Doing Business in the Nordic and Baltic Region

FINLAND

Markus Myhrberg

Partner, Attorney at Law

LEXIA

Finland

Basic Facts about Finland

Size: 390 903 km²

Population: 5.4 M (18 habitants per km²)

State formation date: 6 December 1917

Capital city: Helsinki

Political system: parliamentary republic

Official languages: Finnish, Swedish

Member of the EU: since 1 January 1995

Currency: euro (€)

Basic Facts about Finland

GDP: $266553 M in 2011 (IMF), 37th in the world ($ 36,395 per capita, 23th) Economy: One of the most open, competitive & successful economies in Europe due to political stability & sustained growth (AAA; S&P, Moody’s) Strong in: Information and clean technology, games, paper and metal industry, ship building, machinery, pharma and scientific instruments (e.g. included in the Curiosity explorer on Mars)

Rankings

• 3#, Global competitiveness report 2012-13 (World Economic Forum)

• Best business environment in the world (period 2009-2013, Economist

Intelligence Unit)

• The best availability of scientists and engineers in the world (WEF)

• 7# Global competitiveness index 2010-12 (World Economic Forum)

• Best country in the world (Newsweek, August 2010)

• Best basic education in the world (PISA)

Finland

- Strengths -

• Expertise and innovation (among the EU’s innovation leaders)

• Unique co-operation between education, research and industry

• Great logistics and communications networks

• Transparent legislation, lack of bureaucracy

• IPR protection, signatory to all major international IP treaties

• One of the least corrupted countries in the world

• Safety, clean environment Euro as currency

• Honest and straightforward people

• Excellent geographical location

The finnish nature... The Finnish nature…

Finland

Labour market • Highly educated workforce receptive to new technologies (e.g. vast amount of skilled IT-personnel) • Applicable collective bargaining agreements (union agreements) quite common • Increasing flexibility one of the main objectives • No minimum wage ruling in the law, but included in most of the union agreements Social system • Comprehensive social security • Several mandatory provisions for the benefit of employees •22-25% of the salary to be paid by the employer as social security, pension and other insurance costs

Finland - Investment possibilities -

Industries

• Cleantech

• ICT & Games

• Mining

• Research, Development and Innovation

• Travel

• Healthcare & wellbeing

• Ship building, machinery

Setting up a Business in Finland

• The nationality of a foreigner determines which permits or registrations are needed when moving to Finland

• Depending on the corporate form, a permit of the National Board of

Patents and Registration may be needed (if permanent place of residence outside the EEA) • In limited company (Oy) only for the board members/CEO

• Insurances and unemployment fund for entrepreneurs mandatory,

mostly do not apply to foreigners living abroad

• Business and organization ID provided once the foundation of a business is recorded in the Finnish Business Information System

Setting up a Business in Finland

Company types • limited company • sole proprietorship • partnership (general and limited) • joint venture different tax implications special permits registration procedures

Setting up a Business in Finland

• Share capital requirements: • Private limited companies Euro 2,500 • Public limited companies Euro 80,000

• Board of Directors is mandatory

• minimum one member and one alternate member. • at least one of the Board members must be EEA resident

• No directors needed, a Finnish representative required in some

situation • CEO has to be from the EEA

• Establishment agreement between shareholders, no notary

required

Finland - Taxation -

• Corporate income tax 24,5 % (as of 1.1.2014 20 %) • Tax obligations depend on whether the company has a permanent

establishment in Finland mandatory registration in the Finnish VAT register if the foreign company has a fixed establishment in Finland obligation to file VAT registration form in some cases even without permanent establishment, e.g. company selling goods or services to consumers employer registration: mandatory for companies with permanent establishment in Finland for income-tax purposes the company will be treated as a Finnish payer of wages

Finland - Taxation -

• Withholding tax on dividends 24,5,% • EEA 0% (at least 10 % ownership) • Finnish-Russian tax treaty > 12/5% (ownership 30%, investment

more than USD100,000) • Interests and royalties 0%

• Foreign natural persons in general > 30% • Tax treaties > 0% (if the company has paid)

• Sale of shares made by foreign companies in most cases tax-free under Finnish taxation

• Quite straightforward taxation system, limited possibilities to deduction in the company taxation • R&D deduction based on the paid salaries 15-400K • No results needed…

• IPR Box to be introduced (royalties -50%)

Finland - Working and Residence Permits -

• Residence permit is required for foreigners staying in Finland for 90 days or longer (does not apply on EU/EEA citizens and Nordic countries)

• Residence permit for a self-employed person also required in order

to engage in trade in Finland • Applying residence permit, permit grounds, temporary/permanent

residence permit • Residence permit for an employed person: usually granted for a

specific occupational position/sector • Researchers, executives, concultants, educational work etc.

Thank you!

Markus Myhrberg Partner, Attorney Mobile: +358 (0)40 505 5343 markus.myhrberg@lexia.fi