Doing business in Finland
Finland is a great place to do business. It has a thriving economy and a well-educated workforce. The country also offers tax advantages for businesses, and its rankings in terms of global competitiveness are impressive. If you're thinking about doing business in Finland, this guide will tell you everything you need to know!
Company formation in Finland
If you're thinking of starting a business in Finland, you need to know about the country's company formation process. In Finland, the most common way to form a company is to register as a limited company. To do this, you need to create a company charter and file it with the Trade Register.
The registration process can be complex, and there are several steps that you need to take. You'll need to choose a company name, draft your company's articles of association, and appoint directors and shareholders. You'll also need to decide on a business structure and register for tax purposes.
The good news is that there are several companies that can help you with the company formation process. These companies can help you with everything from drafting your company charter to registering with the Trade Register.
Furthermore, Finland is a highly digitalized nation which makes that many business processes can be done online.
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Business opportunities in Finland
Finland is a great place to do business, thanks to its thriving economy and well-educated workforce. In addition, the country offers tax advantages for businesses, and its rankings in terms of global competitiveness are impressive. If you're thinking about doing business in Finland, these are some of the sectors you should consider:
- ICT sector
- Cleantech sector
- Healthtech sector
- Food and beverage sector
- Retail & e-commerce sector
Finland & e-commerce
Finland is a great place for e-commerce businesses, with over two-thirds of the population shopping online.
This makes Finland one of the most e-commerce-friendly countries in Europe. In fact, Finland is one of the leading countries in the world for e-commerce penetration.
There are a number of reasons why Finland is such a great place for e-commerce businesses. Firstly, the population is highly digitally engaged, with well over 90% of Finns having access to the internet. Additionally, Finnish consumers are willing to spend money online, with e-commerce sales making up a relatively very high percentage of retail sales in the country. Finally, Finland has a well-developed digital infrastructure, with high levels of internet and broadband penetration. This means that Finnish consumers have easy access to high-speed internet, which they use to shop online. As a result, e-commerce businesses can expect high levels of engagement from Finnish consumers.
If you're planning on setting up an e-commerce business in Finland, there are a few things you need to know. Firstly, you'll need to choose a suitable e-commerce platform. There are a number of different platforms available, each with its own advantages and disadvantages. You'll need to consider your specific needs and requirements when choosing a platform. Secondly, you'll need to set up a payment gateway. Finnish consumers are comfortable using a variety of different payment methods, including credit cards, debit cards, and online banking. You'll need to choose a payment gateway that supports the payment methods you want to offer. Finally, you'll need to ensure that your website is optimised for Finnish consumers. This means making sure that your website is available in Finnish and that it includes relevant local content.
By following these steps, you can set up a successful e-commerce business in Finland.
Challenges of doing business in Finland
Although there are many opportunities for businesses in Finland, there are also some challenges that you need to be aware of. One of the biggest challenges is the country's geographical location. Finland shares a long border with Russia. Furthermore, Finland is not the most centrally located country in Europe.
Another challenge for businesses in Finland is the country's small market size. The population of Finland is only about 5.5 million people, which can make it difficult to reach a large number of consumers. On the other hand, Finland is part of the EU and euro system, which gives it full access to the European markets.
Finally, businesses in Finland need to be aware of the country's strict labor laws. These laws can be challenging to navigate and can lead to higher labor costs.
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Tax & accounting in Finland
In Finland, the most common way to account for your business expenses and income is through bookkeeping. You'll need to track all of your income and expenses, and submit regular reports to the tax authorities.
There are two main ways to do bookkeeping in Finland: cash accounting and accrual accounting. Cash accounting is simpler, but it only applies to businesses that trade in goods. Accrual accounting is more complex, but it can be used by businesses of all sizes.
In Finland, you're required to use either cash accounting or accrual accounting. You can't mix and match these methods, so you'll need to choose one or the other.
One thing to note is that Finnish businesses are required to file their financial statements with the tax authorities every year. The financial statements must be prepared in accordance with Finnish GAAP (generally accepted accounting principles).
Tax system for businesses in Finland
The tax system for businesses in Finland is relatively complex. There are several different taxes that businesses need to pay, including corporate income tax, value-added tax (VAT), payroll taxes, and land taxes.
In addition, companies doing business in Finland are subject to EU directives on taxation. This means that they're required to comply with certain rules and regulations regarding taxation. For example, companies are required to charge VAT on all of their sales, regardless of where they're located in the EU.
One thing to note is that the corporate income tax rate in Finland is relatively low at 20%. Especially compared to its Nordic peers! However, there are also a number of tax incentives available for businesses in Finland. These include deductions for research and development expenses and investment credits.
Finland’s tax advantages for businesses
There are several tax advantages available for businesses in Finland. These include deductions for research and development expenses and investment credits. Additionally, the corporate income tax rate in Finland is relatively low at 20%. A few others worth mentioning:
- Loss carry forward up to 10 years
- Group companies may even out their taxable profits and losses (Group contribution)
- Tax free dividends to parent company if both companies are in the EU/EEA area
- Capital gains from the sales of shares are with some exceptions tax free (Participation exemption)
- No surtax or wealth tax
- Real estate tax is set by the local municipal (range 0,93%–2,00%)
- Wide tax treaty network in order to eliminate double taxation
- Predictable interpretation of Transfer Pricing Guidelines rules (OECD, all methods accepted)
- VAT tax rates: 24% (standard rate), 14%, 10%
- Exceptions from VAT (VAT 0%): social, healthcare, medical services, public education and similar services, financial and insurance services
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Finland in Business rankings
In terms of global competitiveness, Finland ranks highly in a number of important categories. In the World Economic Forum's Global Competitiveness Report, Finland was ranked 5th overall out of 137 countries. The country's strongest areas were its institutions (2nd), infrastructure (4th), technological readiness (5th), and market size (12th).
Finland also ranks well when it comes to innovation. In the Global Innovation Index, Finland was ranked 8th overall out of 130 countries. The country's strongest areas were its creativity (3rd), knowledge-intensive services (4th), and company spending on R&D (5th).
Opening a Business Bank account in Finland
Opening a bank account in Finland is relatively straightforward. All you need is a valid passport or ID card, and proof of your address. You'll also need to provide some basic information about yourself, such as your name, date of birth, and occupation.
The process usually takes around 15 minutes, and you can usually start using your new bank account immediately. There are a number of different banks operating in Finland, so you'll be able to find one that suits your needs. Finland is part of the EU and therefore has strict KYC/AML procedures. Therefore, foreign entrepreneurs can expect longer waiting times at the banks. This is the case, particularly if the business owner is not a resident of Finland.
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Visa and relocation to Finland
If you're an EU citizen (including Norway and Iceland), you don't need a visa to live and work in Finland. You can simply move to Finland and start working immediately. As an EU citizen, you also have the right to freedom of movement, which means you can travel and work throughout the EU without any restrictions. You should however register yourself with the Finnish authorities if you are staying longer than 3 months. However, this is just a formality. That last requirement does not apply to citizens from the other Nordic countries (Sweden, Norway, Denmark and Iceland).
If you're not an EU citizen, you'll need to apply for a visa before moving to Finland. The process can be a bit complicated, so it's best to consult with the Finnish embassy or consulate in your country.
Once you have your visa, you can move to Finland and start working. However, note that as a non-EU citizen, you won't have the same rights as EU citizens. You won't be able to travel and work throughout the EU without restrictions, and you may also need a separate work permit.
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Legal compliance in Finland
When doing business in Finland, it's important to have solid contracts in place. This will help protect both you and your business partners in the event of a dispute. There are a number of different types of contracts you might need, including:
- Shareholders Agreement. This is an agreement between shareholders setting out the rights and responsibilities of each party. This is particularly important for businesses with multiple shareholders.
- Employment Contract. An employment contract sets out the terms and conditions of an employee's job. It's important to have a written contract in place, as this will help avoid any confusion or misunderstandings down the road. According to the Finnish Employment Contracts Act, an employer must provide employees with a description of the most essential terms and conditions of employment if they are not indicated on a written employment contract.
- Sales Contract & terms and conditions. A sales contract is used when selling goods or services to another business or individual. It's important to include all the relevant information, such as the product or service being sold, delivery dates, and payment terms. The terms and conditions describe all terms that always apply to each sale and customer contact.
- GDPR. This body of privacy laws imposes significant new obligations on companies doing business in the EU, including requirements to get explicit consent from customers before collecting, using, or sharing their personal data. Companies that violate the GDPR can receive hefty fines.
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Office space and real estate in Finland
If you're looking for office space in Finland, you'll have a number of different options to choose from. The most popular options are coworking spaces and serviced offices. Coworking spaces are great for entrepreneurs and small businesses, as they offer a flexible and cost-effective way to get started. Serviced offices are ideal for larger businesses, as they come with all the amenities you need including office furniture, meeting rooms, and administrative support.
The corporate real estate market in Finland is quite active, with plenty of choice for both tenants and landlords. The average lease length is around five years, although this can vary depending on the type of property. As with most countries, the office market in the capital, Helsinki, is more active than elsewhere in Finland.
If you're looking for corporate real estate in Helsinki, there are a number of things to consider. Firstly, you'll need to decide what type of property you need. The most popular options are:
- Office space
- Warehouse space
- Commercial land
- Retail space
- Hotel or hospitality space
Once you've decided on the type of property you need, you'll need to decide on the size and location. It's also important to think about your budget and what amenities you require. For example, do you need parking spaces or meeting rooms?
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Hiring employees in Finland
When hiring employees in Finland, you'll need to follow the country's employment law. This covers everything from the minimum wage to holiday entitlements. The most important thing to remember is that you must always provide employees with a written contract, as this will outline their rights and responsibilities.
The Finnish Employment Contracts Act sets out the following mandatory provisions which must be included in an employment contract:
- The employee's job title
- The start date of the contract
- The employee's place of work
- The working hours
- The salary and any other pay arrangements
- The duration of the contract (if it's not permanent)
- Any special provisions that apply to the employee
In addition, an employer must provide employees with a description of the most essential terms and conditions of employment if they are not indicated on a written employment contract. This document must include information on:
- Holidays and vacation entitlement
- Sick leave entitlement
- Maternity/paternity leave entitlement
- Minimum wage
- Overtime and night work arrangements
- Other fringe benefits
Why do business in Finland?
There are many reasons why you might want to do business in Finland. Finland might not be your first choice if you are looking at the European map. However, the country is highly digitalized, which makes doing business processes easy. Furthermore, the country has a low corporate income tax rate, and a number of tax incentives available for businesses. Finland also ranks well in terms of global competitiveness and innovation. And finally, the standard of living in Finland is one of the highest in the world. The excellent healthcare system, renowned education system and great social facilities, could make Finland a great place to relocate to.
