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Do you have plans for doing business in Finland?

Tips for International companies entering the Finnish market.

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What should I consider when setting up business in Finland?

Expanding into a foreign country for business can be tricky. Reporting obligations, registrations and other compliance requirements can cause confusion. It’s often helpful to acquire a local specialist to help meet all the compliance needs and to explain basics of Finnish business requirements.

Things you should consider:

  • company registration obligations
  • social security liabilities
  • payroll and accounting needs
  • choosing a legal entity

Azets is here to help you every step of the way to ensure that your operations will run smoothly from day one.

Company registration

There are several registers that might be statutory for your company and should be checked before you can start your operations in Finland:

  • Trade register
  • Prepayment tax register
  • VAT register
  • Employer register

The requirements to register for each register differ. You should check with each register and their respective authority if you are needed to register. Alternatively, Azets has specialists who can help you determine the needed registrations.

Social security insurances

Finland has statutory insurances for companies who have employees in Finland. These social security expenses are similar to other countries and include, among other things:

  • Pension insurance
  • Unemployment insurance
  • Accident insurance
  • Group life insurance

The cost for these are stipulated by the government, so they are the same no matter from which insurance company they are taken from. Azets has established channels for taking these on our customers’ behalf.  The process is quick and, most importantly, in place from day 1.

Electronic filing

Suomi.fi registration is a secure sign-in service for electronic filing with the Finnish Tax Administration and the Social Insurance Institution (Kela). With the registration you are able to handle your matters electronically and avoid the need for paper forms. The process of obtaining and using it is detailed and complicated as the government primarily works in Finnish and Swedish. The most convenient and efficient way of filing reports is to let Azets do it.

What legal entity should I choose?

Choosing the legal entity may not seem like a big decision after you have decided to expand into Finland, but each option should be carefully considered. Here we have presented the three most common options for an international company: operating as a foreign business in Finland, establishing a branch or setting up a subsidiary. Read more below by clicking open the description for each option.

Things to consider when making a decision

How should you go about choosing a suitable form of operations? One of the biggest questions is usually tax liabilities as they can prove to be major expense for a company. This is why assessing whether you would have a permanent establishment in Finland or not is critical. In addition to PE assessment, there are several variables to be considered:

  • How large operations are you planning to have? For how long would you operate in Finland?
  • Do you plan to have personnel? What are the possible collective bargaining agreements and social security and insurance liabilities?
  • Are you planning on major expansion or just minor presence?
  • Company tax rate: should the competitive Finnish 20 % tax rate be utilized in your business somehow?
  • What are the key risks of your business and industry? Is there a need for separate legal entity?
  • Who are your clients: consumers, companies or both?
  • Do you have the need to participate in public procurement?
  • What is the applicable tax treaty between your place of residence and Finland?
  • What are your group policies?
  • Your capital structure: is your business based on own capital and profits or debt capital?
  • How is the capital transferred within your group: dividends, loans, interests, intra-group policies?
 
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Do I need an auditor for my ltd company?

A company needs to have an elected auditor if two of the following three requirements are met:

  • yearly turnover exceeds 200.000 Eur
  • total balance exceeds 100.000 Eur
  • three or more employees

Did you know that in Finland, your accounting partner does not provide auditor services due to legislative reasons?

What is my company’s VAT number?

In Finland, there is only the business ID which is also the VAT number. You can look up your company’s business ID and other public information here.

Can I use my local insurance company?

No, the statutory insurances have to be taken in Finland. Any additional insurance can be taken elsewhere, but remember to that these may be considered to be taxable benefits.

 

Even though there is a lot to think about, you are not alone. Azets will be happy to assist you in these questions and much more to ensure compliance and controlled expansion. Our tax and legal experts are at your service in all stages of expansion. We also help you assess whether you possess the risk of a PE.

Read about our legal services

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Azets quickly understood our tax and legal consulting needs and provided us with a Finnish analysis that was appropriate for our situation without delay,

François Bonnet, Group Head of Tax at Bouygues Construction. 

Read how Azets tax and legal counselling services helped the Energies & Services division of Bouygues Construction gain considerable advantages.

Contact us

Please contact us to discuss how we can help you getting smooth and reliable accounting, payroll, legal and HR services for your business in Finland.

Tel. +358 10 756 4500

 

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