Your guide to doing business in Finland
In Finland Companies can benefit from government investment incentives and have access to extensive research carried out by both Finnish Universities and the private sector.
Finland has one of the most stable and rich societies in the world. It is leading or near the top of most of international comparisons in terms of growth and development in the economic, technological and social spheres. Finland’s main industrial products are paper and board, electronics and metal products. Engineering and high technology industries are the leading branches of manufacturing.
To register a company in Finland the following steps should be followed:
Companies will be added to the necessary registers including the employer register during the initial registration to the tax administration. The process can take a maximum of 2 weeks.
All registration matters are handled by the Finnish Patent and Registration Office which is responsible for the Trade Register and works together with the Finnish Tax Administration.
KATSO ID authorisation is required which enables a partner to make all tax and social security fillings on behalf of their clients. The partner must be an authorised member of the Finnish Financial Administration Association.
It is not mandatory to make payments to employees or the authorities from an in-country bank account. Salary and 3rd party payments can be made on the clients behalf provided that the client has their own bank account in Finland. Payments can only be made using bank transfers to both the employee’s and the authorities. Usually bank transfers will only take a day to complete but international transfers will take 3-4 working days.
The working week in Finland is Monday to Friday. The working day for commercial offices is usually eight hours, typically from 8:00AM to 4:00PM.
Full name: Republic of Finland
Major languages: Finnish, Swedish
Major religion: Christianity
Monetary unit: 1 euro = 100 cents
Main exports: Machinery and electronics, paper and paper products, chemicals
GNI per capita: US $47,760 (World Bank, 2011)
Internet domain: .fi
International dialling code: +358
Good morning hyvää huomenta
Good evening hyvää iltaa
Do you speak English? Puhutko Englantia?
Good bye Näkemiin
Thank you Kiitos
See you later Nähdään myöhemmin
In Finland the tax year runs from January 1st until December 31st.
All tax returns in Finland are due by either the 7th or the 15th May. The date that the tax returns are due will be printed on the pre-completed tax return form.
Residents in Finland are taxed on their worldwide income. Non-residents are taxed only on income and gains from immovable property from a Finnish source.
An individual will be resident if he/she has a principal place of abode in Finland or he/she spends more than 6 months in Finland. Any temporary absence will not break the continuity of the 6 month period.
Employers are obliged to pay tax withheld at the source from all wages paid to employees in accordance with the table below.
All monthly contributions to the tax authority must be made on the 12th day of the following month.
Each taxpayer is provided with a pre-filled in tax return by the tax authorities. There are no joint assessments available.
Finland has a dual income tax system for individuals, under which income is divided into earned income and capital income. Any earned income is subject to national income tax, municipal income tax, church tax and social security contributions.
Penalties for late submissions/payment of tax varies between €5,00 and 20% of the tax payment that is in question.
Kela is Finland’s Social Security Institution and they provide a number of benefits such as home and family, unemployment benefits, pension and retirement, studying benefits and health and rehabilitation.
The statutory social insurance contributions payable by private employers comprise of the earnings, related pension contribution, employment accident insurance contribution, unemployment insurance contribution and employees’ group life assurance contribution plus the social security contribution.
The employer will withhold such contributions from an employee’s salary. Employees will only contribute to the pension fund and the unemployment insurance. Employees will pay a contribution of 5.7% of their monthly salary if the employee is under 53. If the employee is over 53 the contribution rate increases to 7.20%.
Unemployment insurance is collected from employees between the ages of 17 and 64 by the Unemployment Insurance Fund at the rate of 0.65% of an employee’s monthly salary.
The Finnish pension (TyEL) rates amounts to about 24,7% of the employee´s salary (brutto) and this is taken care of by the employer.
The 24% amount consists of pension insurance rate 19%, accident insurance rate of up to 2% (depending on the field), employment insurance 0,8%, group life insurance 0,067% and social security insurance 2,08%. According to Finnish Law the employer is obliged to insure all employees working in Finland.
There is a periodic tax return due on a monthly basis for payroll information. This contains company information as well as information about VAT. The withheld amounts are also required in the periodic tax return document. Such returns should be made by the 12th day of the following month. Clients are required to sign/approve the electronic form which is then sent on to KATSO ID.
Year End Documents consist of annual notifications to the tax, pension, insurance and unemployment insurance authorities in the tax administration. Company and employee information as well as information on salaries and the amounts withheld can be found in year-end documentation. The document should be submitted by the end of January with KATSO ID.
Except from the construction field, only foreign employees in Finland must register themselves with the local office and if required employees will be provided assistance with this matter. To set up a new start, personal information, work agreement and a tax card are required. New employees should provide a contract, passport, work permit, tax card and the A1 form (a certificate from the home country which shows that the employee will remain under its social security scheme and no Finnish contributions are required to be withheld). All foreign employees should be registered with the authorities before they start working.
In Finland the local register should be informed if an employee leaves the company.