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Articles

Establish a Branch in Finland

Updated on Monday 01st August 2022

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Establish a Branch in Finland
 
The foreign companies have the possibility of performing economic activities through branches in Finland, but must be aware that this form of business is not considered a legal entity. The parent company is considered responsible for its actions. The management of a branch opened in Finland must be assured by at least one Finnish resident. 
 
If you are planning to open a branch in Finland, you are welcome to get in touch with our experienced company incorporation specialists. They can provide you with detailed assistance throughout the procedure to help you set up a branch in Finland
 
 
 Quick Facts  
Applicable legislation (Home country/Foreign country)

Home country 

Best used for

Expanding business in other countries

Minimum share capital 

No minimum share capital is required to establish a branch in Finland.

Time frame for the incorporation of a branch in Finland (approx.)

7 days

Documents to be filed by the parent company

- Memorandum of Association,

- Articles of Association,

- shareholder’s register, etc.

Management (Local/Foreign)

Local management is required to establish a branch in Finland.

Legal representative required (Yes/No) Yes, Finland imposes the obligation of having a legal representative. 
Local bank required (Yes/No)

Yes, you can get assistance from our specialists to open a bank account in Finland.

Independence from the parent company

No, the parent company regulates a branch in Finland.

Liability of the parent company The parent company is liable for the actions of its branch in Finland.
Corporate tax rate

20%

Annual accounts filing requirements

Yes

Possibility of hiring local staff (Yes/No)

Yes, it is possible to hire local staff.

Travel requirements for incorporating branch

No, it is not required to travel to establish a branch in Finland.

Double tax treaty access (Yes/No)

Yes, Finland signed almost 25 double taxation treaties.

 

Registration of a branch in Finland

 
The registration of a Finish branch must be performed by the parent company’s representative or by an individual granted power of attorney, at the Finnish Trade Register. If you want to open a branch in Finland, you must know that the registration can be made electronically and requires some specific document. These are: the memorandum of association, the articles of association, the certificate of registration, and a standard application which must contain the following: 
 
  • - The branch’s name and its postal address;
  • - The type of performed business (not different from the line of business adopted by the foreign company);
  • - The foreign company’s name;
  • - The type of company;
  • - The name of the register where the foreign company was registered;
  • - The name of the person entitled to represent the branch (resident of Finland, Sweden, or an EEA country. If not, permission must be received from the National Board of Patents and Registration of Finland for appointing a representative from another country). 
 
If the company is from a country that is not a member of EEA, it must provide the special certificate received from the National Board of Patents and Registration of Finland. If the procedure is respected and all the documents are ready, the process of registration of the branch does not take longer than seven working days. So, if you want to open a branch in Finland, it is suggested to interact with our company formation experts. They can perform due diligence on your documentation to keep you on a fast track and help you set up a branch in Finland without causing any unnecessary delays. 
 

How does a non-EEA resident establish a branch in Finland?

 
As a non-EEA resident/organization, if you want to open a branch in Finland, the process is a bit different. Organizations or foundations from outside the European Economic Area (EEA) must apply for a permit from the Finnish Patent and Registration Office (PRH) to open a branch in Finland. To operate as a private trader in Finland, you must obtain a permit from the PRH, if you do not have a permanent residency within the European Economic Area (EEA). The Lugano Convention is the foundation for this approach. It is a convention on jurisdiction and enforcement of judgments in civil and commercial matters. 
 
If you are a non-EEA resident who is interested to set up a branch in Finland, you can get in touch with our company incorporation consultants. They can provide you with detailed assistance regarding how to open a branch in Finland as a non-EEA resident. 
 

Finnish branch office for EU-based companies

 

Due to the unregistered nature of the branch in Finland, only limited operations are permitted to this entity. Employees or facilities located in Finland, for instance, are two characteristics that most likely result in the development of a permanent establishment for tax purposes. Having an agent typically will not result in the development of a permanent institution, but each situation must be evaluated individually, taking all pertinent factors into account.
 
Companies with EU domiciles are permitted to set up a branch office in Finland. The branch office must maintain separate Finnish accounts and file tax notifications even though it is not a distinct legal organization. As a result, it is necessary to have a local accountant who can handle these issues. If you are planning to set up a branch in Finland, you can rely on the services of our experts. They can look after your branch’s accounts effectively. 
 

Representative requirements for a branch in Finland

 
As described in the Act on the Right to Carry on Business, you can open a branch in Finland, but there are some requirements to fulfill. A foreign trader's branch must have a representative, as defined in section 6(3) of the Act on the Right to Carry on Business:
 
  • - The trader's representative is the individual who is authorized to receive the summons and other notices on the trader's behalf;
  • - The representative must be a resident of the EEA, if the trader is a foreign corporate body or foundation established under the laws of an EEA country and has its registered office (as defined in the statutes), central administration, or head office there;
  • - In all other circumstances, the representative must have a Finnish address.
 
If you are planning to open a branch in Finland, then you are required to hire a representative. Our company incorporation consultants can guide you in detail about the status and requirements of an elected representative. 
 

PRH permit application process for non-EEA citizens

 
As aforesaid, to open a branch in Finland as a non-EEA resident, you are required to obtain a permit. The steps to apply for a permit are given below. In an informal letter written in either Finnish or Swedish, you can ask for a permit. Your application should include the following information:
 
  • - The name of the parent company, its registered office, and the country in which it is situated;
  • - Kind of permit you want to apply for (i.e. permit to establish a branch);
  • - The branch's name, as well as the business ID, if the branch already has one;
  • - Justification for obtaining the permit;
  • - The applicant's or representative's postal address, as well as additional contact information;
  • - Signature and date of either a person authorized to represent the applying organization or a person authorized by him/her;
  • - The original general power of attorney or a certified duplicate of a special power of attorney must be enclosed if an authorized person signs the application;
  • - When reporting to the Trade Register regarding a topic for which the PRH has given a permit, please provide a certified copy of the decision on the granting of the permit, as well as the notification.
 
For further details regarding these steps to obtain a permit, you can reach out to our company incorporation experts. They can practically assist you to set up a branch in Finland. Furthermore, there is a €120 application fee for obtaining a PRH. It is due after a permission decision has been made, whether to approve or deny it.
 

Startup notification for a branch in Finland

 

Please find below the information necessary to be provided in a startup notification for a branch:

 

  • - The branch's postal address;
  • - Line of business, and firm name, which must include the foreign trader's company name and a supplement indicating that a branch is involved;
  • - The branch's business must be the same as that of the overseas parent firm, however, branches have a more limited scope of operations than the foreign trader's; 
  • - The foreign trader's company name (such as "ABC Cargo Ltd." and its legal form ("company limited by shares"); 
  • - The register number in which the trader who is opening the branch has been registered in his home state; 
  • - The kind of work which is done by the branch;
  • - The representative's personal information, the representative must be a resident of the EEA. In other situations, the representative is required to reside in Finland;
  • - Each signatory to the company name of the branch must provide personal information as well as instructions on how to sign the company name;
  • - The start-up notification must include the state whose laws govern the foreign trader, central administration, or main establishment if the merchant is a foreign trader launching a branch and these locations are outside the EEA;
  • - The price of a startup notification is 380 euros.
 
You are required to provide this information in the branch’s startup-notification. So, if you need any further information to open a branch in Finland, our skilled agents can provide you with detailed assistance in this regard. 

 

Documents to be enclosed with startup-notification 

 

It is necessary to include the necessary paperwork with the startup notice for a branch. You can find below a general guide for documentation, and for any further assistance, our consultants are at your disposal. They can help you set up a branch in Finland.

 

  • - A receipt for the handling fee; 
  • - Documentation of the branch's establishment;
  • - Proof of the representative's appointment for the purposes of Section 6, Paragraph 3 of the Trade Act;
  • - Information on the individuals qualified to represent the trader as statutory bodies or as members of such bodies (often found in the trade register extract provided by the company's home state authority);
  • - An extract from the register in which the foreign trader has been entered in its home state or other proof of its existence that demonstrates the right to sign the company name and how the company name must be signed;
  • - A copy of the trader's memorandum of organization, articles of association, regulations, or other similar papers in Finnish or Swedish;
  • - A certified translation that satisfies legal requirements;
  • - There must be a Finnish or Swedish translation of any foreign language documents that are attached to the notification.

 

This is a general idea for the documentation that is required to be attached with a startup notification of a branch. If you still face any ambiguity in this regard, you can get help from our experts. Their assistance can help you open a branch in Finland without hassle. 

 

How is a branch different from other company structures?

 

Please find below the information about how a branch is a different entity from other company structures in Finland:

 

  • - A branch has no legal identity in Finland;
  • - Contracts on behalf of the foreign firm as a Finnish branch as a component of the corporation;
  • - Finnish income is shown in company accounts. Parent accounts display the Finnish branch's revenue;
  • - Finland directors are not required;
  • - Meetings are not required;
  • - The company's home country will impose taxes on the full company's gross income;
  • - By fully crediting the firm for the tax it paid in Finland, double taxation is avoided in the country where the company resides.

 

If you are planning to open a branch in Finland, you are welcome to get additional information from our Finnish experts in this regard. They can provide you with detailed guidance about this specific company structure and regulations. 

 

Corporate taxation in Finland

 

Companies with Finnish residents are required to pay 20% of their worldwide income in Finnish corporate income tax. Losses and tax-deductible expenses are subtracted from the taxable income to determine the taxable income. Finnish branches must pay corporate income tax on any income that is attributable to them. In the nation where the corporation resides, double taxes are abolished. In Finland, a corporation or a branch's income is not subject to municipal income tax. Our team members in Finland can assist you further regarding Finish corporate taxation.
 

Finland’s trade balance

 
To set up a commercial entity in a foreign state is a crucial decision. So, it is necessary to carry on with the plan after showing reasonable due diligence. Below you can find a recent rise in Finland’s trade balance:
 
  • - Finland's trade balance in 2020 was $1.05 billion, 154.24 percent more from the previous year;
  • - Finland's trade balance in 2019 was $0.41 billion, 111.88 percent less than in 2018.
 
Contact our company incorporation experts if you have made up your mind to open a branch in Finland. Our experts will provide you with comprehensive information and practical assistance in the incorporation procedure. 
 
In addition to this, if you cannot afford the rent for your office, you can get in touch with our experts. They can help you get a virtual office in Finland. You can also get guidance from our consultants regarding different virtual office packages. 
 
 

Meet us in Helsinki

Call us now at +44 203 287 0408 to set up an appointment with our lawyers in Helsinki, Finland. Alternatively you can incorporate your company without traveling to Finland.

As a BridgeWest client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Finland.

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