New inheritance tax rules will increase demand for Finnvera’s financing in company reorganisations

A legislative amendment approved by the Finnish Parliament will decrease the tax rates applied to inheritance and gifts between the closest relatives by three percentage points. “Completion of the tax reform that had long been under preparation will certainly increase the number of company reorganisations and, at the same time, the demand for our financing products,” Veijo Ojala , Executive Vice President of Finnvera, predicts.

During the next five years, an estimated 50,000–80,000 enterprises will look for a successor who would continue their operations. In addition, companies may face other reorganisations that are carried out, for instance, to expand their business or to consolidate their competitive standing. These transition situations typically require outside sources of financing.

According to Ojala, the tax reform and the gradual retirement of the large post-war age classes will mean a significant rise in the number of company reorganisations within the next few years. “By offering financing, we want for our own part to guarantee that despite transitions, such as changes of generation, SMEs are able to continue their operations. Our products are well suited for financing both the owner and the enterprise.”

Financing is usually easier to arrange when a company has an established mode of operation. Finnvera’s contribution is needed in situations where financing threatens to become a bottleneck.
“Besides company reorganisations, these situations include times when an enterprise’s business is expanding or growing, or when an enterprise is going international. The current financial crisis, which has shrunk the availability of financing for SMEs, is also quite a change. As a specialised financing company, we can take higher risks that commercial financiers, and our participation helps to ensure overall financing for the project.”

In 2007, Finnvera acted as a co-financier in 1,057 ownership arrangements. The financing offered for these arrangements totalled 150 million euros. By the end of November this year, nearly 1,000 enterprises have received financing from Finnvera for their ownership arrangements. The total sum is 128 million euros.

Additional information:
Veijo Ojala, Executive Vice President, tel. +358 20 460 7405 or +358 400 672 401
Unto Väkeväinen, Head of Regional Financing, tel. +358 20 460 7346 or +358 40 706 8058