Finland

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Finland, officially known as the Republic of Finland is the eighth largest country in the entire Europe. Finland has a highly sophisticated industrial economy with an exuberant private sector coupled with a kind of business environment that many foreign investors may find attractive. The logistics and modern infrastructure are an added advantage for Finland. It has 24 airports and businesses are well served by its excellent railway lines and roads. It also has a huge network of canals, sea lanes and waterways. This top-rated infrastructure really makes the country a popular gateway to the East as it acts as the main direct route between Asia and Northern Europe.
Apart from having a state of the art infrastructure, Finland also has a huge reserve of natural resources. Finland has huge resources of copper, gold, timber, silver and limestone. Apart from these, the Finnish land is also blessed with natural resources such as iron, zinc, lead and chromium throughout the country.

Population: 5.48 million
Form of government: Republic
Official & spoken languages: Finnish (87%) and Swedish (5%), Spoken Russia 2% from population
Currency: EURO €
Time zone: UTC +2
GDP (PPP): $ 270 billion
GDP (PPP)/per capita: $ 49.146
Public debt: 57% of GDP (national debt clock)
Average salary: 3.508€/month
Unemployment: 8.1% (Oct 2016)
Major trading partners: Germany, Russia, Sweden, Netherlands, China, USA, UK, France, Estonia

 

Advantages of doing business in Finland

  • Well functioning and highly developed infrastructure
  • Advantageous taxation for multinational corporations and holding companies
  • Highly educated workforce easily available
  • Member of EU and EURO

Disadvantages of doing business in Finland

  • Large public sector and high public dept cause unpredictability when it comes to law changes and operational environment in general
  • Complicated bureaucracy slows down many business operations
  • High cost of work force and strong unions make hiring risky
  • Small home market and poor buying power in compared to many other western countries
  • High consumption of Alcohol, mental health problems and extremely low threshold for staying home when sick causes reduction of productivity.

Business Friendliness Environment Index (EUROPE) by Novasigma – 2017

Novasigma has published an annual BFEE (Business Friendliness Environment – Europe) -index for 2017. European economies are ranked from  1-51 based on their business friendliness. The rankings are determined by sorting the aggregate distance to frontier scores on 20 topics each consisting of several indicators, giving equal weight to each topic. The rankings for all countries and economies are benchmarked to December 2016

FINLAND – OVERALL RANK 2017: 4th (Europe) 65/100 points
1. Ease of incorporation process (bureaucracy, costs, time frame) 3/5 points
2. Privacy level of shareholders and investors 4/5 points
3. Privacy level of company directors and signatories 3/5 points
4. Availability of the private equity funding 4/5 points
5. Availability of the public and / or bank sector financing instruments 2/5 points
6. Reputation of the country (trading across borders with a company registered in this country) 5/5 points
7. Easiness of recruiting professional staff (professionalism, average pay, protection against dismissal) 1/5 points
8. Easiness of getting business premises (price, availability) 3/5 points
9. Suitability for production of physical products 2/5 points
10. Suitability for producing services 5/5 points
11. Size of the home market B2C (population and purchasing power) 2/5 points
12. Size of the home market B2B and public sector purchasing services from local businesses 4/5 points
13. Exporting physical products (markets nearby, logistics and toll) 3/5 points
14. Exporting services 5/5 points
15. Immaterial rights (compared to other countries) 5/5 points
16. The level bureaucracy or corruption during business operations 2/5 points
17. Company taxation 3/5 points
18. Dividend taxation, withholding taxes and tax treaties 4/5 points
19. Easiness of selling a business 3/5 points
20. Easiness of closing down a company 2/5 points

The World Banks “Ease of doing business ranking”

Overall rank 2016: rank 10th (change in rank: -1)
– Starting a business: rank 13 (average processing time 14 days)
– Dealing with construction permits: rank 27 (average processing time 64 days)
– Getting electricity: rank 16 (average installation time 42 days)
– Registering property: rank 20 (average processing time 32 days)
– Getting credit: rank 42 (change -6)
– Protecting minority investors: rank 66
– Paying taxes: rank 17 (average company tax from profits 40%, average time used for taxation 93 hours per year)
– Trading across borders rank 32
– Enforcing contract: rank 30 (average 375 days, average cost from standing amount 13,3%)
– Resolving Insolvency: rank 1 (Average time processing bankruptcy: 0.9 years)

 

New businesses registered in 2012: 8.184

Advantages

  • Finland is very safe
  • High social security
  • Free education

Disadvantages

  • High cost of living and taxes
  • Lots of rules and laws that affect directly to personal freedom
  • Difficult to operate without speaking Finnish

Freedom Index: Finland

Overall rank 2016: 17th (68/100 points)
– Property rights: 90/100 points
– Freedom from taxes: 65/100 points
– Freedom of speech/religion: 100/100 points
– Limited government: 9/100 points
– Gun rights: 40/100 points
– Drug rights: 45/100 points
– Freedom from corruption: 89/100 points
– Freedom from inflation: 79/100 points
– Business freedom: 94/100 points

Corporate taxation in Finland (Ltd and Plc)

  • Residence: A company is resident if it is registered (incorporated) or otherwise established under Finnish law. The Finnish tax authorities may register a foreign entity in Finland without any notice given.
  • Basis: Residents are taxed on worldwide income; non-residents are taxed only on Finnish-source income attribute to their Finnish permanent establishments. Foreign-source income derived by residents is subject to corporate tax in same ways as Finnish-source income. Branches generally are taxed according to the same principles applicable to subsidiaries.
  • Taxable income: Corporate tax is imposed on a company’s profits, which consist of business income, passive income and capital gains. Normal business expenses may be deducted in computing taxable income. Complex rules govern the deprecation of assets.
  • Taxation of dividends: Dividends received by a Finnish resident company from another Finnish company generally are exempt from tax with certain exceptions, as are dividends received by a Finnish company from a company in an EU/EEA country. Dividends received from all other countries generally are taxable.
  • Capital gains: Capital gains generally are treated as ordinary income and taxed at the standard corporate tax rate of 20%. However, gains on qualifying holdings are exempt in certain conditions are satisfied.
  • Losses: Losses may be carried forward for 10 years. The right to carry forward tax losses is forfeited if more than 50% of the shares of the company were transferred during or after the year in which the losses were incurred. Further, if more than 50% of the shares in a company that owns at least 20% of the shares in a the Finnish loss-making company have been transferred, the relevant portion of the shares in the Finnish loss-making company are deemed be transferred. The carryback of losses is not permitted.
  • Foreign tax credit: Foreign tax paid may be credited against Finnish tax assessed on same profits, but the credit is limited to the amount of Finnish tax payable on the income. The credit may be carried forward for five years.
Taxable income: 20%, Corporate tax is imposed on a company´s profits, which consist of business income, passive income and capital gains
Taxation of dividends: 14.54%
VAT registration: Mandatory if the turnover of the business activities in a certain financial year will exceed 10.000€, VAT registration usually is not required and no VAT
– VAT Rates: 24% (or 14% /10%/0% applying in certain cases)
Surtax: No
Alternative minimum tax: No
Withholding tax (general): 20%
– From Dividends 20%, dividends paid to a nonresident company are subject to withholding tax, unless the rate is reduced under a tax treaty or an exemption (EU or EEA shareholder)
– From Royalties 20%, royalties paid to a nonresident company are subject to withholding tax, unless the rate is reduced under a tax treaty or an exemption (EU or EEA
– From Interests 0%, interest payments to nonresidents generally are exempt from a tax in Finland
– Technical services 0%
Transfer tax: 1.6%-4%, tax is levied on transfers of Finnish securities. A 4% tax is levied of Finnish real property and certain leasing rights in real property. Transfer of shares in real estate-rich companies or holding companies of real-estate-rich companies are subject to a transfer tax of 2%. Some exemptions are available.
Capital gains tax: Treated as ordinary business income taxable by rate 20% (only taxed where there is a profit distribution)
Real property tax: 0.37% – 4%, The municipal authorities levy a real property tax. The tax is deductible for corporate income tax purposes.
Social security: The combined social and health insurance rate paid by the employer on cash and in kind (fringe benefits) employee remuneration is 33%
Payroll tax: No
Stamp duty: No
Capital duty: No
Tax treaties: 70 tax treaties in force
CFC (Controlled Foreign Company) rule: Yes
Other:
  • A tonnage tax regime is available for shipping companies.
  • Special tax zone: Åland Islands

 

Participation exemption:

Gains derived from the sales of shares are not taxable for a Finnish corporate taxpayer when the shares sold belong to fixed assets that are deemed to be part of the seller’s business income-generating assets (rather than passive income) if:

  • The seller company owns at least 10% of the share capital of the entity and the dividend-distributing shares contribute to this equity stake
  • The shares have been held for at least one year, and the sale does not take place more than one year after seller company’s ownership in the entity falls below the 10% threshold
  • The disposed shares are not in a real estate company or limited liability company whose business activities consist principally of governing or owning real estate and;
  • The disposed shares of a Finnish company, a foreign company listed in the EU parent-subsidiary directive or a company resident in a country that has concluded a tax treaty with Finland, provided the treaty provisions on dividends are applicable to distribution by the company

VAT registration, filling and payment in Finland:

If the turnover of the business activities in certain financial year does not exceed EUR 10.000 (increased from 8.500 as from 1 January 2016), VAT registration usually is not required and no VAT is levied (although threshold does not apply to foreign entrepreneurs that do not have a fixed establishment in Finland).

In certain cases, the purchaser, rather than the seller, is liable for VAT under the reverse charge mechanism, although the seller may have reporting obligations. The reverse charge applies if the purchase is made from a foreign supply in Finland, or that has not applied for voluntary VAT registration in Finland. The reverse charge also applies to certain sales of construction services and trade on emission rights under certain conditions, and to sales of scarp and waste.

VAT returns and payments generally are due on a monthly basis. Quarterly or annual reporting and payments may be available in certain cases. According to the tax reporting and payments scheme (tax account), every tax liable person has a tax account through which returns and payments are administered. VAT returns, in principle, should be submitted electronically.

  • The due date for filling the VAT return electronically and making payments is the 12th day of the second month following the VAT period
  • Filling the paper VAT returns still is possible, but the due date for return is the 7th date of the second month following the relevant VAT period.
  • European Sales Listings (ESL) are filled on a monthly basis by the 20th day of the month following the relevant VAT period.
  • Penalties apply for late reporting and payment

Compliance for corporation:

  • Tax year in Finland: The financial is used. If two or more financial years end during the same calendar year, the years are combined for tax purposes
  • Consolidated returns in Finland: Consolidated returns are not permitted. Each company is required to file a separate tax return. However, profits may be transferred between Finnish companies through a group contribution regime. The companies must engage in business activities, there must be at least a 90% direct or indirect holding between the entities and the ownership must have lasted for the full tax year.
  • Filling requirements in Finland: A company is required to file its return within four months of its financial year end. Advance corporate tax is paid monthly.
  • Penalties:  Penalties apply for failure to file, late filling or filling of a fraudulent return.
  • Rulings: A taxpayer may request a ruling from the tax-authorities on the tax consequences of a specific transaction. Such ruling are binding on the authorities, but not on the taxpayer

Tax authorities in Finland: Ministry of Finance, National Board of Taxes and tax officies

Personal taxation

National income tax0 - 31.75%
Municipal income tax16.5% - 22.5%
Social security5.7% + 0.65% + 2.1%
VAT24% (reduced rates: 14% / 10% / 0%)
Capital income tax30% / 33%
Capital gains30%, if more than EUR 30,000 then 33%
Net wealth/Net worth tax:0%
Real property tax0.37% - 1.55%
Inheritance/Estate taxUp to 36% depending on the family connection between the deceased and the inheritor
Transfer tax1.6% / 4%
Vehicle taxDepending on vehicle
Media taxDepending on income: 0€ tai 50€ - 140€/year ;

Tax treaties

Finland has concluded around 70 tax treaties
OECD countries

  • Australia, Austria, Belgium, Canada, Czech Republic, Denmark and Faroe Islands, Estonia, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States

Other countries:

  • Argentina, Armenia, Aruba, Azerbaizhan, Barbados, Belarus, Bermuda, Bosnia-Hertsegovina, Brazil, British Virgin Islands, Bulgaria, Cayman Islands, China, Croatia, Cyprus, Egypt ,Georgia ,Guernsey, Hong Kong & Macau (SAR), Indonesia, India, Isle of Man, Jersey, Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Lithuania, Macedonia, Malaysia, Malta, Moldova, Montenegro, Morocco, Netherlands Antilles, New Zealand, Pakistan, Philippines, Romania, Russian Federation, Serbia, Singapore, Sri Lanka, South Africa, Tajikistan, Tanzania, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Vietnam, Zambia



Our Services in Finland

Consulting & advisory services for Finnish entities

  • Due diligence process
  • Foreign Market entry & Supplier search
  • Business Plans & Descriptions
  • Development & Capital Advisory
  • International Tax Planning
  • Funding & Investor Search
  • Business Restructuring via Offshore entities
  • Exit Strategy & IPO
  • Problem solving

To find out more about our consulting and advisory services in Finland please contact us

 

Incorporation, administration & business services in Finland

Incorporation services in Finland

  • New company formations in Finland
  • Ready-Made Finnish companies
  • Company Closures and liquidations in Finland

Company administration in Finland

  • Legal registration address service for a Finnish company
  • Company secretarial service for a Finnish company
  • Nominee director services
  • Nominee shareholder services

Business services in Finland

  • Virtual office services in Finland
  • Hosting services
  • Real estate in Finland (offices, trade facilities, industrial)
  • Recruitment services and Temporary workers in Finland
  • Marketing, advertising and software development in Finland
  • Sales, research and booking services in Finland
  • Customer support and back office services
  • Logistic services
  • Cyper security services

To find out more about our Incorporation and Business services in Finland please contact us

Accounting, bookkeeping & audit for a Finnish entity

Accounting software available for Finnish companies through Novasigma

  • ProCountor

Some of the common domestic accounting services we provide in Finland include

  • Bookkeeping and accounting
  • Invoicing and payments
  • Annual accounts
  • Monthly Reconciliation
  • Monthly financial statements (including balance sheet and income statement)
  • Payroll services
  • Income and tax return
  • Management accounts

Value Added Tax (VAT)

  • VAT registration
  • Advice on VAT scheme options
  • VAT returns and declarations
  • Intra-EU VAT consulting
  • EU-VAT claim management

Audit

  • Annual accounts in view of an annual audit and attend accounting audits

To find out more about our Accounting and bookkeeping services in Finland please contact us

Accounting services

Legal services for Finnish companies and business owners

Our partners offer legal services in Finland for all Novasigma Clients including companies and their owners and directors

Novasigma has built in Finland a team of lawyers, associates and legal advisors to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisors have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.

To find out more about legal services in Finland please contact us

Banking, financial and insurance services in Finland

Banking services in Finland

  • Business bank accounts
  • Personal bank account opening for business owners
  • Payment service providers
  • Investment solutions
  • Alternative banking solutions

Financial services in Finland

  • Debt collection services
  • Invoice funding & cash flow solutions
  • Factoring
  • Leasing
  • Wealth management

Insurance services in Finland

  • Insurances for corporations
  • Insurances for business owners and their families

To find out more about our banking, financial and insurance services in Finland please contact us

Tax residencies, Citizenship & Immigration services for Finnish business owners

  • Tax residencies for Finnish citizens
  • Second citizenship for Finnish citizens
  • Immigration service for foreign residents when moving to Finland (for Novasigma business clients only!)

To find out more about our immigration services in Finland please contact us

 

Novasigma Accounting, Law & Consulting Certified Partners in Finland

  • Megarus Ltd | Accounting and Management services
  • Salesten Tmi | Sales services, Booking services

 

Interested in Finland? Please leave us a message and we will come back to you shortly.

In cases KYC or/and Due Diligence process required Novasigma requires a personal meeting with all its new clients before proceeding any assignment

Other jurisdictions:

  • Bulgaria
  • Estonia
  • Finland
  • Georgia
  • Germany
  • Gibraltar
  • Latvia
  • Mauritius Novasigma
    Mauritius
  • Norway
  • Russia
  • Seychelles
  • Singapore
  • Spain
  • United Kingdom

Services available in Finland

  • Consulting & Professional Advisory Services
  • How to register a company in United Kingdom
    Incorporation & Administration Services
  • International Accounting & Audit services
  • Legal services for companies & business owners
  • Global Banking & Payment solutions
  • Novasigma offers citizenship programs with Caribian passports and tax residencies with a immigration service
    Tax Residencies & Citizenship programs

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