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Doing Business in Finland

Welcome to Scandicorp’s essential guide to establishing a business in Finland. 

Nestled in the heart of Northern Europe, Finland offers a vibrant, innovation-driven business environment, renowned for its high level of education, cutting-edge technology, and stable economy. With its strategic location, Finland serves as a gateway to the Nordic and Baltic markets, presenting a plethora of opportunities for entrepreneurs and businesses looking to expand or start a new business.

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At Scandicorp, we specialize in navigating the intricacies of setting up and managing businesses in the Nordic countries. Our expertise is rooted in years of experience and a deep understanding of local regulations, business practices, and cultural nuances. Whether you’re a seasoned entrepreneur or taking your first steps in the business world, our comprehensive guide and tailored services are designed to streamline your journey towards successful business establishment in Finland.

In this guide, we’ll walk you through the key aspects of starting a business in Finland, from choosing the right business structure and understanding the legal framework to navigating the Finnish tax system and integrating into the local business culture. Our aim is to provide you with the knowledge and tools needed to make informed decisions and lay a solid foundation for your business venture in this dynamic and welcoming country.

Join us as we explore the unique opportunities that Finland offers and learn how Scandicorp can be your trusted partner in this exciting endeavor.

Why Choose Finland for Your Business

Finland stands out as an exceptional destination for business ventures, characterized by a robust and innovative economic environment. Here are the key reasons why Finland should be your top choice for establishing or expanding your business:

Key Advantages of the Finnish Business Environment

Innovation and Technology Leadership

Finland is globally recognized for its innovation and leadership in technology. With a strong focus on research and development, it offers a fertile ground for tech startups and companies specializing in ICT, cleantech, and biotechnology.

Stable Economy and Political Environment

Known for its political stability, Finland offers a secure environment for businesses. The country’s economy is well-regulated, transparent, and operates on principles of free-market capitalism, providing a safe and predictable business climate.

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Highly Skilled Workforce

Finland boasts one of the most educated workforces in the world. The country’s emphasis on high-quality education translates into a talented pool of professionals, proficient in technology, engineering, and various other sectors.

Quality of Life and Work-Life Balance

Finland is renowned for its high standard of living and excellent quality of life, which contributes to a motivated and productive workforce. The emphasis on work-life balance is a key factor in employee satisfaction and retention.

Insights into Finland’s Strong Sectors and Market Opportunities

Information and Communication Technology (ICT)

Finland is a leader in ICT, home to major tech companies and innovative startups. The country offers a vibrant ecosystem for businesses in software development, telecommunications, and digital services.

Clean Technology

With a national commitment to sustainability, Finland is at the forefront of cleantech innovation. This sector presents opportunities in renewable energy, waste management, and sustainable construction technologies.

Bioeconomy and Life Sciences

Finland’s bioeconomy sector is booming, driven by advancements in life sciences, biotechnology, and pharmaceuticals. The country provides an excellent platform for research and development in health and environmental sciences.

Cloud Service Data Centers: Finland is increasingly becoming a hub for cloud service data centers, attributed to its stable environment, reliable energy supply, and robust data connections. The country’s cool climate is advantageous for data center operations, reducing cooling costs and enhancing energy efficiency. This makes Finland an attractive location for companies looking to establish and expand their data storage and cloud computing capabilities

 

Finland’s Ranking in Global Competitiveness and Ease of Doing Business

Global Competitiveness

Consistently ranked high in global competitiveness indexes, Finland offers a business-friendly environment, underscored by efficient governance, a strong legal framework, and an open market economy.

Ease of Doing Business

Finland ranks impressively in ease of doing business surveys. The country’s transparent and straightforward regulatory environment simplifies the process of setting up and running a business.

In summary, Finland’s combination of a stable economy, technological prowess, skilled workforce, and commitment to sustainability and innovation makes it an ideal location for businesses looking to thrive in a competitive global market. With Scandicorp as your guide, harnessing these opportunities in Finland becomes an achievable and rewarding venture.

Understanding Finnish Business Structure

Finland offers a variety of business structures to suit different needs and goals. Understanding these forms and their legal requirements is crucial for making an informed decision about your business venture in Finland.

Overview of Common Business Forms in Finland:

  • Private Limited Company (Osakeyhtiö, Oy):
    • This is the most popular form for small to medium-sized businesses.
    • Requires a minimum share capital of €0.
    • Shareholders’ liability is limited to their investment in the company.
    • The management is typically overseen by a Board of Directors. The minimum requirement for the Board is one ordinary member plus one deputy member. At least 50% in each have to be EEA-residents, nationality does not matter.
    • Suitable for entrepreneurs who want limited liability and a flexible management structure.
  • Public Limited Company (Julkinen osakeyhtiö, Oyj):
    • Ideal for larger businesses, particularly those seeking to list on a stock exchange.
    • Requires a minimum share capital of €80,000.
    • Shareholders’ liability is limited to their investment in the company.
    • Must have a Board of Directors with at least three members and a Managing Director.
    • Offers the ability to raise capital publicly and increases credibility with larger investors.

Key Features and Differences Between These Business Entities:

  • Ownership and Capital Requirements: The key difference lies in the capital requirements and the size of operations. Oy is suited for smaller businesses with lower capital needs, while Oyj caters to larger businesses with higher capital requirements and the potential for public trading.
  • Governance Structure: Oy can operate with a simpler governance structure, while Oyj requires a more complex structure due to its potential public nature.
  • Regulatory Requirements: Oyj faces more stringent regulatory requirements, including mandatory audits and detailed financial reporting, due to its ability to raise funds publicly.

Legal Requirements for Each Type of Entity:

  • For Private Limited Company (Oy):
    • Registration with the Finnish Trade Register.
    • Preparation of Articles of Association.
    • Annual financial statements must be filed.
    • Auditing is required if the company exceeds certain thresholds in terms of revenue, assets, or number of employees.
  • For Public Limited Company (Oyj):
    • Compliance with the Finnish Companies Act and Securities Markets Act.
    • Mandatory auditing and more comprehensive financial reporting.
    • Compliance with regulations regarding public stock offerings if listed on a stock exchange.
    • Disclosure obligations to shareholders and the public.

Each business form has its advantages and considerations, making it essential to choose the one that aligns best with your business objectives and operational scale. Scandicorp can provide expert guidance on the most suitable business structure for your specific needs in Finland.

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Registration and Legal Requirements

Registering a business in Finland involves a series of steps and adherence to certain legal formalities. Here’s a comprehensive guide to help you navigate through the process.

Step-by-Step Guide on Registering a Business in Finland

Choose Your Business Structure: Decide between different forms like Private Limited Company (Oy) or Public Limited Company (Oyj) based on your business needs.

Select a Unique Business Name: Ensure the chosen name is unique and not already in use or reserved. Check for name availability via the Finnish Patent and Registration Office (PRH).

Draft the Articles of Association: This document outlines your company’s operational framework, including share capital, business activities, and governance structure.

Deposit Minimum Share Capital: For an Oyj, at least €80,000 in a bank account. Obtain a bank statement as proof of deposit.

Prepare Incorporation Documents: Include the memorandum of association, evidence of share capital deposit, and details of directors and shareholders.

Register with the Trade Register: Submit your incorporation documents to the PRH’s Trade Register. This can be done online or by mail.

Obtain Necessary Licenses or Permits: Depending on your business type, you may need specific licenses or permits to operate legally in Finland.

Register for Taxes: Register with the Finnish Tax Administration for VAT, prepayment, and employer registrations, as applicable to your business.

Comply with Local Regulations: Ensure compliance with local municipal regulations, including health and safety, environmental, and industry-specific requirements.

 

Required Documents and Legal Formalities:

  • Identification documents of the founders and directors.
  • Articles of Association and memorandum of association.
  • Bank statement confirming the deposit of share capital.
  • Consent forms from the board members and auditors, if appointed.
  • Proof of business premises, such as a rental agreement.

Information on Minimum Share Capital Requirements:

  • Private Limited Company (Oy): €0.
  • Public Limited Company (Oyj): Minimum €80,000.
  • The capital must be deposited before registration and proof provided.

Overview of the Trade Register and Tax Administration Procedures:

  • Trade Register: Managed by the PRH, it’s the official record of businesses in Finland. Registration ensures legal recognition and the right to commence business operations.
  • Tax Administration: After registering with the Trade Register, businesses must register with the Finnish Tax Administration. This includes VAT registration, obtaining a Business ID, and setting up tax prepayments and payroll taxes if employing staff.

The registration process, while straightforward, requires attention to detail and adherence to Finnish legal standards. Scandicorp can assist in navigating these steps, ensuring a smooth and compliant business setup in Finland.

Taxation in Finland

Understanding the Finnish tax system is crucial for any business planning to operate in Finland. Here’s an outline of the key aspects of corporate taxation, including details on capital gains tax, VAT, and potential tax benefits and exemptions.

Outline of the Finnish Corporate Tax System:

  • Corporate Income Tax: Companies in Finland are subject to a corporate income tax on their worldwide income. The current corporate tax rate is 20%.
  • Taxable Income: This includes profits from business operations, capital gains, and passive income such as interest and dividends.
  • Tax Filing and Payment: Corporations must file an annual tax return and pay the assessed tax. Prepayments can be made during the year based on estimated profits.

Overview of Capital Gains Tax, VAT, and Other Relevant Taxes:

  • Capital Gains Tax:
    • Capital gains, typically from the sale of assets or shares, are taxed as ordinary business income at the standard corporate tax rate.
    • Under certain conditions, gains from the sale of shares may be exempt from taxation, especially if the shares are in a subsidiary and the parent company holds a significant percentage of the subsidiary.
  • Value-Added Tax (VAT):
    • VAT is applied to most goods and services in Finland.
    • The standard VAT rate is 24%, with reduced rates of 14% for food and animal feed, and 10% for medicines, books, and passenger transport.
    • Businesses must register for VAT if their annual sales exceed €10,000. VAT-registered businesses must charge VAT on their sales and can reclaim VAT paid on their purchases.
  • Other Taxes:
    • Employer contributions: Businesses must pay social security contributions based on employees’ salaries.
    • Property tax: Applied to the ownership of real estate, with rates varying based on the location and use of the property.
    • Dividend tax: Dividends distributed to shareholders are subject to taxation, though the rate depends on various factors including the type of shareholder (individual or corporate) and the percentage of ownership.

Information on Tax Benefits and Exemptions for Certain Business Types:

  • Research and Development (R&D): Companies engaged in R&D activities may be eligible for tax credits or deductions.
  • Startups and SMEs: Small and medium-sized enterprises may qualify for certain tax benefits, such as lower prepayment rates or exemptions in specific cases.
  • International Business: Companies engaged in international trade may benefit from Finland’s extensive network of double tax treaties, which can reduce withholding taxes on dividends, interest, and royalties.
  • Sustainable and Green Businesses: Incentives and tax benefits are often available for businesses operating in the green technology and sustainable energy sectors.
  • Loss Carryforward: In Finland, businesses can typically carry forward their losses for ten years. This provision allows companies to offset future taxable income with losses incurred in previous years, providing a significant tax relief, especially for businesses that may have initial years of losses before becoming profitable.

It is important to note that tax laws and rates can change, and various exemptions and incentives may be available depending on the specific circumstances of your business. Scandicorp can provide up-to-date advice and guidance tailored to the unique tax considerations of your business in Finland.

 

Banking and Financial Considerations

For businesses establishing themselves in Finland, navigating the banking sector and understanding financial obligations is vital. This section provides guidance on setting up corporate bank accounts and outlines currency regulations and financial reporting requirements in Finland.

Guidance on Setting Up Corporate Bank Accounts in Finland

Choosing a Bank: Finland has a robust banking system with a range of domestic and international banks. Consider factors like services offered, fees, digital banking capabilities, and English language support when selecting a bank.

Account Opening Process:

  • Documentation: Typically, you’ll need the company’s registration documents, Articles of Association, details of the directors and shareholders, and proof of address for the company and the account signatories.
  • Initial Meeting: Most Finnish banks require a face-to-face meeting to open a corporate account. Prepare to discuss your business plan and banking needs.
  • Verification and Compliance Checks: Banks will conduct due diligence as per anti-money laundering regulations. This includes understanding the nature of your business and the source of funds.

Banking Services: Apart from standard account services, consider if you need additional services like online banking, multi-currency accounts, credit facilities, or merchant services.

Deposit Requirements: Some banks may require a minimum deposit to open an account or maintain a minimum balance.

Information on Currency Regulations and Financial Reporting Requirements

  • Currency Regulations:
    • Finland uses the Euro (EUR) as its official currency.
    • There are generally no restrictions on foreign exchange or capital movements, either into or out of Finland.
  • Financial Reporting Requirements:
    • Annual Reporting: Finnish companies must prepare annual financial statements, including a balance sheet, income statement, and notes to the accounts.
    • Audit Requirements: Depending on size and type, some companies may be required to have their financial statements audited.
    • Filing: Financial statements must be filed with the Finnish Patent and Registration Office and are publicly accessible.
    • Accounting Standards: Financial statements should be prepared in accordance with Finnish Accounting Standards or International Financial Reporting Standards (IFRS), as applicable.
  • VAT Reporting:
    • Companies registered for VAT in Finland must periodically submit VAT returns and payments. The frequency depends on the company’s turnover.
  • Employee-Related Reporting:
    • Employers are required to report salaries and wages, and make appropriate withholding tax and social security contributions.

Navigating the banking and financial landscape in Finland can be complex, particularly for businesses unfamiliar with the local environment. Scandicorp can provide valuable assistance in setting up and managing your corporate banking needs, ensuring compliance with financial regulations and reporting requirements in Finland.

 

Employment and Labor Laws

Finland’s employment landscape is governed by comprehensive labor laws and regulations that balance employee rights with employer obligations. Understanding these laws is crucial for any business operating in Finland.

Overview of Finnish Labor Laws and Employment Contracts

Labor Laws: Finnish labor laws are designed to protect workers and ensure fair treatment. They cover aspects such as non-discrimination, occupational health and safety, and fair dismissal practices.

Employment Contracts:

  • Can be permanent or fixed-term and must specify terms including job description, salary, and working hours.
  • Must comply with national collective agreements that set minimum standards for employment conditions in various sectors.
  • Should be in writing, although verbal contracts are also legally binding.

Information on Employee Rights, Working Hours, and Benefits:

  • Employee Rights:
    • Right to a safe working environment.
    • Protection against discrimination and unjust dismissal.
    • Right to join a trade union and bargain collectively.
  • Working Hours:
    • Typically, 40 hours per week.
    • Overtime work must be compensated with either additional pay or time off.
  • Annual Leave:
    • Employees are entitled to a minimum of 25 days of paid annual leave.
    • Additional leave may be granted based on collective agreements or individual contracts.
  • Parental Leave:
    • Generous parental leave policies including maternity, paternity, and parental leave.
    • Kela (The Social Insurance Institution of Finland) provides benefits during parental leave.

Employer Obligations and Social Security Contributions

  • Obligations:
    • Adherence to employment contract terms and national labor laws.
    • Provision of a safe working environment.
    • Payment of salaries on time and in accordance with the agreed terms.
  • Social Security Contributions:
    • Employers must contribute to various social security funds.
    • Contributions cover pensions, unemployment insurance, and health insurance.
    • The total contribution is a percentage of the employee’s gross salary, varying based on factors like the employee’s age and salary level.
  • Additional Employer Responsibilities:
    • Registration of employees with the relevant social security and tax authorities.
    • Withholding income tax from employees’ salaries and remitting it to the tax authorities.
    • Compliance with regulations regarding employee data protection and privacy.

Navigating Finnish employment and labor laws can be complex, and non-compliance can result in significant liabilities. Scandicorp offers expert guidance and support to ensure that your business operations in Finland are compliant with all relevant employment regulations, providing a harmonious and legally sound work environment.

Real Estate and Location Selection

Selecting the right location and understanding the commercial real estate market are critical steps in establishing your business in Finland. This section provides insights and tips to help you make an informed decision.

Tips on Choosing the Right Business Location in Finland

Identify Your Business Needs: Different businesses have varying requirements. Retail outlets prioritize customer foot traffic, while offices might need proximity to talent pools or specific industries.

Consider Accessibility and Infrastructure: Look for locations with good transportation links, both for employees commuting and for logistics if your business requires it.

Research Local Market Conditions: Understand the economic climate of the area. Some regions may offer incentives for businesses, especially in high-tech or innovative sectors.

Assess Proximity to Suppliers and Partners: For certain businesses, being close to suppliers or business partners can significantly reduce operational costs.

Evaluate Potential for Growth: Consider not just your immediate needs but also potential expansion. Ensure the location can accommodate future growth.

Understand the Local Culture and Customer Base: Especially important for consumer-facing businesses, the local culture and demographics can greatly influence your business.

Overview of Commercial Real Estate Market in Finland

Market Trends: The Finnish real estate market is known for its stability and transparency. Helsinki, as the capital city, has a more dynamic market with higher prices compared to other regions.

Office Spaces: There is a variety of office spaces available, from modern facilities in business parks to more traditional office buildings in city centers.

Retail Locations: Finland offers a range of retail locations including shopping centers, high street shops, and smaller boutique spaces, especially in urban areas.

Industrial and Warehouse Spaces: There are ample industrial properties, particularly in suburban areas and close to major transportation hubs.

Leasing vs. Buying: Both options are available in Finland. Leasing offers flexibility, which is beneficial for new or expanding businesses, while buying is a long-term investment.

Legal and Regulatory Framework: The Finnish real estate market is well-regulated. It’s important to understand the legal aspects of leasing or purchasing property, including contracts, zoning laws, and property taxes.

When selecting a business location in Finland, it’s important to consider a combination of strategic business needs and the practical aspects of the local real estate market. Scandicorp can provide valuable insights and assistance in navigating the Finnish commercial real estate market, ensuring you find the ideal location for your business.

 

Cultural Insights and Business Etiquette

Navigating the business culture and understanding the etiquette in Finland is essential for successful interactions and negotiations. Finnish business culture is characterized by transparency, efficiency, and a strong sense of equality and respect.

Understanding Finnish Business Culture and Etiquette

Directness and Honesty: Finns value straightforward communication. Being direct and honest is appreciated in business dealings.

Punctuality: Time is highly valued in Finland. Being punctual for meetings and appointments is crucial and considered a sign of respect.

Formality: Initial business meetings tend to be formal. Use titles and last names unless invited to do otherwise. The atmosphere may become more relaxed in subsequent interactions.

Equality and Respect: The Finnish workplace is egalitarian. Opinions and contributions from all levels of the organization are valued.

Consensus and Collaboration: Decision-making often involves seeking consensus. Collaborative discussions and a team-oriented approach are common.

Modesty: Overstating abilities or achievements is not well-received. Finns generally have a modest demeanor and appreciate the same in others.

Tips for Successful Business Communication and Negotiation in Finland

Preparation: Before meetings, provide clear agendas and background information. Finns appreciate thoroughness and well-prepared discussions.

Clarity and Brevity: Be clear and concise in communication. Avoid over-exaggeration and stick to facts and figures.

Building Trust: Establishing trust is key. Be reliable and consistent in your interactions. Personal relationships and trust grow over time.

Negotiation Style: Finns are pragmatic in negotiations. They value fair deals and long-term relationships over short-term gains.

Understanding Silence: Do not misinterpret silence as disinterest. Finns are reflective and may take pauses to think before responding.

Language: While English is widely spoken in business, using a few Finnish phrases can be appreciated and shows respect for the local culture.

Gift Giving: This is not a central part of business culture in Finland. If you choose to give a gift, keep it modest and relevant to the occasion.

Socializing: Informal gatherings may be part of the business relationship-building process. These can provide valuable opportunities to know your Finnish counterparts better.

Understanding and adapting to Finnish business culture and etiquette can greatly influence the success of your business endeavors in Finland. Scandicorp can offer further insights and guidance on effectively navigating the cultural nuances of the Finnish business landscape.

 

Ongoing Support and Services from Scandicorp

Scandicorp is dedicated to providing comprehensive support and services to businesses in Finland. Our aim is to ensure your business not only launches successfully but also thrives and grows in the Finnish market.

Introduction to Scandicorp’s Comprehensive Support Services

Scandicorp offers a wide range of services designed to support every aspect of your business journey in Finland:

Business Setup and Incorporation: Assistance with the entire process of business establishment, including choosing the right legal structure, registration, and compliance with local regulations.

Legal and Regulatory Guidance: Offering expert advice on Finnish business laws, regulations, and compliance requirements.

Financial Services: Guidance on financial planning, banking, accounting, and tax compliance, ensuring that your business stays financially healthy and compliant with Finnish laws.

Assistance in Day-to-Day Management and Administration

Administrative Support: Managing day-to-day administrative tasks such as correspondence, document management, and meeting coordination.

HR and Payroll Services: Assistance with recruitment, employee contracts, payroll processing, and adherence to Finnish employment laws.

Property and Asset Management: Support in finding and managing business premises, including negotiations, lease management, and facility maintenance.

Access to Scandicorp’s Network of Professional Advisors and Experts

Legal and Tax Advisors: Access to experienced legal and tax professionals who can provide specialized advice tailored to your business needs.

Industry Experts: Insights and guidance from experts in various industries, helping you navigate market trends and opportunities in Finland.

Networking Opportunities: Connecting you with local business networks, industry events, and potential partners, clients, and suppliers.

Customized Consultation: Tailored advice and strategies to help you achieve your specific business objectives and overcome any challenges in the Finnish market.

With Scandicorp’s ongoing support and services, you gain not just a service provider but a partner committed to your success in Finland. Our expertise, resources, and professional network are at your disposal to ensure a smooth and prosperous business journey.

 

Contact and Consultation

Embarking on your business journey in Finland is just a conversation away. Scandicorp is here to guide you through every step of the process. For any inquiries or further information, you can easily reach us through the following contact details:

Email: info@scandicorp.com

You can also call our direct number or will in the form in our contact page here

Our team is ready to assist you with any questions you may have about starting and running a business in Finland.

Free Initial Consultation

Understanding the intricacies of setting up a business in a new country can be daunting. To help you get started, Scandicorp offers a free, no-obligation initial consultation. This session is designed to provide you with an overview of the process, answer your initial questions, and assess how we can best support your business objectives in Finland.

Once you have decided to establish a company in Finland, Scandicorp will help you prepare all formalities and paperwork for the registration of your company and liaise with the relevant authorities to ensure that your company will be operational in Finland within a short period of time.

Finland has a very strategic location between the markets of East and West. Many companies take advantage of this and establish their business operations in the Helsinki region, and doing business in Finland is paying off for them. Helsinki can offer all the services and infrastructure that a company needs for successful operation in a competitive economy.

Scandicorp provides a full range of corporate services in Finland where Company Formation is one of the most regular. Finland is Scandicorp’s second largest market after Sweden in Scandinavia.

 

Starting a Business in Finland

The Finnish market offers many business opportunities for international business in Finland.

Finland’s central location in Northern Europe, its full membership in the European Union, its long-established connections to Russia, the Nordic and Baltic countries and experience in doing business with them are just some of the reasons why Finland is an ideal base for your business in this fast-growing Northern market area with over 80 million consumers.

Despite the fact, that for example the amount of Shared capital varies, all these types of businesses have to be registered for the Trade register and Tax Administration and have to have a registered office in Finland.
With regard to Accounting legislation, all these forms of businesses have to keep ongoing accounting and annual filing of financial statements. Also, at least one independent licensed Auditor is required to be appointed.

 

Contact Scandicorp

Company Registration Finland

Scandicorp offers company registration in Finland by local professionals who speak the Finnish language. As a client, you can feel safe that all procedures are taken care of correctly from start to an operational company without getting through the hassle by yourself. All new enterprises, including foreign companies starting a business in Finland, must submit a start-up notification to the trade register. The notification can also be used for registration in the employer register, prepayment register and/or VAT register.

 

Private Limited Company in Finland

The most common form of business in Finland is the Finnish Private Limited Company (Osakeyhtiö, suffix Oy in Finnish). A minimum share capital of 2,500 EUR in cash or assets is required, you require at least one board director and a deputy who is a resident of an EU/EEA country, a legal and locally registered office address. One of the reasons the Finnish Limited Liability Company is the most common form of business relates to the shareholders has no personal liability for the company’s obligations.

 

Foreign branch in Finland

A foreign company can establish a local presence in Finland through a branch. This means you can operate in Finland without registering a local limited company. The branch is not considered a legal entity which means the parent company abroad is considered responsible for the branch actions. There are different registration procedures depending if you want to establish a branch in Finland from within the EEA or from outside the EEA. We know all the details and will help you either way.

 

Finnish Bank Account and Share Capital

A bank account for depositing the share capital payment is required to incorporate your Finnish company. Opening a bank account in a Finnish bank can be quite a hassle if you are not prepared, Scandicorp will provide you with the administration of setting up the account.


Taxation in Finland

Finnish Corporate Income Tax

Finland, together with the other Nordic countries, is generally associated with high taxes, especially on the personal level. However, the general corporate tax rate is today at a moderate 20%. Companies resident in Finland are liable to tax on their worldwide income. Non-resident companies are taxed on their income derived from Finland, and if they have a permanent establishment in Finland, on all income related to the permanent establishment. There is no definition for corporate residence in the tax laws. The general rule is that if a company is registered in Finland, it is also considered a tax resident of Finland.

Deductions

In general, expenses are deductible if they are incurred for the purpose of acquiring or maintaining income. The fact that it was the taxpayer’s intention to incur a particular expense for this purpose is usually the decisive test for deductibility. Typical types of deductible expenses are purchases of materials and services, use of inventory, wages and salaries, social security expenses, purchases of investments as a form of depreciation (there are maximum depreciation rates accepted), rents, support services and other operating expenses as well as interest payable.

Group taxation in Finland

Each company belonging to a group is taxed separately plus there is no joint group taxation. Finnish tax legislation recognises a group contribution that allows a transfer of financial resources and profit between group companies. Contributions from an affiliated company may be deducted from the taxable income of the contributing company and added to the taxable income of the recipient company.

Withholding taxes

Withholding taxes or taxes at source are also applicable on certain payments of interests, dividends and royalties to non-resident companies. The withholding tax for dividends to a non-resident company outside the EEA is usually 15% – 20%.


 

The political establishment of Finland

 

Finland (Finnish name Suomi) is a republic as a political establishment. It is a member of the European Union since 1st of January 1995. It became also a part of the Economic and Monetary Union (EMU). However, since 1999, the national currency unit markka was a unit for the currency Euro, with a fixed conversion rate 1 euro=5.94573 marks. Therefore, the Euro is the only valid currency since March 2002.

Corporate Fact Sheet "Business in Finland"