DOING BUSINESS IN FINLAND IN 2023
Since 2003, Healy Consultants Group PLC has assisted Clients with business registration in Finland. Our services include i) Finland company registration ii) corporate bank account opening iii) employee recruitment iv) employee visa strategies and v) office space rental solutions.
|Summary||Tax resident LLC||Bitcoin Company||Free zone LLC||Representative office||Branch office|
|Also known as||Osakeyhtiö ja osuuskunta||Osakeyhtiö ja osuuskunta||Osakeyhtiö ja osuuskunta||Edustusto||Sivuliike|
|Best use of company?||All products and services||FinTech||Manufacturing and export activities||Marketing & research||Specific projects|
|How soon can you invoice Clients/sign sales contracts?||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks|
|How soon can you hire staff?||1 month||1 month||2 months||1 month||1 month|
|How soon can you sign a lease agreement?||Immediately||Immediately||Immediately||Immediately||Immediately|
|How long to supply corporate bank account numbers?||8 weeks||8 weeks||8 weeks||8 weeks||8 weeks|
|How long to supply company registration/tax numbers?||2 weeks||2 weeks||2 months||2 weeks||2 weeks|
|Corporate tax rate on annual net profits?||20%||20%||20%||None||20%|
|Limited liability entity?||Yes||Yes||Yes||No||No|
|Government grants available?||Yes||Yes||Yes||No||No|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/ legal representative required?||Yes, EEA resident||Yes, EEA resident||Yes, EEA resident||Yes, EEA resident||Yes, EEA resident|
|Minimum paid up share capital?||€1||€1||€1||None||None|
|Can bid for Government contracts?||Yes||Yes||Yes||No||Yes|
|Corporate bank account location?||OP Bank||Nordea Bank||Danske Bank||BNP Paribas||Carnegie Investment Bank|
|Can secure trade finance?||Yes||Yes||Yes||No||Yes|
|VAT payable on sales to local customers?||24%||24%||24%||None||24%|
|Average total business set up engagement costs?||€20,330||Request a proposal||Request a proposal||€20,170||€20,850|
|Average total engagement period?||2 months||2 months||3 months||3 months||3 months|
Finland company registration summary
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Advantages and disadvantages
Advantages of Finland company registration
- Company formation in Finland is easy because
- A Finnish LLC can be registered with only i) 1 shareholder who can be of any nationality and ii) 2 directors. The entity must have either i) 1 director who is ordinarily resident in Finland or ii) 1 director who is ordinarily resident in the EEA as well as a service process representative resident in Finland;
- The minimum paid-up share capital required is only €1 and our Clients do not need to travel to complete engagement;
- Company formation can be completed in just 2 business weeks;
- It is helpful that majority of Finnish nationals speak English;
- Finland is perfectly located to access both vast EU market and lucrative, natural-resource rich Russian market, via direct maritime and rail infrastructures;
- Finland is a prime location to register a new business because:
- Finnish workforce is a valuable asset for any global investor, because:
- The WEF has ranked Finland as the country with second most skilled workforce in the world in its Global Competitiveness Report for 2019;
- A happy worker is an efficient worker – Finland has been ranked the happiest country in the world for 5 years in a row, as indicated in the The World Happiness Report 2022;
- Finland’s workers are one of the most innovative in the world, as the country was ranked 3rd Most Innovative within The Consumer Technology Association 2019.
Disadvantages of Finland company registration
- Finland is a high tax country, as i) corporate tax is 20% ii) VAT rate is 24% iii) withholding taxes are up to 20% and iv) labor tax and social security contributions are up to 24.5%. In summary, effective total tax paid by multinationals approximates 40% of their annual earnings;
- Foreign entrepreneurs need to get accustomed to Finland’s seasonal pace of business because:
- Businesses in Finland virtually shut down from late June to early August for summer holidays. During this period, Finnish businesses are likely to suffer from i)low sales, ii) lack of correspondence from Finnish business partners, iii) longer processing times by Finnish authorities and iv) most employees taking leave;
- Office hours in Finland are slightly different than the rest of the world and change according to the season. In general, offices open from 08:00-16:15 in the winter and from 08:00-15:15 in the summer.
- Our Clients find that employee management in Finland is costly and complex because:
- Finland has an extensive welfare system, due to which our Clients can end up paying up to 24.5% of gross amount of salaries in social security contributions;
- Employers find it difficult to negotiate wages because they are generally set by trade unions. Finland i) ranks 143rd in the world for a company’s ability to negotiate wages and ii) has a trade union density of 70%.
- Our Clients’ earnings in Finland will be greatly damaged by the ongoing crisis between Russia and Ukraine because:
- Finnish based businesses can be severely hurt from tensions between Russia and the EU because i) 16% of Finland’s total imports are from Russia and ii) Russia is a very important source of FDI in Finland – it invested €583 million in the last 10 years;
- Finnish businesses will face skyrocketing energy costs if Russia, the sole supplier of natural gas in Finland, decides to cut gas supplies;
- Our Clients’ businesses in Finland are unable to sell food products, to Russia because of the food embargo that Russia has imposed on the EU. Finnish food exporters are expected to lose up to €400 million due to this embargo. Future sanctions on both EU side and the Russian side are highly likely.
- It is extremely tough to acquire credit by the Finnish businesses because there is no public registry coverage in Finland and the coverage of the private bureaus in weak. Therefore, Finland is not an attractive centre for new business ventures.
- Company formation in Finland is easy because
Best uses for a Finland company
- Finland is an ideal place to start a tech company because:
- Finland-based tech companies can receive low interest loans of up to €1 million from the Finnish Funding Agency for Technology and Innovation (Tekes). Those eligible for funding are companies that i) have invested at least 15% of its costs in R&D during at least one of the previous three years, ii) are less than 6 years old, iii) have less than 50 employees, iv) have less than €10 million in annual turnover and v) have less than €10 million in assets;
- Our Clients can benefit from a 200% tax deduction on salary costs for R&D personnel, if the total annual salary costs are between €15,000 and €400,000;
- Our Clients need not worry about losing their best engineers and scientists to brain drain, because the well-educated and brightest Finns prefer to work in Finland itself. Finland is the 4th best country in the world when it comes to retaining talented workers;
- Finland is a great option for companies looking to innovate because it ranks 1st in the world for i) availability of latest technologies and ii) availability of scientists and engineers. In fact, science and technology occupations accounted for about 40% of the workforce in Finland in 2012;
- Although the market size of Finland is quite small with a population of only 5.4 million, Finns have a high purchasing power of US$47,000 per year per person.
- Finland is a great business hub in Northern Europe because:
- As the only Nordic country which is a member of the Eurozone, Finland offers our Clients a strong currency and no risks from exchange rate fluctuations when remitting Finnish income to other Eurozone countries. Furthermore, the country does not impose any exchange controls;
- Many EU multinationals use Finland as the gateway into Russia because of i) the rail link between the countries, ii) the historical trade link and iii) many employees in Finland speaking Russian;
- Our Clients will find it easy to communicate with their employees, as almost all Finns speak English, with very high proficiency. In fact, Finland ranks 4th in the world for English proficiency. Furthermore, many Finns can speak both Finnish and Swedish, as they are both considered national languages in Finland;
- Finland is an excellent distribution base for trading companies, as it boasts the 4th best infrastructure in the world. Amongst the Nordic countries, it has the best quality of roads, railroads, ports and air transport infrastructure;
- Our Clients find Finland the most cost-efficient country in Northern Europe to import/export, as the cost to export and import averages €480 per container;
- Dividends paid to EU holding companies from a Finnish subsidiary are legally tax exempt. Furthermore, the withholding tax of 20% on dividends paid to non-EU holding companies can be reduced by Finland’s broad network of 82 double tax treaties with countries including Canada, China, Singapore, UK and the United States;
- Our Clients can obtain loans and bank guarantees of up to i) €35,000 or ii) 50% of the required financing if the company needs more than €35,000, from the Finnish state owned financing company Finnvera;
- Our Clients can expect transparent and efficient transactions with the government since Finland is ranked the third least corrupt country in the world and the world’s fourth most competitive economy.
- Finland is an ideal place to start a tech company because:
Frequently asked questions
How many shareholders are needed for Finland business registration?For business registration in Finland, only 1 shareholder is required.
I am thinking about registering a company in Finland. Do I need to find a resident director?All Finnish companies require at least 2 directors, out of which at least 1 must be resident in the EEA. Healy Consultants will provide Clients with nominee director resident in the EEA if required.
Do I have to travel for registering a Finnish company?No, Healy Consultants does not require our Clients to travel for registering a new firm in Finland.
How long does it take for company registration in Finland?It takes on average 3 weeks to incorporate the company and another 3 weeks to open the corporate bank account.
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Useful links for Finland
Government and public authority websites:
- Finland Tax Authority
- Finland company name search
- Central Bank of Finland
- Finland Stock Exchange
- Finland Chamber of Commerce
- Finland airports
- Investing in Finland
- Doing Business in Finland – UHY
- Tax Aspects of Doing Business in Finland – PwC
- A Guide to Doing Cost Effective Business in Finland
- Finnish Corporate Governance Code 2010