Finland is a member of the European Union and it is the only Nordic country that has adopted the Euro. Low corporate tax rate of 20 % is attracting foreign business to Finland. International companies are warmly welcomed in Finland. When foreign companies enter the Finnish markets they are entitled to the same benefits and grants as Finnish companies.

Innovation thrives in Finland and strong innovation skills generate business results. New businesses are continuously emerging in the gaming, electronics, software, cleantech and health. Moreover, Finland is one of the most competitive and open economies of the world.

Finland is one of the least corrupt countries in the world, which is reflected in its business life. The judicial system is independent and impartial: in Finland, you can expect your case to be processed fairly and in accordance with the law. In Finland you can feel safe anywhere, anytime. Companies appreciate Finland’s stable and transparent environment for doing successful business


When establishing a business in Finland, the name, company form, municipality and the choice of the field of activity have to be determined. The number of founders, capital requirement, division of responsibility and decision-making, financing and taxation are factors that influence the choice of which legal entity to choose.

Legal entities in Finland: Private Entreprenuer(toiminimi), Limited company (osakeyhtiö), Partnership (avoin yhtiö), Limited partnership (kommandiittiyhtiö), Cooperative association (osuuskunta), Branch Office/PE (sivuliike-kiinteä toimipaikka).

The most popular legal entity is osakeyhtiö (OY)- Limited company. At least one shareholder is needed, minimum share capital is 0 EUR and 1-5 regular members in the board of directors.


For limited companies, the corporate income tax is 20% and it is uniform for all types of corporate income, including sales profits, interest income, dividends, royalties and rental income.

The basic VAT rate in Finland is 24%. Reduced VAT rate is 14% for the supply of foodstuffs, animal feed and restaurant and catering services. 10% reduced rate is applied for example to the supply of books, pharmaceutical products, passenger transportation, accommodation, the subscriptions of newspapers and periodicals.

In Finland Taxation of an individual’s income is progressive. In other words, the higher the income, the higher the tax rate. In 2019, the income tax rate (national tax) for an individual is between 0 % and 31.25 %. In addition to the national tax, individuals also pay a municipal tax of around 20 %.


Accounting Requirements

In Finland only publicly traded companies are required to comply with IFRS Standards. All other companies, partnerships, sole traders or professionals can adopt the local Finnish Accounting System.

Provisions on accounting are laid down in the Accounting Act and Accounting Decree. The Legislation providing general provisions and guidelines for accounting are the Accounting Act (1336/1997) and Accounting Decree (1339/1997).

Financial Information

The financial year in Finland is generally a calendar year or another twelve-month period. In the year of commencement, the financial year can be less or more than 12 months. However, the maximum length of the financial year is 18 months. The Financial Statements must be prepared within four months of the end of the financial year and submitted to the Trade Register (PRH) and Tax authorities.

The universal accounting principles of true and fairpresentation and the material disclosure of information should be followed in the financial statements.

As per chapter 3, section 1 of the accounting act (30.12.2015 / 1620,) the financial statements should consist of the following:

Balance sheet disclosing the financial position at the balance sheet date;

the profit and loss account disclosing how the profit or loss has arisen;

the cash flow statement and its application, if the reporting entity is a large enterprise or a public-interest entity; and

 notes to the balance sheet, the profit and loss account and the cash flow statement.

The Finnish Accounting Act defines microbusinesses, small enterprises and large enterprises. Each have their own rules for financial statements.

All operators other than sole traders and those offering a professional service must use the double entry method of accounting. If expenditure and revenue are recorded on cash basis, trade creditors and trade debtors must be identifiable at all times (30.12.2015 / 1620).

Maintaining of Financial Records

The financial statements are required to be maintained for at least 10 years from the end of the financial period as per the Accounting Act. Other accounting materials such as invoices, vouchers, reconciliation reports, accounts receivable and human resource documents are to be maintained for 6 years from the end of the financial year.

Tax Liability

Some entity forms, such as the limited company, are independently liable to pay income tax. In Finland, the corporate income tax rate is 20 %. Corporate entities must file their income tax returns electronically within four months of the end of the financial year. Also the financial statements are filed electronically. E-filing requires authentication with Finnish online banking codes or Katso identification, depending on the company type (

The general VAT rate for goods and services in Finland is 24%. Reduced VAT rates are applicable on certain goods and services ( The due date for VAT returns depends on the length of the company’s tax period. If the tax period is one month, VAT is to be filed and paid by the 12th of the second month from the taxable month. If the tax period is a quarter, the due date is the 12th of the second month from the end of the taxable quarter, and if the tax period is one year, then VAT is paid by the end of February in the following year.

Authorized Accounting Firms

The Association of Finnish Accounting Firms may authorize an accounting firm complying with the guidelines for following good practice, standards and tools and the regular inspections created by the Association for the industry (  Of the more than 4 000 accounting firms offering accounting and payroll administration services in Finland, only around 800 have been authorized. One of them is Leinonen.


Finnish labour and occupational safety legislation is applicable to all employees working for Finnish employers regardless of their nationality. In the case of ‘posted workers’, terms and conditions such as overtime, working hours, vacations, sick-leave and minimum wage are in accordance with the applicable collective agreement.

Finland has signed treaties with various countries that prevent double taxation. Those foreign nationals that work in Finland for more 183 days either over a period of 12 months or in the course of a calendar year are taxed in Finland.

Collective agreements

In Finland, employment legislation creates the general framework of the terms and conditions of employment, but the unions of employers and employees enter into collective agreements that are more specific than the law.

Some of these collective agreements are universally binding. This means that even unaffiliated employers which don’t belong to an employers’ organization must apply the terms and conditions of the sector’s collective agreement. If the terms of an employment contract are not in accordance with a binding collective agreement, they are not legally valid. There are more than 100 binding collective agreements.  

Employer’s obligations

An employer must observe the law and employment related contracts, treat employees equally regardless of their origin, religion, sex, age or political views, look after the employees’ safety and occupational health, provide employees with a written description of the conditions of work, promote a good working environment, boost employees’ performance and contribute to their occupational development.

According to the law, the employer must provide preventive occupational health care even if it only has one employee. Offering medical care is voluntary. However, regular health examinations must be arranged if the work involves special health risks.

The employer must have an accident insurance covering its employees. It also has to pay fees related to the employees’ pension insurance, unemployment insurance, group life insurance and social security.

There are some exemptions from the obligation to insure the employees. They are mostly related to foreign employers and/or employees.


The provisions concerning annual holiday are in the Annual Holiday Act. There may be further provisions in the collective agreements.

The accrual of holidays is calculated on the basis of the holiday credit year (April 1 to March 31). If the employee has been working for less than a year on March 31, he/she is entitled to two weekdays of holiday for each full holiday credit month. If the employment has continued for at least a year on March 31, the employee is entitled to two and a half weekdays of holiday for each full holiday credit month.

Although there are no provisions regarding holiday bonuses in the Annual Holiday Act, it is common to pay a bonus of for example 50 percent of the holiday pay. There may be rules on holiday bonuses in collective agreements.


The citizens of the EU Member States, Nordic countries, Liechtenstein or Switzerland do not need a residence permit to stay in Finland. It is possible to reside and work freely in Finland for up to three months. If the stay is more than three months, the foreign national has to register with the Finnish Immigration Service. A valid identity card or passport is needed for the registration.

Foreign nationals coming to Finland from outside the EU for more than 90 days have to apply for a residence permit. Even if the stay is less than 90 days, the foreign national might need a resident permit for working purposes. The residence permit must be applied for personally.

Expats staying in Finland for longer than 6 months are resident taxpayers and are subject to unlimited tax liability. This means that their income is taxed progressively in the same way as that of people living in Finland permanently. The A1 certificate attests which country’s social security laws apply to the worker when working abroad. The A1 certificate also determines to which country the social insurance contributions are to be paid when working in Finland.

Helsinki is one of the fastest growing cities in Europe and one of the most attractive locations for foreign investment. It is also a growing and highly interesting consumer market with positive trends in economic development, population growth and purchasing power. According to the estimates of Statistics Finland, the population of Helsinki will increase to over 700,000 residents by 2030.

Helsinki is 470 years old and stands as the political, educational, financial, and cultural center of Finland. About three-quarters of the foreign companies that operate in Finland have their base in this region.

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