Doing Business in Finland

Do you want to expand your business into Finland or hire employees there? Here are some key things you need to know about a Finland expansion.

Finland Economy Overview

Currency

EUR

Working hours

40 hours/week

Public/bank holidays

12 public holidays

Capital

Helsinki

Languages

Finnish and Swedish

Population

5.6 million

Minimum hourly salary

No legal minimum

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

In the case of misclassifying an employee as an independent contractor, employers will be required to extend full employment benefits to the individual. These benefits may also include back payments for social security contributions and additional severance requirements.

Fun fact

Industry in Finland is the second largest sector of the Economy of Finland after the service sector. It has a high level of industrialization, a small domestic market, and openness to trade.

Voted the 2nd best investment environment in the world, Finland boasts some of Europe’s most reliable infrastructure, highly skilled workers, and exemplary productivity within its workforce.

With a comprehensive social security network and a competitive tax regime offering high funding to both national and foreign corporations alike, it is unsurprising that its economic climate, with a GDP of $55.13 thousand, continues to appeal to corporations looking to expand internationally.

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Overview of Finland's Economy

Finland’s economy is characterized by a strong focus on innovation, sustainability, and technology. Known for its highly skilled workforce and advanced infrastructure, the country thrives in sectors such as information technology, clean energy, and bioeconomy. With a stable economic environment, transparent business practices, and a commitment to R&D, Finland offers promising opportunities for investors and entrepreneurs alike.

Economic Indicators	Status
GDP (2023)	$308 billion
Recession (2023)	Mild, economy steadily recovering
Inflation (2024)	Slowing to 1%

A growth in earnings, alongside a steady decrease in inflation, forecasts an improvement in household consumption opportunities. Finland’s geographical location was once a strategic leverage used in the early post-war years to exploit trade relationships with both Western and Eastern Europe.

Now, it proves a possible point of tension as Finland’s growing pro-NATO sentiment moves it closer to the UN and further from their once near trading partner, Russia. However, despite the dramatic decrease in trade with Russia, particularly in raw materials, overall, it has had a limited effect on Finnish manufacturing.

Finland itself has an abundance of natural resources such as:

Timber
Pulp
Water
Minerals

Its huge economic growth since WW2 has been largely due to its technological prowess and focus on innovation and development within the clean energy and technology sectors.

The country’s education system ranks as one of the highest globally, fostering talent that will continue on to join the nation’s productive and committed workforce thus ensuring further advancement. With an aging population, the country’s decision to provide international and national individuals and corporations with the same rights is a strategic decision to ensure the Finnish market remains competitive in an evolving global space.

Taxes

Employer tax: 27.69% – 29.39%

Health Insurance

1.16%

Pension insurance

25.12%on average

Accident insurance

0.7%

Unemployment insurance

0.5% – 2.05%

Employee tax: 10.05% – 43.98%

Pension insurance

7.15% – 8.65% determined by age group

Employment insurance

Unemployment insurance 1.5%

Municipality tax

4.36% – 10.86%

Church tax

1% – 2.1%

Income tax

Over

0
19900
29700
49000
85800

Not Over

19900
29700
49000
85000

Tax on column 1

0
2515
4377
10215
22727

Tax on excess (%)

12.64
19
30.25
34
44

Business Regulation in Finland

Whether a company operates as a general partnership, a limited partnership, a cooperative, an entrepreneur, or a limited liability company (the most common form of foreign enterprises), it must comply with regulations, informing the trade registry through a start-up notification.

Documents such as articles of association of the company, related board minutes, creation of a corporate bank account certified through a board resolution, and a memorandum providing original share distribution details are required to be submitted to the Trade Registry.

Upon the approval of these articles, a company must then choose a name that is in compliance with intellectual property rights. The name of private limited companies must end in ‘oy’ or ‘osakeyhtio,’ whilst public limited companies should end in ‘oyj’ or ‘julkinen osakeyhtio.’

The company formation process, including the verification of the necessary documents submitted to the Trade Registry (either physically or online), usually takes 2-3 weeks.

Taxation Laws

LLCs and other corporate organisations are expected to pay a competitive 20% income tax consisting of a profit tax and real estate tax. Additionally, most companies are liable to pay VAT at a basic rate of 24%. However, there are exemptions with Finland incentivising corporations using potential tax deductions.

In the case of smaller businesses likely to generate a smaller turnover, VAT registration may not be mandatory.

Labour Laws

Finnish law decrees that workers are provided with a healthy and safe work environment. Employees must be given the opportunity to join a trade union as well as afforded protection ensured by laws and agreements.

Labour laws in Finland mandate office employers to employ their workers to work 37.5 hours per week. This average may be increased to 40 hours for certain employees. Employers are not permitted to extend working hours beyond a maximum of 48 hours per week, including overtime hours, and any overtime work must be compensated.

Moreover, Finnish law states that women (both foreign and native) are awarded 40 days of paid maternity leave and granted the right to work of an equal nature upon their return.

Minimum Employment Protections

The Finnish employment environment is regulated to safeguard worker rights and promote fair labor practices. While there’s no statutory minimum wage, collective agreements set wage standards across industries. Regulations cover working hours, paid leave, and parental leave entitlements.

The Employment Contracts Act and other labor laws outline these rights, with collective bargaining agreements playing a key role in various sectors.

Benefits of Doing Business in Finland

Finland proves an appealing climate for foreign investment due to a variety of key benefits identified below.

Initiatives and Incentives

Finland boasts equal opportunities for both foreign and native corporations alike, incentivising businesses with low-interest loans and grants. Funding is provided by the Centres of the Economic Development, Transport and the Environment (ELY).

This funding can be used to develop business operations and efficiency as well as support the training of new employees and the development of technology and innovation within the corporation. Investment aid is particularly targeted towards small and medium companies (SMEs) with the aim of improving many factors within the company ranging from process enhancement to internationalisation.

The official Export Credit Agency in Finland supports enterprises in their journey from start to expansion, shielding them from potential export risks.

Highly Skilled Workforce

Finland proudly ranks as home to one of the highest levels of digital talent in Europe. Expertly involved across all major fields, Finland’s talent pool excels in IT, engineering, and health tech services. The highly skilled workforce is a product of their exemplary education system meaning new talent is constantly being fostered across the country.

Post covid, Finland saw a rise in favour of remote and hybrid working resulting in resources, previously centralised in the capital Helsinki-Uusimaa, now growing across the country.

Reliable Infrastructure

As a leader in achieving UN sustainable goals, Finland benefits from a cost-effective and green economy. Its cool Nordic climate makes it the perfect location for data centres and, thus the digital expertise ecosystems that commonly surround these areas.

Despite the fact that large amounts of electricity are needed to power data centres, Finland remains 90% carbon-free in its electricity production since these data centres are operated using the country’s clean energy. Interestingly, as a key player in the advanced technology industry, Finland proudly boasts the world’s most advanced 5G network.

Challenges

As in every economy, Finnish businesses face challenges. Having once been a leverage for international trade, Finland’s geographical location—situated on the fringes of Europe and in close proximity to Russia—may now cause friction for businesses wishing to scale.

Finland also has a smaller population than other EU nations, consisting of 5.5 million people, making it a much smaller market. However, its access to the single market as a member of the EU can be seen to somewhat alleviate this cause for concern.

Additionally, strict labour laws may prove an obstacle for businesses, and failure to understand these could lead to unforeseen costs.

Business Expansion Options in Finland

As the 2nd best investment environment in the world, international expansion into Finland can be a very successful and lucrative endeavour for corporations. When expanding, businesses have the option to establish a separate local entity known as a subsidiary or to register a branch of the parent company on Finnish soil.

Finland Employer of Record (EOR)

An EOR acts as a legal employer mitigating company risks. Similarly to PEOs, EORs handle HR functions. However, EORs extend their services to provide the company with valuable market insight, enabling them to appropriately strategise their plan for expansion. Conversely, to PEOs, EORs do not require a local entity to employ workers.

Instead, they can employ skilled individuals from around the world. Though PEOs prove less costly if a company already has an established local entity, the scope provided by EORs, including access to the global market, is a key asset for expanding businesses.

With a sole employer, a company is likely to benefit from higher long-term cost savings and can be regularly updated about legislation changes that may affect the corporation’s strategy.

When choosing between a PEO or EOR, a company must consider their long term goals and requirements in addition to the cost of establishing a local entity.

Learn more about EOR in Finland

Recruitment Agencies

Recruitment agencies in the Dominican Republic help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Dominican Republic labor laws.

For businesses looking to grow in the Dominican Republic, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

Learn more about Recruitment Agencies in Finland

Finland Professional Employment Organization (PEO)

Expansion can prove both costly and time-consuming. Therefore, businesses may seek PEO (Professional Employment Organization) or EOR (Employer of Record) organizations to help expand their workforce and smooth potential HR complications in Finland.

PEOs offer a range of HR services, including processing payroll, cost-effective health insurance and talent management. Some even offer recruitment services in Finland. Compliance experts are used by PEOs to help protect the business from unjustified fines and penalties and limit claims.

PEOs usually charge based on the size of the company’s turnover. Often, they will collect a percentage of the company’s total payroll. Unlike EORs, PEOs act as co-employers, meaning that the liability of the company’s employees is shared.

Learn more about PEO in Finland

Subsidiary

Subsidiaries work as separate companies and must act in accordance with Finnish law legislation. They are often the preferred method of expansion as their lower overhead costs mean they are liable to pay significantly less tax and may earn more credibility amongst services such as banks and partners. The independence also allows the separate company to establish a business culture that is more aligned with Finnish society and laws.

Branch

When a parent company establishes a branch in Finland, as in other EU nations, they are responsible and liable for its actions. The parent company’s representative or an individual granted power of attorney must send the necessary documents to the Finnish Trade registry in compliance with business regulations.

The company is only forced to act under its parent company’s nation’s law including foreign taxation. Setting up a branch is recommended for companies wishing to explore the success of their niche within Finnish culture.

Business Opportunities in Finland

Finland presents a wealth of business opportunities for investors and entrepreneurs, driven by its skilled workforce, cutting-edge innovation, and stable economy. With a strong focus on technology, sustainability, and top-tier education, the country provides an ideal setting for businesses to flourish.

Business Opportunities	Reasons
Clean Technology	Strong government support, innovative ecosystem, growing global demand
Information and Communication Technology (ICT)	Highly skilled workforce, advanced infrastructure, thriving startup scene
Forestry and Bioeconomy	Abundant natural resources, strong R&D capabilities, increasing demand for sustainable products
Healthcare and Life Sciences	Aging population, advanced healthcare system, strong research and innovation
Education and EdTech	Renowned education system, growing demand for digital learning solutions

Finland’s focus on sustainability and innovation makes it a prime hub for clean tech, with thriving sectors in ICT, software, AI, and cybersecurity. Its vast forest resources and R&D strengths drive growth in forestry and bioeconomy, while an aging population and strong healthcare system offer opportunities in digital health and personalized medicine. Finland’s top-tier education system also supports growth in EdTech.

With a stable economy, transparent business practices, and supportive policies, Finland is an attractive destination for investors in Northern Europe.