Court upholds €25m fine of Sanoma for evading VAT

The Supreme Administrative Court has rejected Sanoma’s application for a permission to appeal the VAT treatment related to the distribution of certain magazines at Media Finland, said the Sanoma Corporation in a press release on Wednesday.

The Supreme Administrative Court upheld the administrative court’s decision regarding the value added tax (VAT) payment decision given by the Finnish Tax Adjustment Board related to the tax audits at Sanoma Media Finland Oy for years 2015–2018.

Thus, the Supreme Administrative Court will not give a resolution to the company’s appeal.

The decision has no impact on Sanoma’s financials or free cash flow, as the VAT claims have been paid in 2021–2022 and booked in Sanoma’s result in Q2 2023.

On 29 April 2021, Sanoma announced that Sanoma Media Finland had received a payment decision from the Finnish Tax Adjustment Board, based on which Sanoma paid about EUR 25 million of VAT, penalties and interests in the third quarter of 2021.

The payment decision was related to a tax audit concerning the treatment of VAT of certain magazines that were printed in multiple locations in Europe, and processed in and distributed through a centralised logistic centre in Norway in 2015–2018.

Sanoma considered the payment decision unjustified and appealed to the administrative court.

On 16 December 2022, Sanoma announced it had received a similar payment decision based on the tax audits at Sanoma Media Finland for years 2019–2021.

Based on the payment decision received, Sanoma paid about EUR 11 million of VAT, penalties and interests in the fourth quarter of 2022.

Sanoma considered also this payment decision unjustified and has appealed it to the Finnish Tax Adjustment Board, where the process is still ongoing.

On 8 June 2023, Sanoma announced the administrative court had rejected its appeal related to payment decision Sanoma Media Finland had received from the Finnish Tax Adjustment Board based on the tax audits for 2015–2018.

Based on the administrative court’s decision, the VAT claims for years 2015−2018 and 2019−2021 with a total net amount of approx. EUR 30 million were booked as items affecting comparability in Sanoma’s Q2 2023 result.