Common Business Structures in Finland for Foreign Entrepreneurs
Foreign entrepreneurs in Finland usually choose from three main business structures: Private Limited Company (Osakeyhtiö, Oy), Public Limited Company (Julkinen osakeyhtiö, Oyj), or a Branch of a Foreign Company (Ulkomainen sivuliike).
Each option has different benefits and requirements, so it is important to select the structure that aligns with your business goals and operational needs.
Benefits of Forming a Private Limited Company (Oy)
A Private Limited Company (Oy) is the most popular choice for foreign entrepreneurs in Finland. It offers limited liability, meaning shareholders are only liable up to the amount of their investment.
It is flexible — only one shareholder is required, who can be of any nationality, and there is no minimum share capital requirement.
Management rules specify at least one director (with a substitute director if there are fewer than three). At least half the board must reside in the EEA.
Registration is straightforward and usually takes about three weeks after submitting documents to the Trade Register.
Ongoing compliance includes filing annual financial statements and appointing an auditor unless the company qualifies as small.
Requirements for Public Limited Companies (Oyj)
Public Limited Companies (Oyj) are designed for larger businesses, especially those considering a public listing.
The minimum share capital is €80,000, and the board must have at least three directors. Appointing a managing director is mandatory, and they must reside in the EEA.
Public companies face stricter annual reporting and auditing requirements, and they are suitable for raising capital from the public and listing on stock exchanges.
Factors to Consider When Choosing a Business Structure
When selecting a business structure in Finland, consider the size and scope of your business. Smaller businesses typically choose an Oy, while larger or publicly listed companies require an Oyj.
Assess your ability to meet share capital requirements, decide on your preferred level of liability, and consider the number and residency of directors you can appoint.
All corporate forms are subject to a 20% corporate tax rate, but the structure can affect dividend taxation and group contributions.
Public companies must meet stricter reporting requirements than private ones. Also, think about whether you may want to raise capital publicly in the future or remain privately held.
Converting a Branch of a Foreign Company into a Finnish Entity
Operating a branch allows foreign companies to test the Finnish market without forming a separate local entity. However, if you want to convert a branch into a Finnish company (Oy or Oyj), you must establish a new Finnish company by registering it with the Trade Register.
Transfer the branch’s assets, liabilities, and operations to the new entity, and comply with Finnish company law by appointing directors and meeting share capital requirements. Once the transfer is complete, deregister the branch.
It is highly recommended to seek professional advice to ensure a smooth transition and compliance with legal and tax obligations.
Summary
Choosing the right business structure in Finland depends on your company’s size, capital, liability preferences, and long-term goals. Private Limited Companies (Oy) provide flexibility and limited liability, while Public Limited Companies (Oyj) suit larger businesses planning for public listing.
Branches allow you to enter the Finnish market with lower commitment and convert later as needed. Careful planning and professional support help ensure your business is structured for success in Finland.
