Finland is a Nordic nation in Northern Europe, formally known as the Republic of Finland. It shares land boundaries with Sweden to the northwest, Norway to the north, and Russia to the east, as well as the Gulf of Bothnia to the west and the Gulf of Finland to the south through Estonia. Finland has a population of 5.5 million people and an area of 338,455 square kilometers (130,678 square miles). Helsinki is the capital and biggest city, and it is part of a broader metropolitan region that includes the cities of Espoo, Kauniainen, and Vantaa. The ethnic Finns make up the large bulk of the population; Finnish and Swedish are the official languages. The climate of Finland ranges from humid continental in the south to boreal in the north. The land cover is largely a boreal woodland biome, with over 180,000 lakes reported.
Finland was originally populated circa 9000 BC, after the end of the Last Glacial Period. Several pottery types and civilizations emerged throughout the Stone Age. Contacts with different civilizations in Fennoscandia and the Baltic area were common throughout the Bronze and Iron Ages. As a result of the Northern Crusades, Finland eventually became an essential part of Sweden beginning in the late 13th century. As a consequence of the Finnish War, Finland became part of the Russian Empire in 1809 as the independent Grand Duchy of Finland, during which time Finnish art thrived and the concept of independence gained traction. Finland became the first European country to provide universal suffrage in 1906, and the first in the world to allow all adult citizens to run for public office. The last Tsar of Russia, Nicholas II, attempted to russify Finland and remove its political autonomy, but following the 1917 Russian Revolution, Finland proclaimed independence from Russia. The Finnish Civil War separated the young state in 1918. Finland battled the Soviet Union in the Winter War and the Continuation War, and Nazi Germany in the Lapland War during WWII. It later lost land, including the culturally and historically important town of Vyborg, but preserved its independence.
Until the 1950s, Finland was predominantly an agricultural nation. Following World War II, it swiftly industrialized and expanded its economy, while also establishing a comprehensive welfare state based on the Nordic model; the nation soon experienced broad affluence and a high per capita income. Finland joined the United Nations in 1955 and declared itself neutral; it joined the OECD in 1969, the NATO Partnership for Peace in 1994, the European Union in 1995, the Euro-Atlantic Partnership Council in 1997, and the Eurozone in 1999. Finland ranks first in a variety of national performance criteria, including education, economic competitiveness, civil freedoms, quality of life, and human development. Finland ranked first in the World Human Capital Report in 2015, first in the Press Freedom Index, and was the most stable country in the world from 2011 to 2016, according to the Fragile States Index; it is second in the Global Gender Gap Report, and first in every annual World Happiness Report since 2018.
The time from April 1st to March 31st of the following year is used to measure annual leave. Usually, vacation is taken between May 2 and September 30. (4 weeks in the summer and 1 week in the winter).
Employees who have worked for more than a year are entitled to two holiday days per month or 2.5 vacation days per month. Employees who have worked for the company for at least 15 years are entitled to three vacation days every month.
Finland recognizes ten public holidays.
Employees who have worked for at least a month are entitled to complete sick leave for a period of nine working days. Within the nine days, the employee must have a doctor's medical certificate.
Pregnant workers have the option of starting maternity leave up to 50 days before the planned due date. The employee earns insurance for 105 working days after maternity leave starts (Monday-Saturday, excluding holidays).
At least two months before taking maternity leave, the employee must contact the boss and register for maternity pay.
Paternity leave is granted to fathers for a total of 54 days, with a limit of 18 days to be taken concurrently with the mother. The remaining days must be split into several cycles.
Both parents are entitled to 158 days of paid maternity leave, which begins when the child is approximately 9 months old and expires when the child is approximately 9 months old. Since the leave cannot be taken by both parents at the same time, parents must agree on when they will take it.
Employers must offer reasonable justification for terminating an employee. Before terminating an employee for poor performance, the employer must get a warning and an opportunity to improve.
Before terminating employment, an employee must offer written notice to the employer and adhere to the notice period.
Employment on a fixed-term basis cannot be terminated.
When the employer initiates the termination, there is a notice period. There will be a 14-day notice period for up to one year of employment. There will be a one-month notice period for employees who have worked for one to four years. There will be a two-month notice period for employees who have worked for four to eight years. There will be a four-month notice period for employees who have worked for eight to twelve years. There will be a six-month notice period for employees who have worked for more than 12 years. If the employee is the one who initiates the termination, the notice period will be different. There will be a 14-day notice period for employees who have worked for one to five years. A one-month notice period is required for employees who have worked for more than five years.
The probation period in Finland usually lasts for six months.
There is no statutory provision for severance pay unless the employee's termination is arbitrary or the company chooses to grant it voluntarily.
The standard workweek is 40 hours with eight hours per day, and white collar employees work 37.5 hours per week. Regular working hours may be set at an average of 40 hours per week for a period of up to one year. Typically, collective bargaining agreements provide for reduced work hours. However, over a four-month period, the workweek cannot exceed 48 hours.
Each overtime period requires the employee's consent. Overtime hours are limited to 138 hours per four-month period and 250 hours per year. If necessary, an additional 80 hours of overtime may be agreed upon. Overtime can be exchanged for vacation time, and employees have the option of refusing overtime.
Overtime increases pay by 150 percent for the first two hours and 200 percent for the remaining hours. Weekly overtime is compensated at 150 percent of the regular rate of pay. Sunday work is compensated at a rate of 200 percent.
Overtime pay varies according to collective bargaining agreements.
Compensation laws in Finland do not mandate a minimum wage, but collective agreements may specify minimum salary requirements for specific industries.
Employee bonuses are not required by law, but they are common. A collective bargaining agreement, for example, may include a provision for a holiday bonus of approximately 50% of the pay for that annual holiday. Employers have the option of paying this bonus to employees before or after the holiday.
Due to the high quality of health care provided for the public sector, the private health care system only provides about 3-4 percent of care. Supplemental insurance coverage is not required.
Employees in Finland are covered by employment-based benefits insurance. These would include an earnings-related pension, vocational rehabilitation, workplace injury compensation, and occupational illnesses. The earnings-related pensions are administered by the Finnish Centre for Pensions, ETK. Employers are required by law to provide employees with occupational health care services.
Dividends, rentals, and capital gains are subject to capital income tax. In 2017, capital income is taxed at a constant rate of 30%, or 34% if the income exceeds 30,000 euros. Some businesses are taxed differently depending on whether they are listed or not. Tax-free dividends are paid by public businesses on 15% of their earnings. Thus, the effective dividend tax rate is between 25.5 and 28.9 percent.
Dividends from non-listed businesses, on the other hand, are taxed at a considerably lower rate. Up to 150,000 €, up to 75 percent of these dividends are tax-free. This still contains the requirement that the dividend be less than or equal to 8% of the stock's mathematical value (portion of net assets for a single share). Instead, 75% of the portion that exceeds the 8% limit will be taxed as earned income. If a person receives more than 150,000 € in dividends from non-listed limited businesses, the tax-free percentage is only 15% of the amount in excess of 150,000 €. The effective tax rate for a dividend that does not exceed 8% of a stock's value is 7.5 - 8.5 %. Dividends paid by debted private businesses are typically taxed as earned income due to the impact of net assets.
Corporate income tax is levied at a rate of 20.0 percent. Before 2004, the corporation tax was completely paid as dividend tax, however due to the EU's neutrality rules, the tax credits permitted for dividends have become more complicated. In January 2014, the corporate tax rate was reduced from 24.5 percent to 20.0 percent.
Earned gross income is taxed via a combination of proportionate community taxes paid to municipalities (16.5 percent – 22.5 percent, average 19.17 percent ) and parishes (1.00 percent – 2.00 percent, average 1.34 percent ) and a progressive state tax. [8] Local taxes have an earned income tax credit, making them somewhat progressive despite their fixed rate. In reality, low-income people do not pay any state tax since the tax on their earnings does not exceed the standard deductions.
For an income between 0 and 17,200 Euros, the marginal tax rate is 0.
For an income between 17,200 and 25,700 Euros, the marginal tax rate is 6 percent.
For an income between 25,700 and 42,400 Euros, the marginal tax rate is 17.25 percent.
For an income between 42,400 and 74,200 Euros, the marginal tax rate is 21.25 percent.
For an income over 74,200 Euros, the marginal tax rate is 31.25 percent.
VAT is levied at a standard rate of 24% (January 2013), as well as two reduced rates of 14% on food, restaurant services, catering services, and animal feed, and 10% on books, pharmaceutical products, services providing opportunities for physical activity, passenger transportation, and accommodation.
Alcohol, cigarettes, sweets, lotteries, insurance, transportation fuels, and cars all have excise taxes (2011). The car tax is significant. Permanent residents are generally not permitted to drive foreign-registered vehicles in Finland. Persons having permanent residency outside Finland may drive a foreign-registered vehicle in Finland for six months, or up to 18 months if proof of presence elsewhere is shown to Customs separately. European Civil Service workers working for the European Union, on the other hand, are free from paying the car tax on their own vehicle.
Pharmacies pay just the excise tax on their annual revenue; there is no VAT on medicines. Pharmacies that maintain subsidiary pharmacies are eligible for a tax benefit (sivuapteekki). The goal of this strategy is to encourage the continued operation of pharmacies in sparsely inhabited areas.
Citizens of the Nordic nations (Sweden, Norway, Denmark, and Iceland) are able to come and remain in Finland without a residence permit. They may also work for a living without requiring a residency permit for an employed individual.
Without a residence permit, EU nationals and residents of Iceland, Liechtenstein, Norway, and Switzerland have the right to enter, remain, study, seek job, or practice a profession in Finland for three months. If they want to remain in Finland for an extended period of time, they must register their right to do so at a police station.
Persons from outside the EU must get a work permit as well as a residency permit. Several categories are determined by the employment grade and status. Highly qualified individuals with an offer of employment in Finland must apply for a specialized permit. Persons living outside the European Economic Area (EEA) may also be required to get a permission from the National Board of Patents and Registration in order to work in a management role or perform other duties in a firm.
In Finland, it is best practice to have a robust employment contract in place that specifies the conditions of the employee's remuneration, benefits, and termination criteria. In Finland, an offer letter and job contract should always mention the salary and any other compensation amounts in euros rather than foreign currencies.
It is best practice is to put a strong employment contract in place in Finland that spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Finland should always state the salary and any compensation amounts in euro rather than foreign currency.
Euro (EUR)
Before establishing a subsidiary in Finland, your firm should evaluate a number of factors. What sort of industry and company do you want to start? Where will the headquarters be situated, and what nationalities will be represented? Do you have any commercial deals or ties you'd want to discuss?
It is essential to pick the site of your construction with caution. Separate cities and areas may have varied Finland subsidiary laws and incorporation costs. Languages vary by geography as well. The majority of Finns speak Finnish, while a tiny minority also speak Swedish.
The Limited Liability Companies Act of Finland oversees the establishment of subsidiaries in Finland, as well as limited liability companies, limited partnerships, branches, and representative offices. The following stages are involved in establishing a subsidiary in Finland:
1. Choose between a private and a public limited liability business.
2. Determine your management structure.
3. Create a bank account with a little share capital.
4. Multiple papers must be submitted, including foundation deeds, a Memorandum of Association, a description of the company's commercial and banking activities, information on all shareholders and directors, and notarized copies of passports.
5. Submit a Business Plan Notification of an LLC application, together with supporting papers
6. Examine your company's name
7. Enroll in pension, accident, and medical insurance.
Finland's subsidiary legislation aim to attract international investment. The setup method is likewise identical to that of the majority of EU nations. Before you can legally begin working at your subsidiary, the law requires you to complete a number of documentation. These are some examples:
(1) Under the Limited Liability Companies Act, a certificate from auditors certifying your shares is required.
(2) A statement of incorporation made in accordance with the legislation
These papers, as well as the others indicated above, must be submitted to the Finnish Trade Register together with your proposed company name. All company names must be examined for possible infringements on existing names or trademarks.
