How to Do Business In Finland?

Doing business in Finland is facilitated by a stable, transparent, and business-friendly environment known for its high level of innovation and highly educated workforce.

Here is a guide focusing on the necessary steps, legal structure, and cultural context for a foreign company or entrepreneur.

I. Legal Framework and Entity Selection

Finland generally welcomes 100% foreign ownership. The most common legal forms for foreign businesses are:

Key Regulatory Requirements for an Oy:

• Board of Directors/Management: Must have at least one board member. At least one board member or the managing director must be a resident of the European Economic Area (EEA). If not, a separate permit from the Finnish Patent and Registration Office (PRH) is required.
• Registered Office: The company must have a registered office in Finland.

II. Steps for Company Formation (Oy – Private Limited Company)

The registration process is typically handled through the Finnish Patent and Registration Office (PRH) and the Finnish Tax Administration using the joint online Business Information System (BIS/YTJ).

1. Develop a Business Plan: A detailed business plan is essential, especially if seeking a startup grant, residence permit, or external funding.
2. Choose and Reserve the Company Name: Verify the name’s availability and distinctiveness through the PRH.
3. Draft Incorporation Documents: Prepare the Memorandum of Association and Articles of Association. Standard templates are available from the PRH.
4. Open a Business Bank Account: You must open a Finnish corporate bank account. This account is where any required share capital (if set) is deposited.
5. Submit the Start-Up Notification:
   • File the notification (Form Y) with the PRH through the online service or by paper.
   • Attach the required documents (Memorandum, Articles, Board statement, etc.).
   • Pay the registration fee.
6. Obtain a Business ID: Once registered, the company receives a unique Business ID (Y-tunnus) which is used for all official dealings.
7. Register with the Tax Administration:
   • Prepayment Register: To ensure taxes are handled correctly.
   • VAT Register: Mandatory if the annual turnover is expected to exceed €15,000 (check current threshold).
   • Employer Register: Mandatory if the company regularly employs staff (e.g., two or more permanent employees).

III. Taxation

• Corporate Tax Rate: 20%, which is one of the most competitive in the Nordics.
• Value-Added Tax (VAT / Arvonlisävero):
  • Standard rate is 24%.
  • Reduced rates apply to certain goods (e.g., 14% for food, 10% for books, cultural services, and transport).
• Transfer Tax: Applies to the acquisition of shares (1.5%) and real estate (3.0%).

IV. Foreign Investment and Permits

• Entrepreneur Residence Permit: Non-EU/EEA nationals intending to work in their new company in Finland for longer than 90 days must apply for an Entrepreneur’s Residence Permit from the Finnish Immigration Service (Migri). This requires a viable business plan and proof of financial resources.
• Screening of Corporate Acquisitions: While generally open, Finland has a Foreign Direct Investment (FDI) screening mechanism for acquisitions of Finnish entities in defence, security, and other critical sectors (e.g., vital societal functions).
  • Acquisitions of ≥10% of voting rights in a defence/security company require mandatory notification.
  • Acquisitions in other critical sectors by non-EU/EFTA buyers have an optional notification system.

V. Finnish Business Culture and Etiquette

Finnish business culture is marked by professionalism, efficiency, and a lack of overt hierarchy.