but were contrary to the spirit of the law.

Finnwatch seeks to ensure that KPMG introduces processes by which it will in the future ensure compliance with the OECD Guidelines in the tax advisory services it provides.

Relevant OECD Guidelines

Outcome

On 30 May 2025, the Finnish NCP published its initial assessment accepting the complaint for further examination.

On 29 May 2026, the Finnish NCP published its final statement. Although the NCP offered mediation, neither party considered appropriate to resolve the issues raised. The NCP did not find KPMG to have violated the OECD Guidelines. On ascertaining the spirit of the law, the NCP stated that:

“The OECD Guidelines may call for policies that go beyond the requirements of legislation (OECD Guidelines, Chapter 1, paragraph 2). Assessing whether the company acted in compliance with the spirit of the law requires forming an understanding of the substance of the conduct that would comply with such spirit going beyond the requirements of legislation.”

“… based on the evidence and information put forward in the case, the said legal question [compliance with the spirit of the law] remains unanswered. The views put forward, about the policies of the company being contrary to the spirit of the law, are based on assessments which are ex post facto and general in nature and which also were not available at the time of the commencement of the events of the specific instance.”

“Resolving unanswered legal questions is not within the competence of the NCP … Determining the substance of the spirit of the provisions of applicable tax legislation would be a very particular legal question and its resolution can only fall within the competence of a court of law”

The NCP further found that:

“When providing tax planning services, a company must, as a rule, be allowed to make its clients aware of the different options permitted under law as well as the limiting factors of applicable legislation and particular interpretational issues relating to it.”

“The company would be placed in a situation where it faces conflicting requirements as referred to in Chapter I, paragraph 2 of the OECD Guidelines if it was required, after the fact, to implement policies other than those found to be lawful in the case law of the Supreme Administrative Court or the official administrative process of the Finnish Tax Administration.”

The NCP therefore concludes that “based on the evidence put forward in the case, the company must be deemed to have taken the steps to determine the intention of the legislature that are reasonable with regard to compliance with Chapter XI of the OECD Guidelines, by acting in compliance with the case law involving legislation related to the matter and directing clients to avail themselves of the Finnish Tax Administration’s official administrative procedure that ensures the taxation-related interpretation of individual cases.”

Regarding the NCP’s recommendations, the NCP stated:

“With regard to the general application of the OECD Guidelines, the NCP considers it warranted that information on the Guidelines and their requirements be provided in suitable situations as a part of the advisory services. This is essential particularly in situations where the requirements of the Guidelines and of legislation may differ. The NCP further considers it important that tax advisory service provider companies within the scope of application of the OECD Guidelines take account of the Guidelines as a part of the suites of services they provide.”

“This might be accomplished, for example, by bringing up, when necessary, the situations where conduct in compliance with the Guidelines requires measures that go further than legislation and also, when necessary, the fact that the approaches identified may involve the possibility of tension vis-à-vis the provisions of the OECD Guidelines.”

Finnwatch criticised the final statement, stating that:

The NCP’s Committee on Corporate Social Responsibility (the “Committee”) treated KPMG’s activities as a passive advisory service responding to client requests and questions and ignored KPMG’s active marketing of the corporate arrangements in question.
The Committee failed to assess what conduct would be consistent with the spirit of the applicable national tax legislation.
The Committee failed to examine what measures KPMG had taken to identify and determine the legislature’s intent.
The Committee interpreted the OECD Guidelines, with regard to taxation, to not require a company to take actions that exceed the requirements of the law.

On 11 August 2026, Finnwatch announced its withdrawal from the Committee of Social and Corporate Responsibility, citing as reason that “the Committee’s decisions have not complied with the OECD guidelines; there are problems with the Committee members’ recusal practices; and the burden of proof placed on complainants has become unreasonably high”.