Setting Up a Limited Liability Company in Finland
Expanding your business to Finland can be a strategic move – whether you're a startup founder or an established entrepreneur, forming a Limited Liability Company (LLC) offers a reliable and structured way to operate.
Finland stands out among EU nations as one of the most favorable places to establish a business. The process of starting a company, from incorporation to tax registrations and account setup, is relatively straightforward.
What Is a Limited Liability Company (LLC)?
A Limited Liability Company (LLC) is a separate legal entity, meaning that the company is liable for taxes independently from its owners. The LLC comes into existence through registration with the Finnish Trade Register. To establish an LLC, a start-up notification must be submitted. At the same time, the necessary details can also be filed with the Finnish Tax Administration.
Business Structures in Finland
Entrepreneurs in Finland can choose from various business models, including:
- Limited Liability Company (LLC)
- Private Entrepreneurship
- Limited Partnership
- Public Limited Company (Plc)
- Cooperative Association
- General Partnership
Among these, the Limited Liability Company (LLC) is the most commonly used and comprehensive company form in Finland.
Key Requirements for Setting Up an LLC
An LLC can be registered with or without share capital. Business financing can be arranged later through different means, but share capital is not a legal requirement for establishing the company.
When setting up a Limited Liability Company in Finland, the following information is required:
- Company Name
- Owners (Shareholders)
- Line of Business Activities
- Board Members and CEO
Board of Directors
A Finnish LLC must have a Board of Directors, and in some cases, a CEO. Additionally, a deputy board member may be required if the company has fewer than three regular board members.
The requirements for board members are:
- At least one board member must be a resident of the European Economic Area (EEA). If this condition is not met, a permit from the Finnish Patent and Registration Office (PRH) is needed.
- Non-residents must provide identification documents.
- If the company appoints a CEO, their details must also be submitted.
Online Registration Process
In most cases, the registration process can be completed online through the YTJ.fi service. However, an online registration is not possible if:
- The company has share capital.
- Shareholders include other companies or organizations.
- Not all shareholders, board members, or the CEO have a Finnish personal identity code.
- The company requires customized articles of association beyond the standard template.
- The company is a Public Limited Company (Plc).
If any of these conditions apply, registration must be completed using physical documents. The drafted documents and articles of association must be attached to the application.
The articles of association can be kept simple, with only the company name, home city, and business activities being mandatory.
Tax Registrations
During the registration process, the company can also be entered into the Finnish Tax Authorities' registers, including:
- Prepayment Register (required for most businesses before starting operations)
- VAT Register (mandatory if the company is subject to VAT)
- Employer Register (if the company has employees)
Employer Registration Requirements
A company must register as an employer if it:
- Has at least two permanent employees during the calendar year.
- Has at least six temporary employees at one time.
If the company hires only one employee temporarily, employer registration is not required.
Financial Reporting and Taxation
All companies in Finland are required to submit annual financial reports. Upon registration, the company is assigned a business ID (Y-tunnus).
Finland has a corporate tax rate of 20% for limited liability companies, which is competitive compared to other EU countries. Tax matters can also be managed conveniently through online services
Ease of Setting Up an LLC in Finland
Setting up a Limited Liability Company in Finland is a straightforward process, especially with online registration options. By carefully considering business structure, board composition, and tax requirements, entrepreneurs can efficiently establish and operate a business in Finland.
