The National Pension Service won a lawsuit for the refund of withholding tax on dividends from Finnish listed stocks and will receive a refund of over 9.6 billion KRW.
On the 12th, the National Pension Service announced that the Finnish Administrative Court's ruling in favor of the exemption from withholding tax on dividend income from Finnish listed stocks was recently finalized.
As a result of this ruling, the National Pension Service will be refunded approximately 9.6 billion KRW in withholding tax paid from 2014 to 2023 and will save about 3.8 billion KRW annually going forward.
In 2015, based on the European Union (EU) anti-discrimination clause that prohibits discrimination against foreign institutions similar to domestic institutions, the National Pension Service applied for a full refund of the dividend withholding tax paid to Finland since 2014.
After being notified of the refund denial by the Finnish Tax Administration in 2021, and receiving the same decision from the Appeal Review Committee, the National Pension Service filed a lawsuit with the Finnish Administrative Court in 2022.
The key issue was whether the National Pension Service performs a role similar to Kela, the Finnish social insurance institution recognized as tax-exempt in Finland.
The Finnish tax authorities argued that the National Pension Service is a retirement pension, not social insurance, but the Service demonstrated that the National Pension System is a representative social security system of the Republic of Korea, leading to a favorable ruling by the Administrative Court in May of this year.
After the Administrative Court ruling, the Finnish Tax Administration did not appeal within the deadline, finalizing the National Pension Service's victory on the 21st of last month.
Last year, the National Pension Service also received a refund of approximately 12.6 billion KRW in taxes paid in Spain by recognizing the exemption from dividend withholding tax based on the EU anti-discrimination clause.
Currently, tax refunds are being pursued in Sweden, Germany, Italy, Austria, and other countries based on the same clause.
The National Pension Service plans to share related information at the tax consultation body with the four major public funds, which was formed last month to strengthen tax expertise.
Kim Tae-hyun, Director of the National Pension Service, said, “This case is expected to have a positive impact on tax refunds in other EU investment countries,” and added, “We will actively pursue tax-saving opportunities not only in the EU but also in other investment countries to contribute to increasing fund revenues.”
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