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Starting a Business in Finland as a Foreigner

A foreigner can start a business in Finland relatively easily. The process depends somewhat on whether the person lives in an EU/EEA country or outside it, but the basic steps are the same.

1. Choose a Business Form

The most common business forms in Finland are:

Sole trader
Limited company (Oy) – the most common option for foreigners
General partnership
Limited partnership

Most foreigners establish a limited company (Oy) because it is flexible and limits personal liability.

A company must have an official business or postal address in Finland.

2. Register the Company

The company must be registered with:

the Finnish Patent and Registration Office
the Finnish Tax Administration

Registration is done through the Business Information System (YTJ).

There the company is:

entered into the Trade Register
registered for tax registers (VAT, prepayment tax, etc.)

Registration fee (2026): approximately €280–€380, depending on the method.

3. Personal Identity Number or Identification

Usually you will need:

a Finnish personal identity number, or
strong electronic identification

If a person does not have a Finnish personal identity number, registration is still possible, but the process may take slightly longer.

4. Residence Permit for Entrepreneurs (Non-EU Citizens)

If the entrepreneur comes from outside the EU/EEA, an entrepreneur residence permit is usually required.

This is granted by the Finnish Immigration Service.

The application evaluates factors such as:

the business plan
financing
profitability of the company

5. Bank Account and Accounting

The company must have:

a business bank account
accounting

Accounting is mandatory for all companies in Finland.

6. Business Form Affects Taxation

The two most common business forms are:

Limited company (Oy)
Sole trader

Limited Company (Oy)

The company pays 20% corporate income tax on its profit.

The owner pays taxes only when receiving salary or dividends.

Sole Trader

The business profit is taxed directly as the entrepreneur's personal income.

The tax rate can increase progressively to approximately 30–50%.

👉 For foreigners, a limited company (Oy) is often safer because taxation is clearer and liability is limited.

7. Tax Liability in Finland

If a company operates in Finland, it is generally taxable in Finland.

Two important concepts:

General tax liability – if you live in Finland more than 6 months per year.

Limited tax liability – if you do not live in Finland but your company operates here.

In this case, Finland taxes income generated in Finland.

8. Value Added Tax (VAT)

In Finland, almost all companies must register for VAT.

Standard VAT rates:

24% – general VAT rate
14% – food and restaurants
10% – books, sports, and cultural services

VAT registration is done through the Finnish Tax Administration.

👉 VAT must usually be reported monthly.

9. Prepayment Tax

Companies must pay advance tax based on estimated income.

This is applied for through the Finnish Tax Administration and is usually paid:

monthly, or
quarterly

If the estimate is incorrect, it can be adjusted during the year.

10. Payroll Taxes and Employer Contributions

If you hire employees, the company must pay:

withholding tax from wages
employer's health insurance contribution
pension insurance contributions (TyEL)
unemployment insurance contributions

11. Accounting Is Mandatory

All companies in Finland have accounting obligations.

Common accounting software includes:

Procountor
Netvisor

Many companies also use professional accounting firms.

12. Additional Requirements for Foreign Entrepreneurs

Foreign entrepreneurs may also need:

a Finnish personal identity number or Business ID
a Finnish bank account
a residence permit for entrepreneurs (if from outside the EU)

The Finnish Patent and Registration Office handles company registration.

Summary

For foreign entrepreneurs in Finland, the most important aspects of taxation and administration are:

choosing the correct business form
VAT registration
prepayment taxes
accounting
possible employer contributions if hiring employees.

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