By Anne Kauranen
HELSINKI (Reuters) – A decision by Finland’s Supreme Administrative Court this week that work-related legal expenses are taxable income for all employees has alarmed Finnish media and advocacy groups who are concerned it could curb investigative work by reporters.
Finland generally scores well for press freedom, ranking 5th on the Reporters Without Borders (RSF) global media freedom index.
Union of Journalists in Finland chairwoman Hanne Aho said the essence of journalism was tackling controversial issues, including those that may lead to lawsuits, and the court’s decision means journalists could now face personal financial risk doing their jobs.
“Financial liability can lead to self-censorship, meaning that a journalist will not want to write about risky topics, and this narrows freedom of speech,” Aho told Reuters.
In its decision on Monday, the Supreme Administrative Court said legal expenses paid by employers on behalf of employees accused in work-related criminal cases are to be considered taxable income, making employees personally liable for corresponding income taxes.
The court’s decision in principle can not be appealed in Finland although opponents could potentially take it to European courts if they argued it contravened the wording of the European human rights declaration.
The decision was related to a separate and ongoing court case against Finland’s largest daily, Helsingin Sanomat and three of its journalists, two of whom were found guilty in January of revealing state secrets with a story they wrote back in 2017 about Finland’s military intelligence operations.
Sanoma, the media group that owns the paper, had paid lawyers at least 2.4 million euros ($2.6 million) in expenses to defend its journalists in the case, court documents showed in January, meaning the related personal income taxes would amount to hundreds of thousands of euros for the journalists.
The Finnish tax authorities said they took the dispute over the taxation of one of the convicted journalists’ legal expenses in the case to the Supreme Administrative Court due to “ambiguity and judicial inclarity” of the tax rules.
Although the journalist’s “duties had included preparing articles to be published in the newspaper, his duties were not to be considered to have included being a defendant in a criminal trial,” the court said in its decision.
“This is a very regrettable decision from the point of view of the Finnish media and journalism as a whole, and it does not take into account the broader effects on freedom of speech,” Sanoma Media Finland CEO Pia Kalsta said of the tax ruling.
Kalsta said the company would pay its journalists’ taxes in the case, although it was not clear if this in itself would be considered taxable income. A Sanoma spokeswoman told Reuters the company was looking at ways to handle the matter.
The Council for Mass Media in Finland warned the decision could have “extensive and serious consequences” for journalism in Finland and called for changes to tax legislation, as did several Finnish editors-in-chief.
Kai Telanne, CEO of another large Finnish media group, Alma Media, said the tax decision was unreasonable, adding that, “at worst, the policy leads to self-censorship in newsrooms and endangers the independence of the media”.
The Supreme Administrative Court declined to comment, in line with its usual policy of not commenting on decisions.
Prime Minister Petteri Orpo was not available for comment, a spokeswoman said.
The prosecutor, the three journalists who were charged, the Finnish Defence Forces as well as Sanoma Media Finland have appealed the verdict in the court case against Helsingin Sanomat over revealing state secrets, the paper reported in June.
($1 = 0.9269 euros)
(Reporting by Anne Kauranen in Helsinki; Editing by Frances Kerry)
