Business Opportunities in Finland
Over the years, Finland has developed itself into a trend-setting global center for design and technology. The country’s high-level international trade accounts for a major portion of its GDP.
The country is suitable for trade and commerce regarding quality of life, economics, competitiveness, and education. Besides being at the epicenter of Europe, Finland is a perfect spot for corporate entities as it provides easy access to Northern European markets.
The service sector dominates the economy of Finland. A large share of the GDP of Finland constitutes oil industries. Since the country shares the largest bilateral trade with Germany, Sweden, and Russia, entrepreneurs can consider this an added advantage for their business growth.
Setting a company in Finland demands adequate knowledge about the country’s business requirements, registration process, taxes, and many more. Indeed, it is a lot easier for European citizens to start a business in Finland. However, people living outside Europe can also venture into trading in Finland.
Benefits of Starting a Business in Finland
Here are the advantages of doing business in Finland:
- Easy access to the fantastic talent of Finland’s workforce due to the enhanced education system
- Excellent network infrastructure with R&D facilities
- An energetic startup community
- Seamless access to investors who are ever ready to connect and expand their network
- Consistent external support to guide companies and train entrepreneurs
- Fine-tuned small market with advanced international expansion
- Steady work-life balance resulting in zero burnouts
- A technologically advanced country offering easy accessibility to collaborate
- An efficient judiciary system results in a low corruption rate, promoting a healthy business environment.
- 20% EU corporate tax along with profit tax, estate tax, and VAT accessed indirectly by the government
Requirements for Starting a Business in Finland
Businesses need to fulfill specific requirements to do business in Finland, which are as listed below:
Visa & residence permit
A visa will suffice if you want to visit Finland for a short time. The tenure of this visa is 90 days. To exceed the stay, you must submit a residence permit. For Schengen countries, the Finnish government asks for a visa, passport, and travel documents valid for ninety days from the date of departure from the Schengen country.
To set up an offshore company in Finland, you must get a residence permit issued by the Finnish Immigration Service. The permit differs according to the profession. These are the different walks of life that get a residence permit effortlessly:
- A researcher
- A specialist
- An employee for a non-profit or religious association
- A sportsperson
- Working in the middle or top management for a company
- A transfer to a Finnish company having a tenure of one year
- Business involving market study, company location, acquisition or negotiation of orders, delivery supervision for orders, or other similar tasks
- Tasks that involve a delivery contract for a device, individual machine, production line, etc., that needs to be exported from or imported to Finland.
- Businesses can accommodate many ways to figure out a company name. It can be either a wholly invented one or a combination of the name of a place and the kind of business. Further, you can also use a person’s name as a company name.
- The Finnish Patent and Registration Office offers a free service to check the availability of the company names.
- Once you complete business name registration in Finland, no other company can use or register this name.
To ensure that the company name has a corporate touch, these are the options you have at hand:
Ø A simple and clear indication of the type of business
Ø Names of services and goods that the business caters to
Ø Common family or first names
Ø Names of general places
Ø Combination of figures and letters that can neither be pronounced nor considered a meaningful word
- The company address and contact details you provide to the Finnish Trade Register will be valid and available.
- For the contact details, you can provide the telephone number, the website address, or the email address.
Finland company incorporation requirements levy some taxes on conducting business in the country. The business taxes in Finland differ and depend on the type of company. The tax amount is based on the profit and net assets of the company.
Under the corporate taxation of the Finnish Tax Administration, this is the list of taxes that entrepreneurs have to pay for Finland’s new company incorporation:
- Business income tax
For company incorporation in Finland, businesses must provide an income tax return annually and go ahead with the tax prepayments. Currently, the business income tax in Finland is 20%.
- Value-added tax
Companies selling goods and services must pay a value-added tax after registering the company under Value Added Tax Register. The VAT in Finland is 24%.
- Excise duty
If your company deals with goods manufactured and imported in Finland, the excise duty is levied on you. Pay the excise duty and submit the tax to the Tax Administration within the stipulated time.
- Salaries and employer contribution
These are the parameters to comply with, provided your company pays salaries to its employees:
- Have its name registered on the Employer Register
- Provide the details of withholding taxes, salaries, and contributions for employer health insurance in the Income Registers
- Pay contribution on employer’s health insurance and withholding taxes to the Tax Administration
- Make other insurance premium payments on time.
- Appealing a tax decision
If necessary, you can appeal for a decision regarding taxation to the Assessment Adjustment Board. When not satisfied with the decision of the Assessment Adjustment Board, you can appeal to the Administrative Court.
Another requirement to set up a company in Finland is minimum business capital. Currently, no minimum capital is required for private limited companies in Finland. Therefore, you can start a company with a bare minimum capital that suits the business requirements.
Directors and company secretary
For opening a business in Finland, the company must possess at least one director and one deputy director. If the company has two directors, one of the two has to be assigned the role of deputy director. The eligibility criteria for a director include the following:
- A natural person
- Above 18 years
- Free from any criminal offenses
- Must not be adjudged an insolvent
- Must not be declared a bankrupt
One member of the company authority has to be a resident of the European Economic Area or EEA. Along with the director and deputy director, a minimum of one shareholder is a must.
Types of Business Structures in Finland
To conduct offshore company registration in Finland, these are the eligible business structures:
Tax Resident LLC
- The principle of limited liability stands as the crux of Tax Resident LLC.
- Also known as domestic tax residents, these LLCs must pay a corporate tax of 20%.
Free Zone LLC
- A Free Zone LLC operates in a Finnish free zone and works for companies in services and manufacturing.
Public Limited Company
- A public limited company is used for larger organizations. Here, public securities can trade the shares of the company.
- To form a public limited company, at least three board members and a CEO are necessary.
Private Limited Company
- The Private Limited Company is also referred to as Osakeyhtiö (Oy).
- It can only work on limited capital and does not need to enlist its shares in the stock exchange.
- The liability stands limited to the amount of subscribed capital.
- Public Limited and Private Limited companies must follow the Companies Act (2006/642) as notified by Finnish law.
- A representative office acts as an extended branch of a foreign company in Finland.
- It conducts different activities of a parent company. Generally, the Representative Office is involved in market research.
- The branch office is again an extension of a parent Finnish company and similar to a Representative Office with a slight difference. The operations of a branch office are carried out under the supervision of the parent company.
- Monitored by the Co-operatives Act (2013/421), the Co-operative Society can perform different activities individually. Also, they are not liable for the company’s debts.
Company Registration Process
The entire company registration process in Finland is as given below:
Step 1: Selecting business structure type
- The first step in the procedure for incorporation of a company in Finland includes choosing the type of business structure that suits the business goals and objectives.
- Generally, an LLC or Limited Liability Company is the most sought-after business structure.
- Next, the company has to work according to the principles of a separate legal entity to legalize the company.
- The whole process of registration and legalization of the company as an individual entity has to be informed to the FTA or Finnish Tax Authority.
Step 2: Document submission to the Trade Registry
- When you are determined to form a company in Finland, you must submit the documents mentioned here to the Trade Registry.
- For company incorporation in Finland, these are the documents to be submitted:
- Articles of Association of the company
- Board Minutes of the Company deciding to incorporate a company in Finland
- Board Resolution to create a corporate bank account for the company in Finland
- Memorandum of Association providing the details of original shares owned by the company members
- Finnish Trade Registry notification form
- Payment receipt for Finnish Trade Registry (both for physical and online process)
- Auditor confirmation regarding share capital payment.
Step 3: Articles of Association approval
- Now, the Finnish Trade Registry has to approve the articles of association to allow the online filing of the documents.
- To carry out the whole approval process seamlessly, one of the company’s board members must have an internet bank account.
Step 4: Ensuring the company name
- The company has to follow the general rules for selecting a suitable name for the company.
- For a private limited company, the name has to be accommodated with an ‘Oy’ or ‘osakeyhtio.’ On the other hand, for a public limited company in Finland, the word ‘Oyj’ or ‘julkinen osakeyhtio’ is a must.
- No breach of intellectual property rights will be accepted while choosing the company name.
Step 5: Tenure for company registration
- You can physically send the documents to the Trade Registry or submit them online.
- The online system will work only when the Finish Trade Registry has verified the documents. Generally, it takes up to three weeks to complete the company formation process.
After registering your company, you have to follow some compliances as given below:
- Private companies have to organize annual general meetings to notify changes in the company and discuss voting issues.
- Every year, the company has to conduct at least one board meeting.
- The company has to pay a corporate tax of 20% on the profit and loss incurred by the company.
- Businesses should carry out all filings and business registrations by the Finnish Trade Registry.
- Keeping in mind the GAAP or the Generally Accepted Accounting Practices, the company has to prepare the financial statements and reports.
- Companies should put up VAT registered ID on all disclosures related to the company.
How Much Does it Cost to Incorporate a Company in Finland?
The cost of incorporating a company in Finland depends on the type of company you establish. Registering the company name via mail will cost you EUR 380, while applying online charges include EUR 270.
Are Foreigners in Finland on Certain Passes Allowed to Start a Business in Finland?
If foreigners have to start a business in Finland, they must get their work permit and visa first. The work permit allows them to stay in the country for more than three months. Next, the foreigner has to register his firm in the Trade Register of the Finnish Patent and Registration.
Government Assistance for Foreign-Owned Businesses
The government and EU incentives provide a wide range of opportunities and grants for starting a business in Finland to foreign-owned businesses.
- The Government of Finland introduced development policy investment in 2016 to increase opportunities for setting up a new business in developing countries. These investment aids apply to both small and medium enterprises.
- Companies can get EU finance, especially in service sectors and startups.
How Can Multiplier Help?
While setting up the company in Finland, companies must take care of the administration and compliance requirements. Establishing the company itself takes a lot of work. Companies can take assistance with global platforms like Multiplier.
At Multiplier, we help you with the flexible and effortless onboarding of international talents. Being a reputed employer of record (EOR) platform, Multiplier has the adequate infrastructure to employ the best talents in the country. With Multiplier, you can hire global talent, get in touch with employment contracts, avail of insurance benefits, and much more.