Helsinki – your gateway to global markets

Download the presentations:

• Opportunities in Greater Helsinki
  Maria Hartikainen, Senior Advisor, Helsinki Business Hub
• Startup permit
  Karen Grigoryan, Head of Invest in Finland operations in Russia, Business Finland
• Legal aspects of opening and doing business in Finland
  Kiril Tervo, Managing Partner, Ad Astra Attorneys
• Experiences in opening a company in the country of thousand lakes
  Andrey Pechurin, co-founder and CEO of Acoustic Extra Freezing

It is challenging to open a bank account for non-Finnish citizens. Is there any help with this matter?

European banks have an obligation to carry out sufficient customer due diligence and monitor financial transactions and investment activity of their customers to be able to detect unusual or suspicious transactions to prevent money laundering. Standard customer due diligence (KYC) procedure includes providing the bank with information on company’s management, beneficiaries, origin of funds, information on key clients and suppliers, geography of operations and expected volumes of financial transactions. Failing to provide this information to the bank can result in problems with opening the bank account. Question of the citizenship of the management and founders is secondary.

Often for newly established SMEs account in an online banking services such as Holvi or similar is sufficient to start operations.

How difficult is it for hardware manufacturers (microelectronics) to kick-start business in Finland?

Finland is one of the top locations for high-tech manufacturing and R&D worldwide. Helsinki region has a strong electronics & photonics ecosystem consisting of global industry leaders like Vaisala, Murata, Okmetic, GE Health, Nokia and others, as well as startups, SMEs and vital infrastructure like VTT Micronova Memsfab and a strong engineering talent pool. Foreign founders of innovative hardware startups are very welcome to apply for startup permit program.

What is the approval rate of the startup permit program?

Around one third.

What are the requirements for staying in Finland for founders of a startup and the conditions (business criteria for a startup) of extending a startup visa after 2 years?

Finland does not provide just a visa for foreign startup founders, but a full-fledged residence permit. Like any residence permit it means full residency in the issuing country. The founders of the startup company must stay in Finland for at least half a year + 1 day. The company itself must be fully functioning business unit and not just a nominal legal entity on paper.

If these conditions are not met, Finland may refuse to grant you a future residence permit.

It would be great to get some basic information on taxation in Finland.

Corporate income tax in Finland is 20%, which is the lowest in the Nordics. For more information visit the Finnish Tax Administration’s webpage.

Can a company pay taxes to the Tax authority from the account in an online banking service (such as Revolve or Holvi)?

Yes

Is there a capital income tax?

Yes, it varies between 30% and 34%. For more information visit the Finnish Tax Administration’s webpage.

What is the Russian community in Finland like, are there daycares, schools etc?

Helsinki region has the largest Russian speaking community in Finland. There are several Finnish-Russian daycares in the capital region, for example Kalinka, Finnish-Russian school and Russian Embassy school.

We have found a franchising partner in Finland. Are there any special franchising regulations? Any issues if franchiser is in Russia and franchisee in Finland?

There are no special franchising regulations in Finland, relations between franchiser and franchisee are defined by the contractual agreement (freedom of contract). For more information contact the Finnish Franchising Association.

May a company with a Russian subsidiary make an IPO on a Finnish stock exchange?

Yes. Ownership in a Russian legal entity is by no means an obstacle to an IPO. There certainly are strict requirements on audit, compliance, financial and business reporting, that a company wishing for listing must fulfil, but ownership in Russian (or any other) subsidiary is perfectly OK and more of business / commercial consideration than legal. Several of major publicly traded companies in Helsinki exchange have Russian subsidiaries, or even whole groups of subsidiaries. A company going for IPO must be an Oyj (public) company, “normal” Oy will not suffice. It must have a share capital of minimum of 80,000 EUR and a managing director. Annual audit by a highly qualified auditor is compulsory. It should be noted, that additional compliance and reporting requirements, imposed on a publicly traded company, cause very significant additional costs and administration layer for a developing small firm. Therefore too early IPO may easily be destructive. There is also a “sandbox” version of stock exchange in Helsinki for growth companies, with less strict requirements than a fully-fledged stock exchange Nasdaq Helsinki – First North.

Which legal form is preferred if the main team remains in Russia?

All the legal forms are available, depends on the size, type of business and what is transferred between the countries.  The question is rather how to transfer value / input from Russian entity (or persons) to Finland. It may be organised through normal commercial agreements, employment, licenses, or subsidiary / representative office structure. Usually Oy is the most suitable for all these considerations.

How to finance a Russian subsidiary?

By the means available to any shareholder in the Russian company under the Russian law.  It may be investment into the capital of the company in money or in other assets (there are some custom toll preferences for instance if the contribution is paid in-kind in advanced machinery), loan, commercial agreements, parent company guarantees etc.

Will the preferences on dividends, provided for in the Finnish-Russian tax treaty be applied once MLI is in force?

MLI is in force between Finland and Russia as of 1. October 2019. It does not have any impact on the taxation of dividends under the tax treaty (tax at source 5% if the shareholder is a legal entity, holding min. 30% of the shares in dividend-paying company and shareholders’ investment into the equity of dividend-paying company was at least 100 000 USD, in any other cases tax at source is 12%). MLI has effects if trade between Russian and Finnish companies, controlled by same persons, is not conducted on market terms, the tax authorities may investigate, whether there was artificial transfer of income o other country in such cases.

Are there any obligations to hire local employees / job creation requirements?

Finland does not oblige to hire local personnel, but it is always seen as a good sign when you hire a local.

What are the primary costs of setting up a limited liability company (OY) in Finland: lawyers, accounting, public services etc.?

A good estimate for the first two months is about 2500 euros.

Costs may include:

• 380e state registration fee
• 1500е (+ VAT) lawyer services
• 100s – 150s coworking space rental
• 100e – accountant
• Opening a bank account for free

Is it mandatory for a member of the board of directors to be a Finnish citizen or a person with a residence permit will be just enough?

Having a valid residence permit is enough to become a member of the board of a Finnish company. One must be a full-fledged resident and taxpayer with a permanent physical address in Finland.