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Incorporation

Setting up a company in Finland

When setting up a company you may want to consider these factors:

  1. Business Factors

    • The industry and type of business
    • Nationality of headquarters/individuals
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Regional Language

    Regional Language may be an important consideration. An overwhelming majority of Finnish citizens speak Finnish as their primary language, with a small minority speaking Swedish. There is minimal fragmentation of languages between regions, where Finnish largely dominates, while English is also one of the primary foreign languages with around 70% of Finnish citizens having a basic to proficient understanding of English.

Your Options

The process of incorporation is relatively straightforward in Finland, as the Finnish legislation on incorporation encourages foreign investors to do so with ease. The procedures are similar to most countries in the EU. The laws pertaining to incorporation in Finland is regulated by the Limited Liability Companies Act. There are broadly three categories of business entities that may be assumed by foreign companies:

  • Limited Liability Company
  • Limited Partnership
  • Branch, Subsidiary or Representative Office

This page provides a general guideline for foreign businesses on entering Finland for business purposes. In particular it looks at common pathways to establishing a business presence in Finland, generally through a representative office, branch office or establishment of a legal entity. Various economic, tax and regulatory facts are provided throughout as a source of useful information to assist those who will enter the Finnish economy.

Limited Liability Company

PLC

The Limited Liability Company (LLC) in Finland may be private (osakeyhtiö-Oy) or public (julkinen osakeyhtiö-Oyj), where private LLCs may not trade their shares on the stock exchange, whereas the public companies have the ability to do so. This is the most common form of incorporation for foreign firms entering Finland.

Capital Requirements

Private Limited Liability Company: €2,500

Public Limited Liability Company: €80,000

Management Structure

In private LLCs, the management is assured by at least one manager. Major decisions for the firm’s future are made during the general meeting of the shareholders.

In public LLCs, the management must be assured by a management board that is composed of more than 3 members, where more than half must be EEA residents. A managing director is required if the invested capital exceeds €80,000.

Process of Registration

  • A bank account must be opened with proof that the minimum share capital was deposited into the banking institution.
  • The following documents must be submitted to the banking institution to obtain a certificate of verification or receipt that the capital has been deposited:
    • Foundation deeds
    • Memorandum of association
    • Description of the company’s business
    • Description of the company’s banking activity
    • Information of the shareholders and directors
    • Notarized copies of passports for bank account users
  • An application known as the Start-up Notification of a LLC is lodged to the National Board of Patents and Registration and the Tax Administration, which streamlines the business registration process. This must be done three months from the signing of the memorandum of association.
  • The following documents must be accompanied with the application:
  • All relevant documents are submitted to the Finnish Trade Register along with the proposed business name to check violations of existing names or trademarks.
  • The company then registers for pension insurance, accident insurance and medical insurance at any pension provider.

Documentation Required

  • Notarized copies of passports for authorized bank account holders
  • Foundation deeds
  • Memorandum of association
  • Description of the company’s business
  • Description of the company’s banking activity
  • Information of the shareholders and directors
  • Declaration of incorporation under the Finnish Limited Liability Companies Act
  • Certificate from auditors confirming the shares under the LLC Act.

Costs

Fee for Start-up Notification: €380

Average total fees: €11,855

Time

Minimum 14 days up to 10 weeks

Limited Partnership

The limited partnership is formed by an agreement between two partners. The extent of liability for the partners depends on the type of partnership it is: general or limited. Although partnerships are fairly common in Finland, they are not used as often as a method of incorporation for establishing a business in Finland from overseas.

 

The limited partnership arrangement in Finland may be registered by two or more individuals or legal entities, and may be either a General Partnership or Limited Partnership. In a General Partnership (avoin yhtiö-Ay), at least two members, or general partners, are involved in the establishment and incorporation of the business, with all members equally responsible for debts, liabilities and profits. In the Limited Partnership (kommandiittiyhtiö,-Ky), one partner assumes the role of general partner who executes all decisions and may claim all profits, while the limited partner remains ‘silent’, has no decisional power or claim on profits, but is entitled to a return for their investment. The limited partner is only liable to the extent of their contribution to the business.

 

Capital Requirements

There are no capital requirements in a partnership arrangement.

Management Structure

There are no formal requirements for management. However, the general partner has the power to intervene in the company’s management and exert authority over managers, while limited partners may not do so.

Process of Registration

  • A bank account must be opened
  • The following documents must be submitted to the banking institution to obtain a certificate of verification or receipt that the capital has been deposited:
    • Foundation deeds
    • Memorandum of association
    • Description of the company’s business
    • Description of the company’s banking activity
    • Notarized copies of passports for bank account users
  • An application known as the Start-up Notification of a LLC is lodged to the National Board of Patents and Registration and the Tax Administration, which streamlines the business registration process. This must be done three months from the signing of the memorandum of association.
  • The following documents must be accompanied with the application:
  • All relevant documents are submitted to the Finnish Trade Register along with the proposed business name to check violations of existing names or trademarks.
  • The company then registers for pension insurance, accident insurance and medical insurance at any pension provider.

Documentation Required

  • Notarized copies of passports for authorized bank account holders
  • Foundation deeds
  • Memorandum of association
  • Description of the company’s business
  • Description of the company’s banking activity
  • Information of the shareholders and directors
  • Declaration of incorporation under the Finnish Limited Liability Companies Act
  • Certificate from auditors confirming the shares under the LLC Act.

Costs

Fee for Start-up Notification: €380

Average total fees: €11,855

Time

Minimum 14 days up to 10 weeks

Branch Office

A branch office (sivuliike) may be established by the foreign business that operates under the company name while carrying out regular business activities. Foreign companies may find this option attractive as it provides greater exercise of control over business operations, while business functions like accounting, HR and tax do not become burdensome.

A branch office may engage in any function that the parent company engages in as stipulated in the corporate rules, as long as the activities of the branch are permitted by Finnish law and regulations. The wide range of activities available to branches makes it an advantageous method of establishing a business presence in Finland.

Branch offices must be registered with the Finnish Trade Register under the Trade Register Act, which details provisions on the compulsory registration and disclosure of annual accounts of the foreign company.

Companies from the EEA may establish branch offices by simply submitting a notification to the Finnish Trade Register. Countries from other regions must apply through the National Board of Patents and Registration as well.

A Finnish resident must be appointed as the domestic representative of the branch with authority to act on the company’s behalf. A board of directors is not required, although the foreign company is still liable for all debts and obligations of the branch, nots imply the invested capital.

 

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Finland, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Finland they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Finland
  • the company needs help with tax, employment, immigration and payroll compliance in Finland

The complexity of employment regulations in Finland makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Finland allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Finland.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Finland. Read more about outsourced employment through Shield GEO.

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