A decision of the Estonian Supreme Court on June 17 settled a longstanding tax dispute concerning the former shareholders of AS Sylvester (now AS Stora Enso Timber). The dispute has been receiving continuous media coverage. As a result of the decision, the Estonian Tax and Customs Board returned tax paid by all claimants in addition to interest and legal costs, amounting in all to approx EUR 37 mio.
Partner Marti Hääl and senior associate Egon Talur advised and represented nine claimants on the outstanding tax dispute, which challenged the legality of the tax claim, directed at former Sylvester shareholders. However, the proceedings primarily concerned implementation of conditions and limitations of the substance over form principle. In practice this meant that the legal issue was whether the outcome, and hence the ensuing income tax obligation of the companies holding AS Sylvester shares and conducting the sale transaction with Stora Enso, applied to private shareholders of the holding companies.