To those considering a generational handover of a forest estate for tax reasons, retaining the right to control the gift and its proceeds may sound tempting, as it reduces the gift tax imposed on the party to whom the forest estate is handed over. However, this leads to a situation where the party receiving the gift owns the forest estate but cannot make decisions about their forest regarding measures such as forest management and wood sales, and does not receive income from it, because these rights remain with the donor. The recipient of the gift will not be able to enjoy the forest property he or she has received. Is this what was wanted and pursued?
Another way to reduce the amount of gift tax is to give the gift in instalments so that each donation remains below the taxable threshold. In this case, it should be kept in mind that this is a partial handover of a property, which must be done in accordance with the requirements of the Code of Real Estate. The resulting title registration and other costs can easily outweigh the tax savings. A saving of one euro could lead to a cost of five.
A sale is often a more tax-efficient form of handover than a gift, especially when the estate has growing stock on it. The advantage of a sale is that it allows a forest deduction to be made, as well as the avoidance of gift tax. The tax efficiency of this solution improved even further at the beginning of 2026, when the basis for forest deduction rose from 60% to 75 % of the acquisition cost of the forest.
However, the prerequisite for the sale of a forest estate is that the buyer has a real ability to pay the purchase price. If they wish, the parties may agree on a debt between them that the buyer will repay to the seller within a specified period, but the Tax Administration requires realistic and documented measures to repay the debt principal.
A plan that is too complex or has a lot of variables should not be made for a generational handover – the main thing is for all parties to know what has been agreed, what will happen next and who will do what.
The task of Metsä Group’s expert on generational handovers is to assess the customer’s situation, needs and objectives, make clear the likely outcomes of the different options, and enable the customer to choose the option that best meets their objectives. There is no one-size-fits-all solution, which is why it is important to ask the right questions that lead to the best solution, whatever it may be.