Acquisitions and disposals

The acquisition cost of Lemminkäinen shares converted as YIT shares

The acquisition cost of shares acquired as merger compensation is considered equal to that of pre-merger shares per acquisition. This means that the acquisition cost of YIT shares acquired as merger compensation is determined by the old LMK shares’ acquisition tranches. In terms of volume, the YIT shares acquired as merger compensation should be proportioned to each LMK share acquisition tranche. The acquisition cost for each YIT share is calculated on the basis of the corresponding LMK share acquisition tranche at the time of acquisition. When calculating the acquisition cost of shares acquired as merger compensation, the ratio by which LMK shares were compensated for with YIT shares should be taken into account.

 Using an assumed cost of acquisition instead of actual cost will only become relevant when shares are handed over and the resulting profit from assignment is taxed. At such a time, a shareholder may instead of the actual acquisition cost subtract an assumed cost from the sale price (20% or 40% in case the share ownership has lasted for more than 10 years). If actual acquisition cost is used, the taxpayer must themselves present the Tax Administration with the original acquisition cost, on the basis of which the YIT share acquisition cost can be calculated. In practice, it is sensible to use an assumed cost if this results in a taxable profit from assignment that is lower than using the actual and already paid acquisition cost would.

 When selling YIT shares acquired as merger compensation, the “first in, first out” principle is applied, meaning that shares are considered as handed over in their order of acquisition. An exception to this rule is made when a shareholder has shares in various book-entry accounts and can indicate from which account the shares have been sold.

Determination of acquisition costs of YIT and Caverion shares for Finnish taxation purposes

YIT's Building Systems business was transferred to Caverion Corporation in a partial demerger of YIT on 30 June 2013 and YIT’s shareholders received Caverion shares as demerger consideration (1:1). Due to the partial demerger the original acquisition cost of YIT shares is divided between YIT and Caverion shares in the Finnish taxation. The acquisition cost depends on the original acquisition date. Determination of the acquisition costs is necessary for the Finnish taxation purposes in order to calculate a capital gain or loss from a sale of shares.

Large Taxpayers’ Office has from their side confirmed to YIT that the original acquisition cost of YIT share is divided between YIT and Caverion shares based on the ratio of net assets.

YIT’s net assets were divided between YIT and Caverion in the partial demerger as follows:

• 77.37% stayed at YIT and
• 22.63% was transferred to Caverion

Example: If a shareholder purchased a YIT share before the partial demerger for a price of EUR 15.00, after the partial demerger the acquisition cost of YIT share is EUR 11.61 (77.37%) and Caverion share is EUR 3.39 (22.63%).

The above description of the determination of the acquisition costs is not applicable to non-Finnish resident shareholders. We recommend that shareholders who are tax resident outside Finland will seek advice from their own tax advisors or local tax authorities in order to determine the acquisition costs of the shares for their taxation purposes.

Determination of the acquisition cost for Finnish taxation purposes

In the Finnish taxation the original acquisition cost of YIT shares is divided between YIT and Caverion shares received as a demerger consideration based either on the ratio of the distribution of net assets of the companies on demerger date or on the ratio of the current values of the shares. The current value ratio is used if the distribution ratio of the net assets materially differs from the current value ratio.

The ratio of the current values of YIT and Caverion shares did not materially differ from the distribution ratio of the net assets. Therefore, the acquisition costs of the shares are determined according to the main rule, i.e. according to the distribution ratio of the net assets.