How To Start A Business In Finland In 2024

Finland is known for being the happiest country in the world, and also boasts features like its pristine lakes, sauna-loving culture and northern lights.

Finland is also an attractive destination for entrepreneurs, however, there are some key factors to consider before setting up shop there. These include the economic conditions, the legal and regulatory requirements businesses must adhere to, as well as the taxation policies and labour laws.

Finland has strong service and manufacturing sectors, and it can be an exciting location for startups. However, entrepreneurs must prepare thoroughly to ensure their ventures are successful.

 

What Is The Appeal Of Starting A Business In Finland?

 

Finland’s cost of living is low compared to other countries, therefore entrepreneurs can start their businesses with relative ease and can scale more quickly.

Finland’s economic and political outlook is also stable because of adequate management and efficient government service. Finish people also have a 100% literacy rate according to Education, which translates into a robust, skilled workforce.

Finland has many strong industries, ripe for entrepreneurs. These include the technology, clean energy, and service industries, and businesses in software development or digital services reflect high profits.

 

What Opportunities Are There For Startups In Finland?

 

Finland is rated as the 4th best place in the world to launch a startup, and there are many support programmes entrepreneurs can lean on from the earliest stages of starting a business.

Since Finland is a leader of sustainability, startups with a focus on clean energy, energy efficiency, smart grids, and circular economy innovation may have a bright future in Finland.

Startups focusing on health and wellbeing innovations, new products in the gaming industry, educational technology and bioeconomic solutions may also tap into a market ripe for entrepreneurs.

 

Finland’s Economic Overview

 

Finland’s economy is emerging from a chilly season, as high inflation, rising interest rates, and the effects of the war in Ukraine contributed to its recession in 2023, the European Commission reports. Luckily, the Finnish economy is predicted to make a gradual recovery due to an increase in local and external demand.

As inflation reached peaking heights of 4.3% in 2023, consumer spending and investments were slowed down. Luckily, inflation is expected to decrease to around 1.4% by the end of 2024. Investment may still remain a challenge in the short term.

Finland’s job market has also taken a beating due to the stunted economic growth it experienced, and unemployment rates with risen to 7.2% in 2023.
 

 

Finland’s Legal And Regulatory Framework

 

Finland’s legal and regulatory framework is transparent and streamlined, and entrepreneurs can be expected to be welcomed by a welcoming business environment:

 

Choosing An Appropriate Business Structure

 
Choosing the best structure for your business depends on various factors, such as the number of owners, the level of liability protection you need, and growth trajectory. It’s advisable to consult a business adviser to help you make the best informed decision.

The most popular business structure in the private limited company (Oy) which provides its owners limited liability. Larger ventures may want to choose the public limited company (Oyj) which provides means for businesses to raise capital through public services.

 

The Registration Process

 
Business registration in Finland is relatively straight forward. Business owners must give their business a unique name and draft Articles of Association that outlines their company’s rules. Businesses must have a registered office address and a minimum of one board member who is an EU resident.

It is also important for entrepreneurs to do research for their industry as some may require them to obtain licenses and permits.

Then, entrepreneurs can register their businesses with the Finnish Trade Register that is maintained by the Finnish Patent and Registration Office.

 

Finish Taxation And Financial Management

 

Finland has a relatively simple tax landscape. Consulting a tax advisor can help ensure compliance with all regulations and can help you optimise your tax duties.

 

Corporate Income Tax And VAT In Finland

 
Finland has a corporate income tax rate of 20% which is applicable to a company’s global profits. Tax rates can thus be predictable and be calculated quite simply. Finland also has a 30% capital gains tax rate for businesses with an income below €30,000, and 34% rate for businesses that earn more than €30,000.

The VAT rate in Finland is currently 24%, according to Finnish Tax Administration. Businesses must register for VAT when they exceed an annual turnover threshold of about €10,000.

 

Hiring And Managing Employees In Finland

 
Finland has a highly skilled workforce and salaries are usually competitive. Many employees belong to trade unions, helping them negotiate Collective Bargaining Agreements that determine minimum terms such as working hours, vacation days, and termination procedures.

Finnish law takes fairness and non-discrimination seriously. Written employment contracts are the norm in Finland, and must outline terms such as salaries, benefits, and working hours. While oral contracts aren’t completely disregarded, it is not recommended.

According to Finnish law, maximum working hours in Finland are 8 hours a day and 40 hours per week, and flexible arrangements are possible through negotiation. Employees are also entitled to sick leave benefits and annual leave, which is usually generous at five weeks.

Most employees receive pension and healthcare benefits along with unemployment insurance. Employers must contribute to social security and employee deductions.

Finland, with it’s magical allure and playground of opportunities, can be a promising country for entrepreneurs who want to start new ventures there. Entrepreneurs must prepare adequately and take into consideration various factors, such as the economic outlook, applicable taxes, registration processes and employee management.

The simplistic tax system and straightforward registration processes create a welcoming business environment for new entrepreneurs.