Company registration in Finland

The first step involves crafting a business concept. It's essential to meticulously refine this idea, assess market opportunities, analyze competitors, and pinpoint the intended customer base. The business concept should be both innovative and feasible, capable of consistently generating revenue.

The next critical step is crafting a business blueprint. This blueprint should encompass:

• Detailed elucidation regarding the merchandise or provision, the demographic it caters to, and its competitive edges.
• Marketing strategy: promotion plan, competitor analysis and sales strategy.
• Financial plan: forecast of income and expenses, possible sources of financing and assessment of profitability.

It's important to also take into account all legal and regulatory obligations relevant to the sector where the organization will operate. For example, enterprises in the food sector must adhere to the stipulations of the Consumer Protection Act and the Food Products Act.

To successfully register a business in Finland, it is important to obtain professional advice. The main sources of help may be:

• Finnish business development agencies: free consultations on registration, business plan development and financial planning.
• Centers for Economic Development, Transport and the Environment: advice on business development, innovation and finance.

Financial planning is a critical aspect of preparation. It is essential to identify sources of funding such as own capital, bank loans, grants, or investments. In Finland, various support programs for startups are available, encompassing funding from Business Finland and the EU. For instance, the Business Finland program provides grants for innovative projects and international market entry.

To start a company in Finland, you will need to prepare and provide the following documents:

• Articles of Association: the main provisions of the company, encompassing the goals of its activities, authorized capital and rights of participants.
• Memorandum of Association: a signature document from the company's founders attesting to their intention to establish a business and their consent to the rules set forth in the articles of organization.

These documents must be prepared in accordance with Finnish legislation requirements. When submitting paper documents, they must be notarized and presented along with the application to the Trade Register.

If electronic filing is not possible, the application can be submitted on paper. To do this you need:

• Download forms and templates: all required forms are available on the website of the Finnish Patent and Registration Office (PRH).
• Fill out the forms: enter all the required data, similar to those indicated during electronic registration.
• Attach documents: attach the Articles of Association and the Memorandum of Association to the application.
• Submit application: forms and documents are sent by mail to the PRH office.

The paper application process can take two to four weeks, which is longer than electronic filing.

The initial step in establishing a business in Finland is registration in the Trade Register, overseen by the PRH. All legal entities, including LLCs, general and limited partnerships, as well as cooperatives, are required to undergo registration. Sole proprietors can register voluntarily unless mandated by the Accounting Act or if they reside outside the European Economic Area.\

The process of registering a company through the Trade Register can be completed either online via the YTJ system or on paper. Electronic registration is preferable as it is faster and more convenient.

Electronic registration steps include:

• Creating an account in the YTJ system.
• Filling out an electronic form indicating all data about the company.
• Attaching the required papers such as the Articles of Association and the Memorandum of Association.\
• Payment of the registration cost.

The type of business and the manner in which the application is submitted determine the registration fee. For the year 2024, registering an LLC costs 275 EUR for online submission and 380 EUR for submitting by mail. These fees cover the handling of documents and the registration of the business in the Trade Register.

Companies engaged in the production, sale, or distribution of food products and agricultural commodities must register with registries managed by the Finnish Food Authority. For instance, enterprises dealing with feeds, fertilizers, and seeds are required to undergo registration in the respective registries.

Businesses engaged in activities with substantial environmental impact, such as manufacturing, processing, and disposal, must enroll in environmental registries. These registries are overseen by the Finnish Environment Institute, ensuring compliance with environmental regulations and criteria.

The Board of Directors serves as the supreme governing authority within an LLC, tasked with providing strategic direction and supervising the company's activities. Depending on the company's size and its articles of association, specific criteria are set for the makeup of the board.

• Composition of the board: at least one director and one deputy. For larger companies, a more diverse composition is recommended to ensure different perspectives and experiences.
• Board elections: board members are elected during the annual shareholders' meeting. The tenure typically lasts for one year, with the option for reelection.
• Oversight of the company's activities, execution of pivotal choices, endorsement of yearly and monetary statements, selection and supervision of the CEO.

The chief executive officer oversees the daily operations of the organization, executes the strategic directives of the board, and reports to the board.

• Appointment of the CEO: the board appoints a CEO, who may be a member of the board or an independent person.
• Responsibilities of the general director: operational management of the company, compliance with legislation and internal regulations, implementation of strategic tasks set by the board.

The appointment of an auditor is mandatory for certain types of companies in Finland. The auditor ensures the accuracy and transparency of the company's monetary statements.

• Audit requirements: mandatory for medium and large companies, as well as for companies that meet at least two of the following criteria: assets over 100,000 EUR, turnover over 200,000 EUR or an average annual number of employees more than three.
• Procedure for appointing an auditor: the auditor is selected at the general meeting of shareholders. The main criteria are independence and appropriate qualifications.
• Responsibilities of the auditor: checking the company’s financial returns, confirming their reliability and compliance with the law, providing a report to the board and shareholders.

The company tax tariff in Finland is 20% of a company's taxable revenue. This rate is among the most optimal in Europe, making Finland an attractive jurisdiction for establishing businesses.

• Object of taxation: encompasses income from the company's main activities, investment income and capital gains.
• Deductible expenses: businesses can deduct most operating expenses, including salaries, rent, marketing and professional services.
• Corporate tax is paid based on an annual tax return, which must be submitted to the Finnish Tax Administration (Vero). The due date for submitting the declaration is four months after the end of the fiscal year.

VAT is a crucial component of the Finnish taxation structure and is applicable to all products and services, excluding specific favored categories.

• In Finland, the customary VAT tariff is 24%.
• Special rates: reduced charges pertain to particular goods and services. For example, for groceries and pharmaceuticals, the VAT percentage is 14%, while literature, periodicals, and transit services are levied at 10%.
• Registration threshold: entities must enroll with the VAT registry if their yearly revenue surpasses 15,000 EUR. Enrollment occurs via the YTJ system concurrently with company establishment.
• Deadlines for filing returns: VAT returns are submitted monthly or quarterly, depending on the company’s turnover. The deadline for filing the declaration is the 12th day of the month following the reporting period.

Employers in Finland are required to make compulsory payments, which encompass contributions for retirement benefits, workplace injury insurance, medical insurance, and joblessness insurance.

• Pension contributions: TyEL (employer's pension insurance) contributions make up about 24% of an employee's salary, of which the employer pays about 16.95% and the employee about 7.15%.
• Work accident insurance: premium rate varies depending on industry and risk level, but averages 0.8% of wages.
• The health insurance premium is approximately 1.34% of salary and is paid entirely by the employer.
• Jobless benefits: the employer's contribution is 0.5% of salaries and the employee's share is 1.5%.

If you plan to hire employees from outside the European Union or the European Economic Area, obtaining work visas and permits is necessary. Work visas in Finland vary depending on the type and duration of employment. Temporary work visas are issued to seasonal workers, while long-term visas are intended for highly skilled professionals.

Filing an application with the Finnish Immigration Service is the initial stage in the procedure of getting a work visa. The employment circumstances should satisfy national prerequisites, and the employer should demonstrate that the position could not be filled by national experts. Work permits are given in compliance with work contracts and are good for the whole period of their validity. It is the employer's liability to renew all permissions on time.

When employed, a written employment agreement regulated by Finnish labor legislation is compulsory. The agreement must outline job duties, payment terms, work hours, and vacation entitlement.

The main elements of an employment contract include:

• Information about the employer and employee.
• Description of job responsibilities.
• Conditions of remuneration and payment of wages.
• Length of working hours.
• Duration of the probationary period, if any.
• Conditions and procedure for termination of the contract.
• Extra advantages and conditions offered by the employer.

The contract can be fixed-term or indefinite. Temporary employees often enter into fixed-term contracts for up to two years. Upon expiration, the contract may be renewed or converted to an indefinite basis.