Dasos has for several years paid compensations for two leading experts in Luxembourg with decades of experience in international financing, law, forestry and agriculture. Their expertise is widely utilised in Dasos investment decision making and due diligence as well as forest management across geographies.

With headquarters in Helsinki and AIFM authorisation in Finland, Dasos currently provides direct employment for 10 people in Finland. Helsinki can be considered as a “forest capital in a global context”, and the Finnish forest expertise is well appreciated amongst international investors. The forest know-how is a growing export industry with the international investor community as an increasingly demanding client (see also Dasos article “Vihreä talous pääomasijoittamisen vientivaltiksi”, Kauppalehti 24 April 2014). In addition, Dasos forestry operations employ tens of people on full or part-time basis in Finland.

It should be noted that Dasos is a pan-European company which invests across the European Union and on a global basis. The Nordic forestry know-how is of essence, but ultimately the aim of Dasos is to identify the best international and local relevant knowledge for each investment, and subsequently to employ it. All in all, Dasos investments create jobs for several hundreds of people internationally, employing highly-qualified forestry experts as well as people in rural areas.

In many European countries, including Finland, individual persons or cooperatives owning forest have to pay a single tax based on the stumpage revenue actually received.

Typically, timberland funds have to structure their forest ownership in terms of a limited liability company. Such companies pay tax at the company level. In Finland, forestry incentives (Kemera subsidies) are not compensated to limited liability companies. Thus, timberland funds have a tax disadvantage in general terms.

Also, the Finnish law allows individual and cooperative forest owners to subtract a notable part (60%) of the acquisition cost of the timberland asset from the stumpage revenue on an annual basis (in Finnish “metsävähennys”), effectively freeing the forestry revenue from all tax for several years. This notable tax release is not available for forest funds such as Dasos.

Dasos forest ownership in Finland does not receive Kemera subsidies. Nor does Dasos utilise the tax release through a subtraction of the acquisition cost.

To achieve tax neutrality and to mitigate its current disadvantageous position, Dasos has in several occasions proposed fair and neutral forest ownership structures treating all forest owners equally (see e.g. “Erikoissijoitusrahasto voisi sijoittaa myös metsiin”, Metsälehti 15/2007, and “Yhtiöomistus toisi tehoa metsänomistukseen”, Kauppalehti 15 November 2010).

As a trivial general fact, the land property rights and taxation of forest income are broadly similar in the Europe and the North America. However, in Russia, Asia and Africa, the forestry “tax” is based on so‑called “stumpage fee” which is not related to actual harvesting income but on the potential to harvest. Such stumpage fee payable to the government are typically at least 20-30% of actual stumpage revenue. In some geographies, even greenfield tree planting operations are liable to pay the stumpage fee although there is no harvesting revenue. The stumpage fee is typically neutral and independent of the form of the ownership, i.e. limited liability companies, such as the ones operated by Dasos, pay the same fee as individuals. In tropical zone investments, Dasos also typically cooperates with a local government sharing the risk and revenue. For example, Dasos has retained in a minority shareholding position for its Malesian investment with the remaining shareholding being held by other investors, including the local government. Because the stumpage fee has to be paid regardless of the actual harvesting level and actual stumpage revenue, it forms a remarkable additional fee and increases the risks of investing in these geographies.

National Land Survey (NLS) statistics (http://www.maanmittauslaitos.fi/kauppahintatilastot) indicate that a total area of 174,000 ha of forest properties entered into the forest property market in Finland during 2010-2012. The market share of Dasos of the properties that changed ownership was 4,9%.

More than 90% of the 174,000 ha was acquired by private individual forest owners (PIFO), forest cooperatives (FC), retail investment funds (RIF; note: Dasos is not a “retail investment fund”), as well as trade unions (TU).

All these entities enjoy a substantial tax advantage in various ways: PIFOs and FCs can subtract 60% of the acquisition price of the forest property from the forthcoming tax on timber sales revenue (Metsävähennys, see above question 10); RIFs have a tax release concerning income tax; and TUs are freed from tax in general, particularly from capital tax.

Similar to the standard limited liability company (osakeyhtiö) structures also utilised by Dasos, the above competing entities commonly apply debt leverage with tax-deductible interest costs.

It has been estimated that about 45-55 million hectares of new industrial planted forests (both fast growing plantations and semi-managed planted forests) would be needed worldwide to fill the projected roundwood gap of some 700 million m3 during the next decades (see “FSC Strategic Review of the Future of Forest Plantations”). 

This would require investments in the range of EUR 80-100 billion by 2050.

If major investments are not realised, the remaining natural forests will be put under increasing pressure since the wood must simply come from somewhere.

Most of the investments in fast-growing plantations will take place in Latin America, South East Asia and also in Australia/New Zealand which serve the increasing needs of China and India.

There are opportunities to increase sustainable production of wood from the managed natural forests in Europe, and to make better use of the current growth potential. Forest investments can be seen as a means to shift forestry into an active operation from passive and quiet status, as well as to consolidate fragmented forest lots into larger entities more valuable not only for economic use but also for conservation.

Yes, there is a well-established policy for sustainable forest management.

Dasos invests only in certified, or certifiable, projects which fit the following descriptions:

• For Boreal and Temperate forests: Acquisition and management of existing commercial forest areas, afforestation and reforestation.
• For Tropical and sub-Tropical forests: Forest plantations on degraded forest land. Permitted end-usage of forest products is to provide wood, fibre, energy generation and environment regeneration. The management and use of natural tropical forests is permissible only by small holders or environmentally oriented projects.
• For tree farming plantation projects: Projects which alleviate shortage of wood fibre/fuel wood in the region and globally, provide social and economic benefits, and help maintain and conserve natural forests.

In addition, and for all three categories, all forestry project investments should be structured and executed in order to enhance:

• Their economic and financial profitability;
• Their impact on biodiversity improvement;
• Their impact on climate change;
• Utilisation of carbon credits; and
• Social benefit spillovers.

Dasos is a proactive forest owner with a targeted approach and a well-defined modus operandi.

In general, the Dasos forest management concept compares favourably with the most advanced institutions active in international or national forestry. Most large forest owners and public entities have well-designed policy benchmarks. In Finland, notable exceptions are the municipalities (0.4 million ha; apart from some larger cities) as well as the Church of Finland (0.1 million ha) for which such fundamental issues as the certification status remain unclear.