Company Formation in Finland
Company incorporation in Finland opens up important opportunities for trade and expansion within the EU. Finland has a strong tradition of international business, its business environment is used to working with companies worldwide. English is widely spoken and there is a high level of international contact.
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Advantages of company incorporation in Finland
Here are some of the main advantages of business incorporation in Finland.
1. It’s easy to do business
Finland consistently ranks first in global ease of doing business indexes. The country provides a transparent and efficient business environment with well-established rules and regulations.
2. Access to the EU single market
Finland is a member of the European Union, which gives businesses access to a single EU market of over 500 million consumers without any customs or trade barriers. This can be particularly useful for companies looking to broaden their market.
3. Strong economy
Finland has a rather developed economy, with a huge emphasis on technology, innovation, and research. It has many global tech giants and a strong startup ecosystem.
4. Low corruption
Finland consistently ranks as one of the least corrupt states in the world, providing a transparent and trustworthy business environment.
5. Tax benefits
Although Finland has a relatively high corporate tax rate compared to some countries, it offers tax incentives and deductions that can reduce the effective tax rate available to businesses. Also, the Finnish tax system perceives it as obvious and predictable.
Types of companies in Finland
Finland, like most countries, has a variety of companies to choose from. The type of entity chosen depends on different factors, e.g. the size of the business, its purposes, and the owners’ responsibilities. Here are some common companies in Finland.
In many other countries, equivalent to a limited liability company (LLC). It is a separate legal entity, and shareholders are only responsible for their investments. It is a popular solution for small and medium-sized businesses.
2. Avoin yhtiö:
An avoin yhtiö is a general partnership in which two or more persons or entities work together. In this partnership, the partners have unlimited personal liability for the company’s debts.
The Kommandiittiyhtiö is a limited partnership. It consists of at least one general partner with unlimited personal liability and one or more partners whose liability is limited to the investments in the partnership.
Osuuskunta is a cooperative, where members come together to pursue common economic interests. Each member has limited responsibilities, and decisions are generally made democratically.
This is a sole proprietorship, where a person uses his name or a registered business name. The owner has unlimited personal liability for the debts of the company.
6. Osakeyhtiö osuuskuntayritys:
This is a hybrid company that combines elements of Osakeyhtiö and an osuuskunta. It is designed for businesses with capital shares.
This is a branch of a foreign company operating in Finland. The operations of the branch are controlled by the foreign parent company.
The most popular options for Finland company formation are:
- the private limited liability company (yksityinen osakeyhtiö, Oy)
- the public limited liability company (julkinen osakeyhtiö, Oyj).
Requirements for formation a company in Finland
If you are in doubt about how to register a company in Finland, you should consider the following requirements.
1. At least 1 owner
In Finland, a limited liability company must have at least one owner. The owners are the shareholders of the company. The owner(s) can be an individual or a legal entity, and there is no maximum limit on the number of shares owned.
2. At least 1 Director and 1 Deputy Director
For a limited liability company, you should appoint at least one director. The director is responsible for daily processes. In addition, you must appoint at least one representative. The director and deputy director must be individuals, and must also be shareholders of the company.
3. Minimum share capital
Share capital is based on dividends issued to shareholders.
4. Articles of Association
The Articles of Association are the basic document that gives an understanding of the rules and regulations that apply to your company. This document should include the name of the company, objectives, business activities, number and types of shares, names of directors and deputy directors, and other important information about the internal operations and decision-making process
5. A bank account for transactions with the Finnish bank
To carry out transactions in Finland, you will need to open a commercial bank account with the Finnish bank. These accounts will be used for various financial transactions such as collecting payments from customers, paying suppliers, and managing the company’s finances
6. Registration with the Finnish Tax Office for tax purposes
Register your company with the Finnish Tax Office for tax purposes. If applicable, you will receive a VAT number.
Documents required to company formation in Finland
You need to provide various documents and information to start a business in Finland. They can be different depending on the type of workflow you choose. Here is a full list of the most common documents and information required for company formation in Finland:
1. Application for registration:
This is the main document for registration in the Finnish Business Register. The application should contain the name of the company, registered office address, business activities, directors, shareholders, and other necessary information.
2. Articles of Association:
In the case of a limited liability company, the Articles of Association refer to the internal rules and regulations governing the operation of the company. It should include information about purpose, share capital, shares, directors, and other key policies of the company.
3. Consent documents:
If you appoint a director or deputy who is not a shareholder or an authorized representative to act on behalf of the company, you may also need to include their written consent to serve in these roles.
4. Minutes of Board of Directors meetings:
Minutes of meetings of the Board of Directors must be recorded to reflect decisions on company formation, election of directors, and other important matters.
5. Identification documents:
All directors, agents, and shareholders must be provided with certain identification documents (e.g. passports, certificates).
6. Confirmation of address:
Proof of the registered office address, which can be a lease agreement or a certificate of domicile from the landlord.
7. Bank Account Maintenance:
A letter from the designated Finnish bank confirming that you have opened a commercial bank account for company incorporation in Finland.
8. Payment of registration fees:
Proof of payment of the registration fees, which varies by company type and other factors.
Our assistance in company registration in Finland
Fintech Harbor Consulting stands out as the ultimate solution for both novice and mature entrepreneurs who are questioning where to establish their business. As a professional fintech legal firm, here are compelling reasons that set us apart and make us the perfect choice for you with the process of Finland company formation:
Our lawyers have a deep understanding of the process of how to start new companies across various jurisdictions.
With extensive experience, we specialize in the registration of private enterprises, holding structures, representative offices, and subsidiaries.
We stand firmly by your side throughout the entire process. We assist you in selecting the most advantageous tax framework, obtaining essential licenses, and optimizing your operations for maximum efficiency.
Every decision and action we take is executed with your full awareness and consent. Your financial resources are treated with the same care and diligence as if they were our own, ensuring that we never impose unnecessary costs.
Beyond the initial company formation in Finland, we take immense pleasure in offering continued assistance as you navigate further into your commercial endeavors.
At Fintech Harbor Consulting, we’re not just a service provider; we’re your trusted partner in achieving business success.
Process of Registering a Company in Finland
Company registration in Finland involves a lot of steps, and it is important to follow legal requirements carefully. Here is a detailed description of the process:
1. Choose the company type
Select the type of entity you want to set up, such as Osakeyhtiö (Oy), Avoin yhtiö (Ay), or the other forms mentioned earlier. The choice depends on your business plan and goals.
2. Business plan
Develop a detailed business plan that states your goals, plans, products or services, and financial forecast. Complex business models are often required for the enrollment and funding stages.
3. Select a unique company name
Check the Finnish Business Registry for the name you have chosen. You can reserve your name by paying the required fee.
4. Registered office address
Provide a registered office address in Finland that is the official address of your company. If your company is not physically located in Finland, you should also have a Finnish contact or representative.
5. Share capital
Determine the required share capital of the selected company.
6. Articles of Association
Prepare the Articles of Association, including information about shareholders, business objectives, and other important information.
7. Bank account
Open a Finnish bank account for your business. You will need this to deposit the share capital you need forFinland company formation.
8. Submit the necessary registration documents to the Finnish Trade Register
This usually includes the Articles of Association, information about shareholders and board members, and detailed business information.
9. Registration fee
Pay a registration fee, which can vary depending on your company type and share capital.
10. Tax registration
Register with the Finnish Tax Administration and obtain a Business ID.
Trade Register in Finland
Kaupparekisteri is the Trade Register in Finland. It’s a government-run registry where businesses and organizations must register to operate legally in the country. The Trade Register is administered by the Finnish Patent and Registration Office (PRH), which is the official body for the registration of names and intellectual property.
Registration with the Finnish Trade Register is compulsory for most new businesses. This consists of sending a Start-up Notification in Finnish or Swedish. The recording must be captured by submitting it to the National Board of Patents and Registration contributions offices or mailing it to the postal box used by the NBPR and the Tax Administration.
Business Environment in Finland
Finland has a stable political system and a history of social and political consensus. This stability provides businesses with a secure base from which to operate.
Finland offers a good business environment known for its stability, innovation, and competitiveness. It is a particularly attractive area for companies in technology, innovation, and clean energy.
Finland has a reputation as an easy place to do business, with a professional workforce and clear legal framework. The World Bank consistently ranks Finland at the top of its “business fragility” index.
As a member of the European Union (EU) and the Eurozone, Finland provides access to a vast single market with more than 500 million people. It also has strong trade relations with neighboring countries.
Taxation for companies in Finland
Taxation for companies in Finland is determined by Finnish tax laws and regulations, businesses need to understand the tax system to ensure compliance. Here’s an overview of the main tax items that apply to companies in Finland:
- The corporate income tax rate in Finland is 20%. However, tax rates can change, so verifying current tax rates is important.
- Dividends received by a Finnish company from another Finnish company are generally exempt from corporate income tax in certain circumstances. Dividends received from foreign companies may be taxable, but tax treaties can generally reduce or eliminate withholding taxes.
- Finland has a fixed VAT rate, which is usually 24%. There are also reduced VAT rates (14% and 10%) applied to specific goods and services. VAT returns must be filed regularly, usually monthly or quarterly.
- Different types of payments to non-Finnish residents include dividends, interest and royalties. Taxes charged may vary depending on the tax treaty between Finland and the host country. In some cases, withholding tax can be reduced or eliminated through tax treaties or EU directives.
Important financial considerations and reporting requirements
After your company has been registered, you have new reporting obligations. Your reporting obligation starts from the beginning of your first requested tax registration day. Tax registrations like VAT and employer registers bring obligations to submit monthly returns. Even if the company has not started the business or has not any transactions or salaries yet, it still has obligations. Also, an enterprise must submit an annual report and tax return once a year.
The cost of company registration in Finland can vary depending on many factors. For example, the type of office you choose, legal and administrative costs, and what other services you may need. Generally, the cost of starting a business in Finland can range from a few thousand euros to several thousand euros. This is based on costs under a project. For example, taxes, permits, legal fees, renting office space, or buying equipment.
It takes on average three to six weeks to register company in Finland.
It’s advisable to seek legal and financial advice when starting a business in Finland. This process can be complex, and requirements may change over time.
Finland is indeed a business-friendly country. It provides a rather stable and transparent business environment with a very low level of corruption and a strong rule of law. Finland’s EU membership gives it access to Europe’s largest single market. This provides a huge advantage for companies looking to broaden their business across the continent. Also, although the tax rate in Finland is relatively high, it provides tax incentives for businesses involved in research and development and other manufacturing activities.
Yes, foreign investors and non-residents can open a company in Finland. Finland has a business-friendly environment that welcomes foreign investment. You do not need to be a Finnish citizen or resident to establish a business in the country.
The minimum share capital for a private limited company is €2,500. The minimum share capital for a public limited company is €80,000.
Contact us now
*Your contact information will be used for our inner purposes and only with the aim to provide you with the best business solutions.