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Things to remember when changing ownership of the forest property

The change of ownership of a forest property imposes obligations on both the new forest owner and the transferor. 

Obligations of the new forest owner 

  • The new owner must apply for a legal confirmation of possession of the property with the National Land Survey of Finland within six months of signing the document of title. The legal confirmation means the registration of ownership in the real estate information system. Application for a legal confirmation of possession of the property requires a completed legal confirmation application form. In addition, other documents related to the acquisition are required on a case-by-case basis (deed of estate inventory, deed of estate distribution, will, receipt for payment of the purchase price, etc.). The attesting notary submits the contract of sale or gift certificate with attachments (proxies, map of the parcels of land) electronically directly to the National Land Survey of Finland. The National Land Survey of Finland charges a property-specific fee of EUR 144 (year 2022) for granting a legal confirmation of possession of the property. 

  • The National Land Survey of Finland has a fee-paying, electronic real estate exchange service, where the parties to the transfer can make real estate transactions and donations. The service has template acquisition related documents that can be edited as needed. The service includes both a trade confirmation and an application for a legal confirmation of possession of the property, and the necessary certificates (encumbrance certificate, certificate of the legal confirmation of possession of the property, land registry extract and map of the land registry extract) can also be purchased there. 

  • In the case of transfers against payment (trade and exchange against payment), the buyer must file a transfer tax return and pay a transfer tax of 4% within six months of signing the receipt of the document of title. However, the transfer tax must always be paid before applying for a legal confirmation of possession of the property. The transfer tax return and the transfer tax payment can be made on the website of the Tax Administration in the MyTax service.  

  • The recipient of the gift (pure gift or gift-type transaction) must file a gift tax return on their own initiative within three months of the receipt of the gift. The gift tax return is made in the MyTax service or with a paper version. The tax authorities process the gift tax return and submit the gift tax decision and any gift tax payment forms to the recipient of the gift. The gift tax decision often takes six months to make. A payment period is given for the payment of the gift tax, and larger gift taxes are collected in several installments. The gift tax is often due about a year after receiving the gift. 

  • For a brand new forest owner, it is advisable to voluntarily apply for VAT on forestry at the Tax Administration's office. It is obligatory to register for VAT if the turnover of the forest owner (timber trade income and other income) in any tax year is at least 15,000 euros. VAT-liable forest owners benefit from their tax liability because they recover the VAT included in the prices of the goods, supplies and services they have acquired in forestry in full by filing the so-called VAT return (tax return on voluntary taxes). 

  • In addition, the change of ownership of a forest property must be reported at least to the hunting society (hunting lease agreement) and the road maintenance association (road tolls). In connection with the change of ownership, it is also worth keeping up to date with various possible memberships related to forestry (Forest Management Association, Metsäliitto, etc.). 

Obligations of the forest tranferor 

  • A person transferring his or her forest property in a transaction must file a capital gains tax return for his or her sale no later than the end of February following the year of the sale. The tax administration often requests this declaration earlier. The capital gains tax return is filed in the MyTax service or on paper form 9 (capital gains or losses).

  • A person who completely relinquishes forest ownership must file a VAT cessation declaration on form Y6 if he or she is no longer owns any forest. If the declaration of termination is made in the middle of the year, the last annual VAT return and any payment of VAT must be made by the 12th day of the second month following the termination.   

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