What to consider when setting up a business in Finland?

Before starting operations in Finland, companies should determine which registrations are required for their activities. Depending on the nature of the business, registration may be required in one or more of the following registers:

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

Registration requirements vary depending on the type and scope of activities carried out in Finland. Identifying the necessary registrations at an early stage can help avoid delays and ensure compliance from day one. Azets can help determine which registrations apply to your business and assist with the registration process.

Companies employing staff in Finland are required to arrange certain statutory insurance cover and fulfil employer-related social security obligations. These requirements apply regardless of the size of the business and should be considered before hiring employees.

Typical employer obligations include:

• Earnings-related pension insurance
• Unemployment insurance
• Workers' compensation insurance
• Group life insurance

The costs of statutory insurance are regulated, and coverage must be arranged through authorised Finnish providers. Ensuring the necessary insurance arrangements are in place from the outset helps employers meet their legal obligations and avoid unnecessary compliance risks.

Read more about employee insurance requirements in Finland.

Finland relies heavily on digital reporting and communication with public authorities. Companies are generally expected to manage tax reporting, employer obligations and other statutory filings electronically.

Many official transactions and authorisations are handled through the Suomi.fi service. While many public services are available in English, setting up the necessary authorisations and access rights can be challenging for foreign companies, particularly when dealing with multiple authorities and reporting requirements.

Ensuring that the required authorisations are in place from the outset can help avoid delays in registrations, reporting and other compliance-related matters. Many international companies choose to work with a local partner to help manage registrations, reporting obligations and ongoing communication with Finnish authorities.

Understanding your tax and reporting obligations from the outset is an important part of setting up operations in Finland. For foreign companies, one of the key considerations is whether their activities could create a permanent establishment (PE). The existence of a PE may affect corporate tax liabilities, registration requirements and reporting obligations. As PE assessments depend on the specific facts and circumstances of each business, it is worth reviewing the position before operations begin.

Read more about the taxation of a permanent establishment in Finland.

Operating in Finland as a foreign company can be a practical option when your activities in Finland are limited and you have few or no employees in the country. In this model, business is conducted through the existing overseas company without establishing a separate Finnish legal entity.

This approach may be suitable for companies testing the Finnish market, carrying out short-term projects or operating on a limited scale. Depending on the nature of the activities, registration obligations may still arise, for example in relation to VAT, employer requirements or tax reporting.

One of the key considerations is whether the activities could create a permanent establishment (PE) in Finland. If a PE is established, additional tax and reporting obligations may apply. As each situation depends on the specific facts and circumstances, companies should assess their position before commencing operations.

For example, a foreign company selling goods to Finnish customers may need to register for VAT in Finland if it stores goods in a Finnish warehouse, even if it does not have a permanent establishment for income tax purposes.

Many foreign companies find that the most appropriate structure depends on the expected duration of operations, planned growth, staffing requirements and the level of local presence required.

Read more about the taxation of a permanent establishment in Finland.

The branch is registered with the Finnish Trade Register and receives its own Business ID, while remaining legally part of the parent company.

A branch can be an attractive option for companies seeking a more permanent presence in Finland without establishing a separate Finnish company. It allows businesses to operate under their existing corporate structure while maintaining a recognised local presence.

Unlike a subsidiary, a branch does not have its own board of directors and cannot act independently of the parent company. It also remains the parent company's responsibility from a legal and financial perspective.

A branch is generally required to maintain accounting records for its Finnish operations and is subject to Finnish reporting requirements. In many cases, operating through a branch will also result in a permanent establishment (PE) in Finland, with the related tax obligations.

One advantage of a branch structure is that it can provide greater clarity regarding the taxation of Finnish operations compared with operating solely as a foreign company. However, companies should also consider factors such as administrative requirements, long-term business plans, group policies and the expected scale of operations when deciding between a branch and a subsidiary.

A subsidiary is an independent legal entity that operates separately from its parent company. Unlike a branch, a subsidiary can enter into contracts in its own name and is responsible for its own obligations.

Many international companies choose a subsidiary when establishing a long-term presence in Finland. A subsidiary can provide a clear local structure for business operations, employees, customers and suppliers, while also limiting the parent company's liability to its investment in the company.

Establishing a subsidiary is relatively straightforward, and Finnish limited liability companies have no minimum share capital requirement and administrative fees are reasonable. A subsidiary has its own board of directors and must comply with Finnish company law, accounting requirements and reporting obligations.

A subsidiary is often seen as a more established local presence than operating through a foreign company or branch. This can be beneficial when hiring employees, working with local customers and suppliers, or participating in public procurement processes.

However, a subsidiary also comes with ongoing administrative responsibilities. Depending on the size of the company, statutory audit requirements may apply, and the company must maintain corporate records and fulfil its reporting obligations in Finland. Unlike a branch, a subsidiary can also be wound up or enter bankruptcy as an independent legal entity.

An auditor is generally required if the company exceeds at least two of the following thresholds during both the most recently completed financial year and the preceding financial year:

• Annual turnover exceeds €200,000
• Balance sheet total exceeds €100,000
• The company has an average of more than three employees

Additional requirements may also apply in certain situations, and a company may be required to appoint an auditor if this is stipulated in its Articles of Association.

In Finland, accounting and auditing services must be provided independently and cannot be supplied by the same service provider.

In Finland, every company is assigned a Business ID, which serves as the company's official identifier. The Business ID is also used as the company's VAT number where applicable.

The Business ID can be used to verify company information and registrations through official public registers.

Statutory employer insurance policies must be required to be arranged through authorised Finnish insurance providers. These requirements apply, for example, to earnings-related pension insurance and other mandatory employer insurances.

Additional voluntary insurance cover may be arranged separately, depending on the circumstances. Companies planning to hire employees in Finland should ensure that all statutory insurance obligations are in place from the outset.

Business setup and taxation

• Company tax return in Finland – avoid the most common mistakes
• Taxation of a permanent establishment in Finland
• Why open a Finnish business account through your accounting partner

Accounting and reporting

• IFRS vs. FAS financial reporting when operating in Finland
• Finland's digital financial statement reform: what it means in practice

Employment and payroll

• How to avoid the most common payroll mistakes when operating in Finland
• Employee insurance in Finland – What you need to know
• How to arrange occupational health care in Finland
• Legally required documents for human resources management in Finland
• Concluding a contract of employment in Finland
• Annual leave and holiday pay regulations in Finland
• Family leave model in Finland – A short guide for employers