A big benefit of jointly owned forests is the ease of ownership: administration resembles that of a Finnish housing corporation, i.e. stakeholders need not do everything by themselves. A jointly owned forest is managed according to a mutually agreed rulebook and decisions are taken by majority. Representatives are appointed by the owners to handle the practical handling of jointly owned forests.
Jointly owned forests enable owners to extract a steadier stream of revenue than is available from a solely owned property. When forests are managed as a larger totality, it is possible to sell timber at higher prices, while the per-unit cost of management also reduces. Revenues generated by jointly owned forests are divided among stakeholders in proportion to the size of their holdings.
Jointly owned forests enjoy good tax benefits
Establishing a jointly owned forest or adding more land to an existing one enjoys tax benefits. Joining a jointly owned forest is not considered a transfer of property, so no asset transfer tax is levied and there is no obligation to pay capital gains tax either.
Timber sales from jointly owned forests are subject to lower taxes (26%) than sales by private individuals (28%). Furthermore, the distribution of a jointly owned forest’s profits is not taxed. Coupled with a professional approach to forestry, these tax benefits provide ownership with great profit potential.
More systematic approach and larger scale provide further benefits
A more systematic approach to ownership is, however, required of jointly owned forests: they must be managed and utilised in accordance with a forestry plan. A jointly owned forest is also accountable, i.e. it is required to draft an accounting statement for each accounting period.
The popularity of jointly owned forests is rising substantially, as is evidenced by the increasing number of ongoing projects. The ease of forest ownership, yearly revenues and other potential benefits such as hunting opportunities make joint forest ownership an attractive alternative.
Jouni Väkevä, Senior Adviser (Forestry), tel. +358 9 132 6620
Anu Islander, Senior Adviser (Forestry), tel. +358 9 132 6678, +358 40 729 3678