BUSINESS IN FINLAND
Finland is a Scandinavian country in northern Europe with a moderately cold climate. It has been a member of the EU since 1995. Leaving behind the large-scale dependence on forestry and adopting an all-round industrialised economy, Finland has managed to become one of the most prosperous countries in Europe, with a high standard of living.
Business immigration to Finland is a great chance to integrate into European society and move abroad for permanent residence. Besides, if we take into account the negative tendencies of the last years, connected with migration crisis and growth of political tension, then in comparison with other countries, business in Finland is the most acceptable option for many foreigners.
In addition to economic factors, the country attracts the absence of corruption, high quality of education in Finnish universities and the level of social security of the population. In this article we will answer the question of how to open a business in Finland for a foreigner.
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How to start a business in Finland
In the annual ranking of DOING BUSINESS, which compares 190 countries worldwide in terms of accessibility of starting a business and the most favourable conditions for doing so, Finland ranked 20th. And among European countries it is the 8th place, though after its neighbours in the region, Norway and Sweden.
More than 90 per cent of Finland's business environment is represented by small businesses. These are over 250 thousand companies, of which about 6.5 thousand are opened by foreigners. There are no legal restrictions on doing business in Finland for citizens of other countries.
The only restriction for third country residents wishing to open a company is the need to obtain a special permit to stay in Finland as an employee or entrepreneur. Owning shares in a Finnish company will not qualify for a business visa.
The best option is to be officially employed in your own company in Finland and obtain a permit on this basis. The relevant application must be submitted through the Finnish Consulate in your home country. If the business plan is considered profitable and the candidate has enough funds for its implementation, the Finnish Migration Service will grant the foreigner a residence permit for a period of 1 year, with the right of further extension.
In case of successful operation of the company after 4 years it is possible to apply for a residence permit. If the founders of the company do not include any Finnish or European Economic Area (EEA) nationals, the authorisation of the General Directorate of Patents and Registrations (GDPR) will be required.
For more than 20 years there have been advisory organisations (TE Offices and ELY Centres) for start-up entrepreneurs, where you can take special courses on doing business in Finland. If you have a good business idea and experience in entrepreneurship, you can try to get state aid to cover the financial costs, which reaches up to 70-80 per cent of the required investment.
And the last thing that should be taken into account for effective business in Finland is the language and mental differences. You cannot do without it in any country.
Cost and procedure of company registration in Finland
Preparation and registration of incorporation and statutory documents.
Opening a company bank account and payment of the authorised capital.
Registration with the Commercial Register. Depending on the form of ownership, a fee is charged, up to a maximum of 380 euros. On the same application, registration in the Tax Office and Employers' Register takes place.
It is possible to carry out the whole procedure online. The company is then given an identification code, which will allow the use of the company's bank accounts until the registration procedure is completed.
Registration of employees in the insurance system: pension, accident, unemployment, health insurance.
Important. Special attention should be paid to the choice of a unique company name, also to increase the effectiveness of marketing strategy is allowed to register an auxiliary name.
In order to avoid problems with the regulatory authorities and to increase the confidence of business partners, it is necessary to specify the specific field of activity of the company when registering in the Trade Register.
In order to comply with tax and accounting legislation, it is necessary to hire a good specialist among local citizens or apply to a specialised accounting office.
Forms of business ownership in Finland
Depending on the type of business and the goals of the company, there is a wide range of business ownership forms in Finland. The most popular form of business ownership in Europe, the LLC, is not available in Finland. The Joint Stock Company is considered as an analogue.
The most popular forms of ownership are
Private entrepreneur (Tmi). This form is available for citizens of EEA countries. Otherwise, a permit from the State Administration of Public Administration is required. As practice shows, it is not easy to obtain authorisation. You can run a business on an individual or commercial basis.
The difference is that an individual entrepreneur works independently without hiring employees and under a simplified accounting system. Any type of private enterprise is exempt from audits, and the owner is responsible for financial obligations with all his property. The cost of registration is about 105 euros.
Joint Stock Company (Oy). Foreigners can register a company regardless of their country of residence, but one of the founders must have a residence permit in an EEA country. Otherwise, all participants will require authorisation from the SUEZ. The minimum amount of the authorised capital is 2,500 euros.
Liability for the obligations of the company within the limits of the invested funds. The cost of registration is 380 euros. Joint Stock Company is the only type of company that can be registered for one person. A family member can be appointed as a reserve co-founder.
It is also possible to register a Limited Partnership, a Co-operative and a branch of a foreign company in Finland.
Taxes in Finland
The percentage tax rates in Finland depend on the form of business ownership. Income tax is levied in advance and the balance is paid at the end of the accounting period if required. VAT is withheld on a monthly basis, regardless of the form of ownership.
Rates of main taxes in Finland in 2024
Corporate income tax – 20%
VAT:
General rate – 24%
Reduced rates – 14% (food, catering services), 10% (books, pharmaceuticals, some services) and 0% (gold bullion/coins, domestic and international transport).
In addition, Finland levies tax on the income of shareholders, private entrepreneurs and limited partnerships. Income is divided into labour and capital income. In the first case, a progressive tax rate is applied; the higher the income, the higher the rate. The rate of income tax on capital income is:
30% if income does not exceed 30 thousand euros
34% if the income exceeds 30 thousand euros
| Taxable annual income (thousands of euros) | Base tax | Rate on excess (%) | |
| 0 | 20.5 | – | 12,64% |
| 20.5 | 30.5 | 2,515 euros | 19% |
| 30,5 | 50.4 | 4,491 euros | 30,25% |
| 50.4 | 88.2 | 10,510 euros | 34% |
| 88.2 | 150 | 23,362 euros | 42% |
| Over 150 | 49,318 euros | 44% | |
Finland has municipal taxes on income at a flat rate of 4.36% to 10.86% (depending on the region) and a church tax of 1-2.1%.
Popular business destinations in Finland
Finland offers complete freedom of choice when choosing a business area, the main thing is to comply with the law. The only thing to consider is the need for licences for some types of business. For example, for restaurant business, trade in weapons, medicines, private medicine.
Among the popular areas for business in Finland are retail trade, rapidly developing market of IT-services, tourism, health care, manufacturing and innovative technologies, the development of which the country takes one of the leading places in the world. If you have sufficient funds, you can buy a ready-made business in Finland and continue its development.
Business visa to Finland
In order to carry out business activities in Finland, you need to obtain a business visa. You must apply in person at the Finnish Consulate in your home country.
Documents for a business visa to Finland
Visa application form.
A colour photograph (47x36 mm) taken at least 6 months old.
Health insurance valid on the territory of all Schengen countries with a coverage of 30 thousand euros.
Copies of all pages of the civil passport.
A foreign passport issued not later than 10 years.
Proof of financial solvency (certificate of employment, bank statement, third-party guarantees).
Official confirmation of business registration in Finland or a letter of invitation from a legal entity.
In some cases, the Finnish Consulate may require additional information. The visa fee is 25.8 euros. Finnish business visa issuance time is 8-9 working days.
