Starting a Business in Finland
Finland is consistently ranked among the best countries in Europe for ease of doing business. The registration process is straightforward, and the legal framework is stable and transparent. However, choosing the right legal structure from the start is critical — it affects taxation, liability, and how the business is governed.
Main Legal Structures
1. Sole Trader (Toiminimi / Yksityinen elinkeinonharjoittaja)
The simplest form of business. You operate as an individual — there is no separate legal entity. Advantages include low setup costs and simple administration. The key drawback is unlimited personal liability: your personal assets are at risk if the business incurs debt.
Best for: freelancers, consultants, and small-scale traders starting out.
2. Limited Liability Company (Osakeyhtiö / Oy)
The most common structure for Finnish businesses of any significant scale. An Oy is a separate legal entity from its owners (shareholders). Key features:
- Limited liability — shareholders are only liable up to their investment
- Minimum share capital of €0 (abolished in 2019 — there is no minimum)
- Must have a board of directors and file annual accounts
- Profits are subject to corporate tax (currently 20%)
Best for: most businesses that plan to grow, hire employees, or take on significant financial commitments.
3. General Partnership (Avoin yhtiö / Ay) and Limited Partnership (Kommandiittiyhtiö / Ky)
Partnerships involve two or more partners. In a general partnership, all partners have unlimited liability. In a limited partnership, at least one partner has limited liability. These structures are less common today but may suit certain professional or family business arrangements.
How to Register Your Business
- Choose your business name — check availability at the Business Information System (ytj.fi)
- Prepare founding documents — for an Oy, this includes the memorandum of association (perustamissopimus) and articles of association (yhtiöjärjestys)
- Submit the registration — through the Business Information System (ytj.fi) or the PRH (Finnish Patent and Registration Office). Online registration for an Oy costs around €275; paper registration is more expensive.
- Receive your Business ID (Y-tunnus) — this is your official identification number for all business activities
- Register for applicable taxes — VAT, employer's register, prepayment tax register, as applicable
Tax and VAT Obligations
Most businesses must register for VAT (arvonlisävero / ALV) once annual turnover exceeds €15,000. The standard VAT rate in Finland is 25.5% (as of 2024), with reduced rates for certain goods and services.
Corporate income tax for limited companies is a flat 20%. Sole traders pay income tax at their personal progressive rate.
Employment Law Basics
If you hire employees, you become subject to Finnish employment law under the Employment Contracts Act (Työsopimuslaki). Key obligations include:
- Providing a written employment contract
- Paying at least the minimum wage set by collective agreements (if applicable)
- Contributing to employee pension insurance (TyEL)
- Providing statutory annual leave and sick pay
Useful Resources
- ytj.fi — business registration and Business ID lookup
- prh.fi — Finnish Patent and Registration Office
- vero.fi — tax registration and business tax guidance
- newfinland.fi — practical guide for international entrepreneurs in Finland
- yrittajat.fi — Finnish Entrepreneurs association, with member support and resources
Setting up a business in Finland is a well-structured process, but getting the legal and tax foundations right from the start will save you significant time and cost down the line. When in doubt, consult a Finnish business lawyer or accountant before registering.