The very harsh conditions for doing business in the Russian Federation are forcing Russian entrepreneurs to look for new opportunities. Finland has become one of these new and actively developing markets: liberal legislation, government support and moderate taxes even for foreigners attract many businessmen from abroad. Russians are no exception. Today we will tell you how to open a business in Finland and what are the requirements for foreigners.
Finnish business environment
According to the Trade Register, there are about 300 thousand enterprises in Finland plus about 210 thousand private entrepreneurs. Due to stable economic growth, their number is constantly growing.
Finnish business continues to grow: in 2021, the total turnover was 408.6 billion euros, which is 23.5 billion more than in 2021. The largest companies in Finland, such as Fortum Corporation, Neste Oil, Finnair, Nokia Oyj, Stockmann, UPM-Kymmene Oyj and Metso, also made a significant contribution to this.
But small and medium-sized companies still make a much larger contribution - they account for more than 97% of enterprises, while 93% are companies with less than 10 employees.
Small and medium-sized enterprises are the engine of the new Finnish economy: they account for more than 40% of GDP and 92% of new jobs created.
At the same time, any Finnish company tries not to lock itself in the domestic market, and after 2-5 years of vigorous activity, it steadily enters the European market, and then beyond. The state itself actively contributes to this, in the country there are:
- regional development agencies that provide free business consulting services, business strategy development, transaction support, and others;
- business incubators and acceleration programs designed for aspiring entrepreneurs starting a small business;
- Tekes is an innovation investment agency that finances up to 1,500 innovative start-ups annually;
- free courses for entrepreneurs at employment services;
- Fiban is the largest community of private investors funding a wide range of industries, from healthcare and marketing to IT.
The number of foreign enterprises in the structure of small businesses is negligible - at the beginning of 2021, their number was only 4.6 thousand. While there are obvious advantages, there are also many disadvantages - let us briefly consider the advantages and risks of starting a business in Finland.
| Advantages | disadvantages |
|---|---|
Economic, political stability and low inflation. | 1. Difficulties in attracting foreign labor - it is necessary to prove the lack of specialists among the Finns. |
The ability to work without additional permits throughout the European Union. | 2. Language problems: Finnish is a rather difficult language for Russians. |
Comprehensible tax system and attractive fiscal policy. | 3. Alertness in relation to Russian capital on the part of financial organizations, even getting a technical loan is a big problem. |
Cheap lease and purchase of commercial real estate. | 4. Strict control by the state and trade unions as an employer. |
Finns are interested in attracting foreign capital. | 5. Skeptical attitude towards small companies, especially if they do not produce anything. |
The status of a Finnish company is prestigious, and a Finnish one is a quality mark. | |
The right to obtain a residence permit for a Russian citizen as an entrepreneur. |
Trending directions for doing business in Finland
Finnish law does not restrict foreigners in the directions and economic areas that they can choose to do business. The main difficulty is obtaining licenses and permits to work in some industries, for example, for the production and trade of arms, for opening catering establishments, for the production of medicines, the development of natural resources, and so on.
Taking into account the specifics of Finland, business ideas can be implemented in a wide variety of industries. An analysis of successful Finnish enterprises with Russian roots does not allow us to single out an industry that prevails over others. These include:
- production of food and fish products;
- production of household appliances and electronics;
- agriculture, in particular berry growing;
- domestic and European tourism;
- the sphere of consumer services;
- introduction of innovative technologies and solutions for business automation;
- Internet commerce, for example, selling things or products online;
- fishing;
- construction and renovation of real estate;
- catering;
- automotive and marine logistics.
Requirements for a foreigner to start a business in Finland
If business in Finland is available to foreigners, a citizen of another state must still meet a number of requirements. In particular, only a resident of the European Economic Area or a Finnish resident can open an individual entrepreneur or his own independent company, therefore, to establish it, you will have to obtain a residence permit in Finland (Oleskelulupa) or any other EU country.
Doing business is one of the reasons for obtaining a residence permit; you can request it at the local migration service (Maahanmuuttoviraston).
The second requirement is to obtain a Finnish identification number (Henkilötunnus). You can get it at your local registry office or tax office. In addition, registration is allowed in one of the diplomatic missions abroad.
If a foreign citizen plans to open a joint-stock company, a residence permit is not required for him. But for this, at least one of the members of the board (or other executive body) and the executive director must be EU residents. In the future, entrepreneurship allows a foreigner to apply for a residence permit.
Organizational and legal forms of doing business in Finland
Consider the forms of doing business in the form of a table.
| Organizational legal form | Advantages | disadvantages |
|---|---|---|
| Self-employed (Toiminimi) | simplest business model; independent decision making; the possibility of hiring employees; quick and easy registration. | the entrepreneur is personally responsible for the obligations. |
Joint Stock Limited Liability Company (Osakeyhtiö) | there is no personal responsibility of the founders; income and voting rights are subject to the holding of shares. | the minimum authorized capital for a CJSC is 2.5 thousand euros, for an OJSC - 80 thousand euros. |
Limited partnership (Kommandiittiyhtiö) | the contribution can be made in money, things or labor; commandants are responsible for debts only with their own contribution, but do not participate in management. | general comrades participate in management, but bear personal responsibility; an important condition is the trust and cooperation of comrades. |
General partnership (Avoin yhtiö) | minimum capital, can be invested in money, things or labor; comrades on their own about internal management and corporate relations. | comrades bear unlimited liability for obligations. |
Cooperative (Osuuskunta) | limited liability of members; members' votes are equal; no minimum capital; can be created by one person. | risk of delays in decision making |
The procedure for setting up a business in Finland
According to the Doing Business rating, Finland is ranked 26th among all countries in the world in terms of new business registration. This is not the best result - for example, Russia is ranked 28th in this rating.
According to the World Bank, the registration of a Finnish company will take 14 days (longer in practice).At the same time, most of the time will be spent on the consideration of the issue by the controlling body.
Opening a Finnish company on your own is not so difficult. The whole procedure includes the following stages:
- Obtaining a Finnish residence permit before entering the country.
- Researching a niche, developing an idea, preparing a business plan.
- Search for partners, search for funding sources; choice of organizational and legal form.
- If necessary - filing an application for financing, obtaining a loan.
- Obtaining a permit or license, if required by the type of activity.
- Preparation of documents depending on the chosen form of work.
- Submission of an application for registration in the commercial register.
- Opening a bank account in a Finnish bank.
- Tax authority notification.
Let's consider the basic procedures in more detail.
Preparation of documents
Working on Finnish territory has the peculiarities of business planning. Anyone planning to start a business should draw up a business plan. It is not required for registration, but investors or Finnish potential partners will definitely ask for it.
A business plan in Finland is the backbone of any business. It contains not only the company's strategy, but also a competitor analysis, market overview and other important information.
As for the documents required for registration, they will differ depending on the form of ownership:
- For registration as a private entrepreneur, no mandatory statutory documents are required. Moreover, even registration is not always mandatory for them.
- To create both a full and a limited partnership, participants must sign a written agreement. Although there are no strict rules for its creation by law.
- To create a joint stock company or cooperative, participants must sign a memorandum of association and the charter of the company.
The constituent documents must be supplemented:
- Form Y notification (1,2,3 depending on the form of ownership, the forms can be found here) for company registration;
- form of application 1 of the commercial register;
- the form of personal data;
- declaration of conformity of the company being created;
- an auditor's certificate on the transfer of assets (for joint stock companies);
- a certified copy of the minutes of the constituent assembly on the election of the chairman of the board;
- the auditor's report, if the capital is not formed in cash;
- residence permit of the foreign founder;
- the identification number of the founder;
- a receipt confirming the payment of the state registration fee, if the documents are submitted in paper form.
Registration
The registration of a company in Finland is of a notification nature. The notification and the package of documents must be sent to the State Bureau of Patents and Registration by mail or online on the website of the Bureau.
When filling out the notification, you must indicate the name of the company, which must be unique. You can read more about choosing a name here.
You can check the companies already existing in the Commercial Register, as well as those whose names are under consideration, using the electronic service of the bureau.
Please note that private entrepreneurs (Toiminimi) must register only if the entrepreneur:
- chose a field of activity that requires licensing;
- plans to open his own office;
- plans to use hired employees, except for close relatives;
- wishes to register his company name and protect the business name from others.
When registering via the Internet, a business identifier is assigned to the company immediately after the notification is sent. If the notification is sent by mail, a business ID will be assigned within 3 days.
If a legal entity is registered, in addition to notifying the Trade Register, information about the company is also entered in the VAT tax register and the register of employers. The decision to register is usually made within 3-4 weeks after the notification is sent.
Opening an account
While the entrepreneur is waiting for the decision on registration, he must open a bank account. This can be done in any of the major Finnish banks.
To open an account, you will need a certificate from the Trade Register to send a registration notification.
If the document has not yet been received, it can be replaced by the constituent documents of the enterprise (plus the charter and minutes of the meeting of the founders indicating the decision to open a bank account).
A bank account is a prerequisite for starting a business, be it a business - selling clothes from an online store or a large manufacturing enterprise. On this account, the founders must contribute the minimum authorized capital. Until the moment of its introduction, the enterprise cannot be registered.
Registration / tax registration
Since the Bureau of Patents and Registration maintains a joint register of business information (BIS, YTJ) with the tax administration, additional registration with the tax authority is not required - it occurs when the company is registered (if the notification was sent through this system).
When the company is registered in the tax system (this is a long process and may take more than one month), the tax service will send an additional notification and a set of reporting and payment instructions to its mailing address.
However, you should not save money and keep accounting on your own - the Finnish authorities recommend entrepreneurs to do business, and outsource accounting to an accounting office.
Simplified accounting according to the ledger of income and expenses can only be kept by private entrepreneurs, companies keep accounting on the principle of double entry.
In addition to supporting commercial transactions and accounting, bureaus (or private accountants) form and submit tax reports, carry out calculations, payroll accounting, plan cash flow, manage the account, and so on.
Prices for accounting services are formed depending on the number of transactions or hourly. On average, one transaction costs 0.85 euros. Other pricing principles may apply. Small Finnish companies spend from 100 euros monthly on accounting services.
For some legal entities, an annual audit is also mandatory. Certified auditors are involved in its implementation. It is mandatory if more than one of the following conditions are met:
- the book value of the property exceeds 100 thousand euros;
- the annual turnover exceeds 200 thousand euros;
- the company employs more than 3 people.
Business start-up costs
Establishing a Finnish company involves a number of mandatory cost items that the founders will incur:
- state registration fee - 380 euros for legal entities (330 euros when submitting online) and 110 euros for individual entrepreneurs (75 euros when submitting online);
- the minimum authorized capital is 2.5 thousand euros for a closed joint-stock company and 80 thousand euros for an open joint-stock company;
- services of legal support and preparation of constituent documents - 500-1.2 thousand euros;
- legal address at the place of mass registration - from 40 euros per month;
- assistance in opening a bank account - from 200 euros;
- if necessary - services of a resident of Finland for opening a legal entity - from 350 euros.
Please note that these are only basic items and do not include business expenses, start-up capital, residence permits, and so on.
Is it possible to buy a business in Finland
Considering the duration of registration and the obvious costs of paperwork, it is easier for Russian entrepreneurs who want to start working as soon as possible to buy a ready-made registered company. You can find many intermediaries on the network who provide such services. Moreover, in some cases, it is not even necessary to come to Finland to re-register.
The cost of such a company depends on its history and the actions performed with it:
- a registered company with an open bank account - from 1.5 thousand euros;
- registered company (CJSC) with a bank account and contributed authorized capital, included in the VAT register and having a positive credit rating - from 4 thousand euros;
- a company with a positive credit rating and a history of commercial activity - from 6 thousand euros.
Please note that we are not talking about a ready-made and running business - this is just the acquisition of a registered legal entity.
Taxation of companies in Finland
Finland has very high business taxes. In general, entrepreneurs have to pay taxes such as:
- VAT if the annual turnover exceeds 10 thousand euros:
- 24% - for most goods and services;
- 14% - for food products and public catering;
- 10% - for medicines, printed materials, passenger transportation and some others;
- corporate income tax:
- 20% - for joint stock companies and cooperatives;
- 30% - for individual entrepreneurs and partnerships;
- 34% - for individual entrepreneurs and partnerships, if the income exceeds 30 thousand euros;
- employer's insurance contributions (social and pension insurance, unemployment contributions) - depending on the type of activity and other features - from 18 to 21% of the salary fund.
But there may be some peculiarities. For example, in some municipalities, companies pay corporate property tax.
Foreign investment in Finland
The Finns did not adopt a unified legislation governing foreign investment in the country, and this is a sign of an economically developed state. Foreign capital in the country is provided with national treatment with some exemptions, as in Russia.
By law, foreign individuals and legal entities are not limited in the right to acquire shares and stakes in Finnish companies; they do not need to obtain a special permit for this.
Exceptions are enterprises “with important national interest” or “subject to monitoring”. Shares and shares of such enterprises can be acquired only with the approval of the Ministry of Economy.
If a foreign person becomes the owner of shares or shares, as in the Russian Federation, the enterprise acquires the status of “with foreign participation”. This status arises for a company if at least 10% of the votes in the governing body or 10% of actual control belongs to a foreign person, from outside Finland and the EU. Finnish legislation provides full protection for foreign investments.
A few tips for entrepreneurs
When considering starting your own Finnish business, consider the tips and rules of experienced entrepreneurs:
- A business plan is required, no matter what type of business you plan to engage in. He is the first thing that Finnish partners, potential investors, business consultants and even tax officials will ask about (for example, if you need to assess the potential turnover).
- Get free business advice. Specialized agencies try to be as helpful as possible and are looking for many ways in which they can help a new business - they are interested in your success.
- Look for partners in Finland. Finnish officials (banks, tax authorities) are much less picky about companies if local residents are among the founders or owners.
- Drive business innovation. The more progressive solutions, the more attention from the consumer, the more chances to get financing or a loan.
- Explore the Finnish work culture. The employer-employee relationship in the country is based on equality, equity, initiative, directness and responsibility. Finns do not consider the boss to be the ultimate truth and expect respect from him. If their rights are violated, wait for the labor inspection and the trade union.
Common questions
If the reader has not found the answer to his question, he can ask it in the comments or find the answer in this section.
Do I need to get a special permit to do business in Finland?
No, there is no special permit for commercial activity by local laws. However, as mentioned above, a prerequisite is the presence of a residence permit and identification number.
Is it true that there are free courses for entrepreneurs in Finland?
Yes, such courses are provided by many foundations, unions and organizations. These include the organization Suomen Yrittäjät (“Entrepreneurs of Finland”) and their Yrittäjän tukiverkko network service, where you can get free advice and support. In addition, training for entrepreneurs is carried out by local employment and business services - contact one of them at your place of residence. Read more about this here.
Is public funding available for companies in Finland?
Yes, many state funds provide funding to aspiring entrepreneurs (including foreign ones) in the form of grants and loans. These include the Finnish technology and innovation agency Takes, the finance company Finnvera, which acts as an export credit agency, the Finnish innovation fund Sitra, and the Center for Economic Development, Transport and the Environment. Go to their websites for more information on funding programs
Where to look for business partners in Finland?
The main trading partners of Russian entrepreneurs can be found through the state agency Invest in Finland, the Finnish organization Business Finland, the Finnish-Russian Chamber of Commerce, or through the Russian Trade Mission in Finland. For detailed information on their activities, go to their websites.
Conclusion
In recent years, many Russians have opened their own businesses in Finland. This is facilitated by economic and political stability, ease of registration of enterprises, and protection of Russian investments. The state itself is interested in Russian capital: like the Finns, Russian entrepreneurs can freely use state support programs and even receive grants for development. The main condition for them is the presence of a residence permit and TIN. And for those who want to start working faster, services are available from intermediaries for registration and even purchase of an already registered company.
