Starting a business in Finland: A guide for foreign companies

Starting a business in Finland involves choosing a suitable operating structure and preparing for local obligations. A foreign company can operate directly, establish a branch or set up a Finnish subsidiary. The right approach depends on what the company will do in Finland, how permanent its operations will be and how responsibilities should be organised. Before launching operations, the company needs to determine the required registrations, its tax obligations and the practical arrangements for payments and financial administration.

Expanding into Finland does not always require setting up a new company. Equally, operating without a Finnish company does not mean that no obligations arise in Finland. What matters is the actual nature of the business activities.

This guide explains the key decisions involved in getting started and the order in which to address them. For a broader overview of the Finnish business environment, see our guide to doing business in Finland.

Start by defining what your company will do in Finland

Choosing a suitable operating structure requires a sufficiently detailed picture of the planned business activities. A company supplying goods to Finland may be in a very different position from one opening a local office or sending employees to a long-term installation project.

Clarify at least the following:

• Will the company sell goods, services or both, and will its customers be businesses or consumers?
• Where will the work be carried out, and who will enter into customer contracts?
• Will the company have employees, premises, inventory or equipment in Finland?
• Is this a single assignment or an ongoing business operation?
• Which group company will invoice customers and be responsible for delivery?
• From where will the Finnish operations and the foreign company itself be managed?

These details allow the operating structure, taxation and registrations to be assessed together. Any sector-specific permits and notifications should also be identified at this stage. Registering a business does not replace these requirements.

Operating as a foreign company, a branch or a Finnish subsidiary?

When starting a business in Finland, consider each operating structure from the perspective of both the initial setup and future operations. A structure that appears administratively simple at first may not be the most suitable if the Finnish business is expected to grow quickly.

Operating directly as a foreign company

Under this approach, the existing foreign company carries on business in Finland without a separate Finnish subsidiary or a registered branch. A new company may not be necessary, for example, when a foreign company supplies products to Finland or carries out a limited assignment here. This alone does not, however, determine whether registrations are required.

The foreign company must separately assess matters such as registration in the Finnish tax registers and whether its activities create a permanent establishment. Even a fixed-term project can give rise to obligations in Finland.

Establishing a branch in Finland

A branch is part of the foreign company and operates in its name and on its behalf. It is not a separate legal entity. A key consideration is therefore whether the Finnish operations should remain within the same legal entity as the foreign business.

A branch must be registered with the Finnish Trade Register. The registration requires information about the foreign company, the relevant corporate decisions and the persons authorised to represent the branch.

If the company establishing the branch is based outside the European Economic Area (EEA), a permit from the Finnish Patent and Registration Office (PRH) is required. The requirements concerning the branch representative must also be checked. Detailed instructions on the documents and notification are available in PRH’s guidance on establishing a branch.

Setting up a Finnish subsidiary

A Finnish subsidiary is a separate company owned by a foreign company, typically a Finnish limited liability company (osakeyhtiö, Oy). As a separate legal entity, it enters into its own contracts and is responsible for its own obligations. Services, financing and other transactions between the foreign parent company and the Finnish subsidiary must therefore be planned and documented separately.

A subsidiary may be an appropriate option when building a permanent organisation in Finland and managing the local business as a distinct operation. The choice should nevertheless reflect the company’s objectives, risks and administrative needs.

A Finnish private limited liability company can be established without share capital. This does not eliminate the need for working capital: the company must be able to cover its initial expenses before receiving its first customer payments.

Assess the tax implications before registering

A permanent establishment is not a legal form that a company chooses. It is a tax concept assessed on the basis of the actual business activities and the applicable tax treaty. A company cannot avoid creating a permanent establishment simply by deciding not to establish a branch or a subsidiary.

Relevant factors may include premises used in Finland, the duration of a project, or the duties and contracting authority of a representative operating here. If a foreign company has a permanent establishment for income tax purposes, Finland taxes the income attributable to it. See the Finnish Tax Administration’s guidance on the income taxation of foreign companies.

Value added tax (VAT) must be assessed separately. A company may have VAT registration or reporting obligations even if it does not have a permanent establishment for income tax purposes. The VAT concept of a fixed establishment also differs from a permanent establishment for income tax purposes.

The location of management must also be considered. If a foreign corporate entity’s place of effective management is in Finland, it may be treated as a resident taxpayer in Finland.

In practice, these tax considerations should be clarified before the first contracts and invoices are finalised. This allows the invoicing entity, pricing and tax treatment of invoices to be planned on a sound basis.

What is required for incorporation and registration?

Gather the necessary information and documents

To establish a Finnish limited liability company, the founders must determine matters such as its name, registered office, business activities, financial year, ownership and board of directors. A memorandum of association and articles of association must also be prepared, together with the required personal details and beneficial ownership information.

Where a foreign company is a shareholder, the guided set-up package in the YTJ online service cannot be used. Instead, the start-up notification must include separately prepared incorporation documents. The company comes into legal existence when it is registered with the Trade Register.

Check the places of residence of the proposed directors and managing director early in the process. A board member or managing director living outside the EEA may require a permit from PRH; nationality does not determine whether a permit is needed. The requirements for ordinary board members and deputy members are assessed separately.

Current procedures are explained in PRH’s guidance on starting a limited liability company. Where foreign shareholders or company officers are involved, the available identification and signing methods should also be confirmed before preparing the documents.

Determine which tax registrations are needed

The need to register in each of the following registers is assessed separately on the basis of the company’s activities:

• Prepayment register: registration is particularly relevant to the tax treatment of payments for work or services.
• VAT register: the requirement depends on factors such as what is sold, the place of supply, the customers and the applicable VAT rules.
• Register of employers: the need for registration must be assessed if the company pays wages. For a foreign employer, the existence of a permanent establishment also affects its position.

Companies are not automatically entered in every register. The description of a foreign company’s operations must reflect how its work and sales will actually be organised.

The Finnish Tax Administration’s guidance on starting business operations in Finland as a foreign company explains the registration process.

A Finnish Business ID does not confirm that all registrations are complete

A Finnish Business ID (Y-tunnus) is a company’s identification number in Finland. Receiving one does not, by itself, mean that the company has been entered in the Trade Register or the required tax registers.

Check the individual register entries and their effective dates in the YTJ company and organisation search. A Finnish Business ID issued to a foreign company does not turn that company into a Finnish limited liability company.

Prepare banking and payment arrangements early

Opening a banking relationship is a separate process. Before deciding whether to accept a company as a customer, the bank reviews its business activities, ownership, beneficial owners and expected payment transactions.

A foreign group should be prepared to provide documents such as register extracts, an ownership structure chart, identification details for the relevant company officers, and an explanation of the Finnish business activities and source of funds. Confirm the exact document requirements and any need for an in-person meeting with the selected bank.

Practical payment arrangements should also be agreed: who approves invoices, who has access to the account, and how salaries, taxes and intercompany payments will be handled. Clarifying the banking timetable during preparation helps prevent payment arrangements from delaying the launch.

Arrange access to online services and assign financial administration responsibilities

Being authorised to sign on behalf of a foreign company does not always provide access to Finnish online services. The company must determine how its representatives can identify themselves electronically and how the necessary authorisations will be granted.

If a company cannot grant Suomi.fi e-Authorizations independently, it can arrange them through a mandate application. This may apply, for example, to a foreign company whose authorised representatives are not listed in the Finnish Trade Register. The procedure is described in Suomi.fi’s guidance on how a company grants mandates.

Before the first invoice is issued, agree how accounting records will be submitted, what information invoices must contain and who will be responsible for tax returns. Within a group, it is also useful to define how the Finnish financial figures will feed into the parent company’s reporting and who will resolve any differences.

Clarify employment obligations before work begins

If the company hires employees in Finland or sends employees here from abroad, employment-related preparations should run alongside the other setup arrangements.

Depending on the circumstances, matters to clarify include the right to work, applicable terms and conditions of employment, payroll, insurance, and the notification and representative requirements for posted workers.

A foreign employer may have to report wages to the Finnish Incomes Register even if it has no permanent establishment in Finland and is not required to register as an employer. Registration status and payroll reporting obligations must therefore be checked separately. The Finnish Tax Administration’s guidance on the obligations of a foreign employerexplains the tax-related requirements.

How long does it take to get started, and what costs are involved?

There is no single setup timetable that applies to every company. The overall schedule depends on the availability of documents, any required translations and permits, processing times at the authorities, banking arrangements and access to online services.

The Trade Register’s processing time alone does not reflect the full preparation period. Registrations, bank onboarding and authorisations may be completed at different times. Work backwards from the intended first working day or delivery and assign a responsible person to each part of the preparation.

Costs should also be divided into initial setup costs and ongoing operating expenses. The overall budget should cover the following areas.

Incorporation and registrations

Initial costs include Trade Register handling fees and any permit or documentation costs. The amounts depend on the operating structure and procedures required.

Preparation and professional advice

Allow for assessing the operating structure and tax implications, preparing documents and obtaining any necessary translations. Careful preparation helps align incorporation and registrations with the company’s planned activities.

Banking services and systems

Banking services, invoicing software and financial administration systems may involve both setup costs and recurring fees. When assessing these costs, consider any integrations with the group’s existing systems.

Ongoing administration

Once operations begin, expenses may include accounting, statutory filings, payroll, reporting and, where required, auditing. The services needed and their scope depend on the Finnish operations.

Launch costs and working capital

In addition to administration, funding is needed for employees, premises, insurance and purchases. Working capital must also cover the period before customer payments start to meet operating expenses.

Starting a business in Finland: A checklist for foreign companies

1. Define the Finnish operations: customers, work locations, employees, contracts and the planned duration of activities.
2. Choose the operating structure: operating directly as a foreign company, establishing a branch or setting up a Finnish subsidiary.
3. Assess taxation and permits: permanent establishment risk, VAT treatment and sector-specific requirements.
4. Prepare documents and registrations: company officers, signatures and the necessary supporting documents.
5. Arrange banking and authorisations: payment processes and access to the required online services.
6. Assign financial administration and employment responsibilities: records, filings, payroll and reporting.
7. Confirm readiness to start: register entries, contracts and practical processes are aligned with the planned activities.

Review the assessment if the business changes. Extending a project, hiring a new employee or opening business premises may alter the assumptions on which the original assessment was based.

Support for starting a business in Finland

A smooth start depends on planning the operating structure, registrations and day-to-day processes together. With clear responsibilities and schedules, the company can focus on its customers and developing its Finnish business.

Leinonen Finland helps foreign companies assess the requirements for starting business operations, prepare documents and arrange financial administration. As part of its company establishment support, Leinonen assists with the process and documentation, the client’s representatives sign the required documents, and the authorities process the registrations.

Explore our company establishment support services or see how Leinonen Finland’s services can support your business after the initial setup.

Frequently asked questions

Does a foreign company need to set up a Finnish company?

Not always. It may be possible to operate directly as a foreign company or through a branch. However, the required registrations and tax obligations depend on the actual activities, even where there is no Finnish subsidiary.

What is the difference between a branch and a subsidiary?

A branch is part of the foreign company and operates in its name and on its behalf. A Finnish subsidiary is a separate legal entity. The choice affects matters such as administration, contracts and financial arrangements.

Is a permanent establishment the same as a branch?

No. A branch is an operating structure registered with the Trade Register, whereas a permanent establishment is a tax concept. A foreign company can have a permanent establishment in Finland without a registered branch.

Is a Finnish Business ID enough to start operating?

A Business ID alone does not show that all required registrations are complete. The company must separately check its register entries, any permits and the other conditions for starting its particular activities.

Is share capital required to establish a Finnish limited liability company?

A Finnish private limited liability company can be established without share capital. The business still needs a financing plan so that it can cover its expenses before it starts generating sales revenue.

Can a foreign company or individual own a Finnish limited liability company?

Yes. A Finnish limited liability company can be wholly owned by a foreign company or foreign individuals; a Finnish shareholder is not a general requirement for incorporation. Ownership is, however, different from holding a management position: the eligibility and residence requirements for board members and any managing director are assessed separately.

Does a Finnish limited liability company need a board member who lives in Finland?

Finnish citizenship or residence specifically in Finland is not generally required. Unless PRH grants an exemption, at least one ordinary member of the board must reside in the EEA. If the board has deputy members, the corresponding requirement is assessed separately for them.

How quickly can a foreign company establish a subsidiary in Finland?

The timetable depends on how ready the documents are, any permits required and PRH’s processing time. Registering the company and becoming operational are separate stages: tax registrations, banking arrangements and authorisations for online services may take additional time. The planned launch should therefore account for the entire preparation process, not just Trade Register registration.

Can a Finnish company be established remotely?

It may be possible to establish a limited liability company remotely if the required documents, signatures and an accepted method of identification or filing can be arranged. The appropriate procedure depends, among other things, on the identification methods available to the company’s representatives. Bank onboarding is a separate process, and any need for an in-person meeting must be confirmed with the bank.

Does a company operating in Finland need a Finnish bank account?

Operating in Finland does not automatically mean that a company must have a Finnish bank account. A cash subscription payment for shares in a Finnish limited liability company can also be paid into an equivalent foreign account held by the company, provided the statutory conditions are met. The account arrangements should be assessed against the operating structure and practical needs, including invoicing, tax and salary payments, and compatibility with financial administration systems.

Can a Finnish company be established without its own office in Finland?

Establishing a Finnish limited liability company does not generally require renting or owning an office. However, the company must have a registered office in Finland specified in its articles of association and must provide the required address and contact details. The need for dedicated premises depends on the business activities and any sector-specific requirements.