Finland is a Nordic country located north of the Baltic States bordering Russia, Sweden, and Norway, possessing a stable and modern economy, including a world-class investment climate. It is a member of the European Union and part of the euro area. The country has a highly skilled, educated and multilingual labor force, with strong expertise in Information Communications Technology (ICT), shipbuilding, forestry, and renewable energy.
Key challenges for foreign investors include a rigid labor market and bureaucratic red tape in starting certain businesses, although in June 2016 the Government enacted a Competitiveness Pact that aims to reduce labor costs, increase hours worked, and introduce more flexibility into the wage bargaining system. An aging population and the shrinking working-age population are the most pressing issues that could limit growth opportunities for Finland.
At the end of 2018, the value of foreign direct investment (FDI) totaled USD 71 billion, of which equity accounted for USD 64.6 billion and the value of debt capital for USD 6.5 billion. Sweden accounts for 32 percent of Finland’s FDI; Luxembourg – 19 percent; the Netherlands – 17 percent; Denmark – 5 percent; and Germany – 4 percent. Approximately 90 percent of Finland’s FDI is from EU member states.
According to Ernst & Young’s Nordics Attractiveness Survey 2019, Finland secured a record high of 194 FDI projects; more projects than all the other Nordic countries combined in 2018. The 2019 survey was Finland’s seventh consecutive as the Nordic leader in new FDI projects – the largest category being Sweden-based businesses (53), followed by UK-based – 19; the United States – 18; Germany – 15; Norway – 13; and China – 13.
To attract investment over the years, the Government of Finland (GOF) cut the corporate tax rate in 2014 from 24.5 percent to 20 percent, simplified its residence permit procedures for foreign specialists, and created a one-stop-shop for foreign investors called Business Finland.
The U.S. Embassy in Helsinki, through the Foreign Commercial Service and Political/Economic Sections, is a strong partner for U.S. businesses that wish to connect to the Finnish market. Finland has vibrant telecommunication, energy, and biotech sectors, as well as Arctic expertise. With excellent transportation links to the Nordic-Baltic region and Russia, Finland is a developing transportation hub.
On January 1, 2018, Finpro, the Finnish trade promotion organization, and Tekes, the Finnish Funding Agency for Innovation, united to become Business Finland, which is now the single operator working to facilitate foreign direct investment in Finland. Business Finland is the Finnish government organization for innovation funding and trade, travel and investment promotion. Business Finland’s 600 experts work in 40 offices abroad and in 16 offices in Finland.
|TI Corruption Perceptions Index||2019||3 of 180||http://www.transparency.org/
|World Bank’s Doing Business Report||2019||20 of 190||http://www.doingbusiness.org/
|Global Innovation Index||2019||6 of 129||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2017||USD 3,318||https://apps.bea.gov/international/
|World Bank GNI per capita||2018||USD 48,280||http://data.worldbank.org/indicator/
3. Legal Regime
Transparency of the Regulatory System
The Securities Market Act (SMA) contains regulations on corporate disclosure procedures and requirements, responsibility for flagging share ownership, insider regulations and offenses, the issuing and marketing of securities, and trading. The clearing of securities trades is subject to licensing and is supervised by the Financial Supervision Authority. The SMA is at .
The Act on the Openness of Public Documents establishes the openness of all records in the possession of officials of the state, municipalities, registered religious communities, and corporations that perform legally mandated public duties, such as pension funds and public utilities. Exceptions can only be made by law or by an executive order for reasons such as national security. For more information, see the Ministry of Justice’s page on Openness: . The Act on the Openness of Government Activities can be found here: .
Finland ranks third on The World Justice Project (WJP) Rule of Law Index (2020) regarding constraints on government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice and criminal justice. For more, see: . Finland ranks fourth on World Bank’s Global Indicators of Regulatory Governance: .
Availability of official information in Finland is the best in the EU, according to a report by the Center for Data Information (2017).
Finland joined the Open Government Partnership Initiative (OGP) in April 2013. The global OGP-initiative aims at promoting more transparent, effective and accountable public administration. The goal is to develop dialogue between citizens and administration and to enhance citizen engagement. The OGP aims at concrete commitments from participating countries to promote transparency, to fight corruption, to citizen participation and to the use of new technologies. Finland’s 4th national Open Government Action Plan for 2019–2023 was published in September 2019.
International Regulatory Considerations
Finland respects EU common rules and expects other Member States to do the same. The Government seeks to constructively combine national and joint European interests in Finland’s EU policy and seeks better and lighter regulation that incorporates flexibility for SMEs. The Government will not increase burdens detrimental to competitiveness during its national implementation of EU acts.
Finland, as a member of the WTO, is required under the Agreement on Technical Barriers to Trade (TBT Agreement) to report to the WTO all proposed technical regulations that could affect trade with other Member countries. In 2019, Finland submitted 23 notifications of technical regulations and conformity assessment procedures to the WTO and has submitted 100 notifications since 1995. Finland is a signatory to the WTO Trade Facilitation Agreement (TFA), which entered into force on February 22, 2017.
Legal System and Judicial Independence
Finland has a civil law system. European Community (EC) law is directly applicable in Finland and takes precedence over national legislation. The Market Court is a special court for rulings in commercial law, competition, and public procurement cases, and may issue injunctions and penalties against the illegal restriction of competition. It also governs mergers and acquisitions and may overturn public procurement decisions and require compensatory payments. The Court has jurisdiction over disputes regarding whether goods or services have been marketed unfairly. The Court also hears industrial and civil IPR cases.
Amendments to the Finnish Competition Act (948/2011) entered into force on June 17, 2019, and on January 1, 2020. The amendments include, most notably, changes to the Finnish Competition and Consumer Authority FCCA’s dawn raid practices, information exchange practices between national authorities and the calculation of merger control deadlines, which are now calculated in working days, rather than calendar days.
Laws and Regulations on Foreign Direct Investment
A non-European Economic Area (EEA) resident (persons or companies) operating in Finland must obtain a license or a notification when starting a business in a regulated industry. A comprehensive list of regulated industries can be found at: .
See also the Ministry of Employment and the Economy’s Regulated Trade guidelines: . The autonomously governed Aland Islands, however are an exception. Right of domicile is acquired at birth if it is possessed by either parent. Property ownership and the right to conduct business are limited to those with the right of domicile in the Aland Islands. The Aland Government can occasionally, grant exemptions from the requirement of right of domicile for those wishing to acquire real property or conduct a business in Aland. This does not prevent people from settling in, or trading with, the Aland Islands. Provided they are Finnish citizens, immigrants who have lived in Aland for five years and have adequate Swedish may apply for domicile and the Aland Government can grant exemptions.
EnterpriseFinland/Suomi.fi ( ) is a free online service offering information and services for starting, growing and developing a company. Users may also ask for advice through the My Enterprise Finland website: https://oma.yrityssuomi.fi/en. Finnish legislation is available in the free online databank Finlex in Finnish, where some English translations can also be found: .
Competition and Anti-Trust Laws
The Finnish Competition and Consumer Authority FCCA protects competition by intervening in cases regarding restrictive practices, such as cartels and abuse of dominant position, and violations of the Competition Act and the Treaty on the Functioning of the European Union (TFEU). Investigations occur on the FCCA’s initiative and on the basis of complaints. Where necessary, the FCCA makes proposals to the Market Court regarding penalties. In international competition matters, the FCCA’s key stakeholders are the European Commission (DG Competition), the OECD Competition Committee, the Nordic competition authorities and the International Competition Network (ICN). FCCA rulings and decisions can be found in the archive in Finnish. More information at: .
Expropriation and Compensation
Finnish law protects private property rights. Citizen property is protected by the Constitution which includes basic provisions in the event of expropriation. Private property is only expropriated for public purposes (eminent domain), in a non-discriminatory manner, with reasonable compensation, and in accordance with established international law. Expropriation is usually based on a permit given by the government or on a confirmed plan and is performed by the District Survey Office. Compensation is awarded at full market price, but may exclude the rise in value due only to planning decisions.
Besides normal expropriation according to the Expropriation Act, a municipality or the State has the right to expropriate land for planning purposes. Expropriation is mainly for acquiring land for common needs, such as street areas, parks and civic buildings. The method is rarely used: less than one percent of land acquired by the municipalities is expropriated. Credendo Group ranks Finland’s expropriation risk as low (1), on a scale from 1 to 7: .
ICSID Convention and New York Convention
In 1969, Finland became a member state to the World Bank-based International Center for Settlement of Investment Disputes (ICSID; Washington Convention). Finland is a signatory to the Convention of the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).
Investor-State Dispute Settlement
The Finnish Arbitration Act (967/1992) is applied without distinction to both domestic and international arbitration. Sections 1 to 50 apply to arbitration in Finland and Sections 51 to 55 to arbitration agreements providing for arbitration abroad and the recognition and enforcement of foreign arbitral awards in Finland. Of 186 parties in 2019, the majority (92 percent) were from Finland. There have been no reported investment disputes in Finland in recent years.
International Commercial Arbitration and Foreign Courts
Finland has a long tradition of institutional arbitration and its legal framework dates back to 1928. Today, arbitration procedures are governed by the 1992 Arbitration Act (as amended), which largely mirrors the UNCITRAL Model Law on International Commercial Arbitration of 1985 (with amendments, as adopted in 2006). The UNCITRAL Model law has not yet, however, been incorporated into Finnish Law. In August 2019, the Finland Chamber of Commerce sent a statement to the Justice Ministry urging Finland to revise the 1992 Arbitration Act to be fully consistent with the Model Law, arguing it would increase Finland’s attractiveness as a venue for international arbitration. In response to the Finland Chamber of Commerce’s request that the government adopt the Model Law, the Ministry of Justice has appointed a monitoring group to begin the process of reviewing what the new legislation should address. Finland’s Act on Mediation in Civil Disputes and Certification of Settlements by Courts (394/2011) aims to facilitate alternative dispute resolution (ADR) and promote amicable settlements by encouraging mediation, and applies to settlements concluded in other EU member states: . In June 2016, the Finland Chamber of Commerce launched its Mediation Rules under which FAI, the Institute of the Finland Chamber of Commerce, will administer mediations: .
Any dispute in a civil or commercial matter, international or domestic, which can be settled by agreement may be referred to arbitration. Arbitration is frequently used to settle commercial disputes and is usually faster than court proceedings. An arbitration award is final and binding. FAI promotes the settlement of disputes through arbitration, commonly using the “FAI Rules”: .
Revised arbitration rules of the Finland Chamber of Commerce entered into force January 1, 2020. A 2020 Guide to the Finnish Arbitration FAI Rules has been published: The Institute appoints arbitrators both to domestic and international arbitration proceedings, and administers domestic and international arbitrations governed by its rules. It also appoints arbitrators in ad hoc cases when the arbitration agreement so provides, and acts as appointing authority under the UNCITRAL Arbitration Rules. The Finnish Arbitration Act (967/1992) states that foreign nationals can act as arbitrators. For more information see:
Finland signed the UN Convention on Transparency in Treaty-based Investor-State Arbitration (“Mauritius Convention”) in March 2015. Under the new rules, all documents and hearings are open to the public, interested parties may submit statements, and protection for confidential information has been strengthened.
The Finnish Bankruptcy Act was amended and the amendments took effect on July 1, 2019. The main objectives of these amendments were to simplify, digitize and speed-up bankruptcy proceedings. The amended Bankruptcy Act allows administrators to send notices and invitations to creditor addresses registered in the Trade Register. This will improve accessibility for foreign companies that have established a branch in Finland. Administrators of bankruptcy and restructuring proceedings must upload data and documentation to the bankruptcy and restructuring proceedings case management system (KOSTI). KOSTI is available only for creditors located in Finland due to the strong ID requirements.
The Reorganization of Enterprises Act (1993/47), , establishes a legal framework for reorganization with the aim to provide an alternative to bankruptcy proceedings. The Act excludes credit and insurance institutions and certain other financial institutions. Recognition of restructuring or insolvency processes initiated outside of the EU requires an exequatur from a Finnish court.
Finland can be considered creditor-friendly; enforcement of liabilities through bankruptcy proceedings as well as execution outside bankruptcy proceedings are both effective. Bankruptcy proceedings are creditor-driven, with no formal powers granted to the debtor and its shareholders. The rights of a secured creditor are also quite extensive. According to the 2019 World Bank’s Doing Business Report, Finland ranks second out of 190 countries for the ease of resolving insolvency: .
4. Industrial Policies
Foreign-owned companies are eligible for government incentives on an equal footing with Finnish-owned companies. Support is given in the form of grants, loans, tax benefits, equity participation, guarantees, and employee training. Assistance is administered through one of Finland’s Centers for Economic Development, Transport, and the Environment (ELY) that provide advisory, training, and expert services as well as grant funding for investment and development projects. Investment aid can be granted to companies in the regional development areas, especially small and medium enterprises (SMEs). Large companies may also qualify if they have a major employment impact in the region. Aid to business development can be granted to improve or facilitate the company’s establishment and operation, know-how, internationalization, product development or process enhancement. Subsidies for start-up companies are available for establishing and expanding business operations during the first 24 months. Transport aid may be granted for deliveries of goods produced to sparsely populated areas. Energy subsidies can be granted to companies for investments in energy efficiency and conservation. .
Tekes, the Finnish Funding Agency for Technology and Innovation, provides low-interest loans and grants to challenging and innovative projects potentially leading to global success stories. The organization offers funding for research and development work carried out by companies, research organizations, and public sector service providers in Finland. Besides funding technological breakthroughs, Tekes emphasizes also service-related, design, business, and social innovations. Startups and both SMEs and large companies can benefit from Tekes incentives.
A company can use guarantees from the state-owned financing company Finnvera: . Finnvera offers services to businesses in most sectors and is also Finland’s official Export Credit Agency (ECA). Business Finland helps foreign investors set up a business in Finland. Its services are free of charge, and range from data collection and matchmaking to location management: . Support for innovative business ventures can also be obtained from the Foundation for Finnish Inventions: .
Foreign Trade Zones/Free Ports/Trade Facilitation
Free trade zone area regulations have been harmonized in the EU by the Community Customs Code. The European Union Customs Code UCC, its Delegated Act and Implementing Act entered into force on May 1, 2016, and will be implemented gradually; the free zone of control type II was abolished and the operator authorizations were changed into customs warehouse authorizations on Customs’ initiative. The Code also allows the processing of non-Union goods without import duties and other charges. New regulations for customs declarations have been applied to customs warehousing since June 1, 2019. According to the current schedule, new declarations will be introduced for import and temporary storage at the end of 2020, and for export and transit in 2021–2023.
Performance and Data Localization Requirements
There are no performance requirements or commitments imposed on foreign investment in Finland. However, to conduct business in Finland, some residency requirements must be met. The Limited Liability Companies (LLC) Act of Finland is at: . A LLC must be reported for registration within three months from the signing of the memorandum of association: . There is no forced localization policy for foreign investments in Finland.
Finland participates actively in the development of the EU’s Digital Single Market and, aside from privacy issues, encourages a light regulatory approach in this area. Since May 2018, data transfers from Finland to non-EU countries must abide by EU General Data Protection Regulation (GDPR) (EU) 2016/679. Finland supports the EU Commission’s view on promoting European digitalization and creating a single market for data. In March 2020, the Ministry of Transport and Communications appointed a data economy implementation and monitoring group, with task of continue exerting influence and to coordinate the work of different administrative sectors. The working group is also tasked with exerting influence both internationally and at the EU level. The objective is for Finland’s view on the principles and development of the data economy will be noted internationally.
Personal data may be transferred across borders per the Finnish Personal Data Act (PDA, at: ), which states that personal data may be transferred outside the European Union or the European Economic Area only if the country in question guarantees an adequate level of data protection. Office of the Data Protection Ombudsman legislation is at: .
5. Protection of Property Rights
The Finnish legal system protects and enforces property rights and secured interests in property, both movable and real. Finland ranked first of 131 countries in the Property Rights Alliance 2019 International Property Rights Index (IPRI) which concentrates on a country’s legal and political environment, physical property rights, and intellectual property rights (IPR).
Mortgages exist in Finland and can be applied to both owned and rented real estate. Finland ranks 20th out of 190 countries in the ease of Registering Property according to the World Bank’s 2019 Doing Business Report. In Finland, real property formation, development, land consolidation, cadastral mapping, registration of real properties, ownership and legal rights, real property valuation, and taxation are all combined within one basic cadastral system (real estate register) maintained by the National Land Survey: .
Intellectual Property Rights
The Finnish legal system protects intellectual property rights (IPR), and Finland adheres to numerous related international agreements. Finland is a member of the World International Property Organization (WIPO) and party to a number of its treaties, including the Berne Convention, the Paris Convention, the Patent Cooperation Treaty, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty. One of Prime Minister Marin’s goals is to draft a National IPR Strategy for Finland.
The new Finnish Trademarks Act entered into force on May 1, 2019. With the new Act, Finland implements the revised EU Trademark Directive, enforces the Singapore Treaty on the Law of Trademarks, and brings the 1964 trademark regulations up to date. Provisions concerning collective marks and control marks are included in the new Act, which nullified the Act on Collective Marks. The Act also includes amendments to related legislation such as the Finnish Company Names Act, the Criminal Code, and relevant procedural acts. Trademark applicants or proprietors not domiciled in Finland are required to have a representative resident in the European Economic Area.
In August 2018, Finland adopted a new Trade Secrets Act to incorporate the provisions of the EU Directive 2016/943 on Trade Secrets . The new Act replaces the Unfair Business Practices Act and provides harmonized definitions at the EU level for trade secrets, their lawful and unlawful acquisition, and their use and disclosure. The Act also includes a whistleblower provision according to which a person (e.g. an employee) is allowed to disclose a trade secret in order to reveal malpractice or illegal activity, so long as it is done to protect the public interest and the person has significant reasons to reveal the information. The Trade Secrets Act can be found at: (available only in Finnish and Swedish).
Patent rights in Finland are consistent with international standards, and a granted patent is valid for 20 years. The regulatory framework for process patents filed before 1995, and pending in 1996, denied adequate protection to many of the top-selling U.S. pharmaceutical products currently on the Finnish market. For this reason, Finland was placed on the Special 301 Report Watch List in 2009, but it was removed from the list in 2015 when the term for relevant patents expired.
Finnish Customs officers have ex-officio authority to seize and destroy counterfeit goods. IPR enforcement in Finland is based on EU Regulation 608/2013. In 2019, according to Finnish Customs statistics, Finnish authorities inspected 797 suspected counterfeit goods . The number and value of counterfeit goods detained by Finnish Customs have been in decline since 2013. The number and value of counterfeit goods decreased significantly (99 percent) in 2019 compared to 2018. The long-term trend indicates a decline in counterfeit goods detected in large volume shipments. However, due to increased online purchases, small volume shipments via postal and express freight traffic have increased in number, and these are more difficult to screen for counterfeits. Finland is mentioned in the 2019 Notorious Markets List for reportedly hosting servers associated with infringing activity.
6. Financial Sector
Capital Markets and Portfolio Investment
Finland is open to foreign portfolio investment and has an effective regulatory system. According to the Bank of Finland, in January 2020 Finland had USD 11.4 billion worth of official reserve assets, mainly in foreign currency reserves and securities. Credit is allocated on market terms and is made available to foreign investors in a non-discriminatory manner, and private sector companies have access to a variety of credit instruments. Legal, regulatory, and accounting systems are transparent and consistent with international norms.
The Helsinki Stock Exchange is part of OMX, referred to as NASDAQ OMX Helsinki (OMXH). NASDAQ OMX Helsinki is part of the NASDAQ OMX Nordic division, together with the Stockholm, Copenhagen, Iceland, and Baltic (Tallinn, Riga, and Vilnius) stock exchanges.
Finland accepts the obligations under IMF Article VIII, Sections 2(a), 3, and 4 of the Fund’s Articles of Agreement. It maintains an exchange system free of restrictions on payments and transfers for current international transactions, except for those measures imposed for security reasons in accordance with Regulations of the Council of the European Union.
Money and Banking System
Banking is open to foreign competition. At the end of 2018, there were 255 credit institutions operating in Finland and total assets of the domestic banking groups and branches of foreign banks operating in Finland amounted to USD 945 billion. For more information see:
Foreign nationals can in principle open bank accounts in the same manner as Finns. However, banks must identify customers and this may prove more difficult for foreign nationals. In addition to personal and address data, the bank often needs to know the person’s identifier code (i.e. social security number), and a number of banks require a work permit, a certificate of studies, or a letter of recommendation from a trustworthy bank, and details regarding the nature of transactions to be made with the account. All authorized deposit-taking banks are members of the Deposit Guarantee Fund, which guarantees customers’ deposits to a maximum of EUR 100,000 per depositor.
In 2018 the capital adequacy ratio of the Finnish banking sector was 20.9 percent, above the EU average. Measured in Core Tier 1 Capital, the ratio was 17.2 percent. The average CET1 ratio in the EU banking sector was 14.4 percent at the end of 2018. The Finnish banking sector’s return on equity (ROE) was 8.5 percent, well above the average ROE for all EU banking sectors (6.2 percent). Standard & Poor’s in March 2020 reaffirmed Finland’s AA+ credit rating and stable outlook while Fitch kept Finland’s credit rating at AA+ in February 2020. Moody’s kept Finland’s credit rating unchanged at Aa1 in January 2020. The Finnish banking sector is dominated by four major banks (OP Pohjola, Nordea, Municipality Finance and Danske Bank), which together hold 81 percent of the market.
Nordea, which relocated its headquarters from Sweden to Finland in 2018, has the leading market position among household and corporate customers in Finland. The relocation increased the Finnish banking sector to over three times the size of Finland’s GDP. Nordea is the world’s 20th largest bank (2018) in terms of balance sheet. Consequently, Finland’s banking sector is one of Europe’s largest relative to the size of the national economy.
Nordea became a member of the “we.trade” consortium in November 2017, a blockchain based trade platform for customers of the European wide consortium of banks signed up for the platform. “we.trade” makes domestic and cross-border commerce easier for European companies by harnessing the power of distributed ledger and block chain technology.
The Act on Virtual Currency providers (572/2019) entered into force in May, 2019. The Financial Supervisory Authority (FIN-FSA) acts as the registration authority for virtual currency providers. The primary objective of the Act is to introduce virtual currency providers into the scope of anti-money laundering regulation. Only virtual currency providers meeting statutory requirements are able to carry on their activities in Finland.
The Finnish Tax Administration released guidelines on the taxation of cryptocurrency in May 2018, updates were made in October 2019, and new guidelines were released in January 2020 , (so far only in Finnish): The October 2019 guidelines are at: .
Foreign Exchange and Remittances
Finland adopted the Euro as its official currency in January 1999. Finland maintains an exchange system free of restrictions on the making of payments and transfers for international transactions, except for those measures imposed for security reasons.
There are no legal obstacles to direct foreign investment in Finnish securities or exchange controls regarding payments into and out of Finland. Banks must identify their customers and report suspected cases of money laundering or the financing of terrorism. Banks and credit institutions must also report single payments or transfers of EUR 15,000 or more. If the origin of funds is suspect, banks must immediately inform the National Bureau of Investigation. There are no restrictions on current transfers or repatriation of profits. Residents and non-residents may hold foreign exchange accounts. There is no limit on dividend distributions as long as they correspond to a company’s official earnings records.
Travelers carrying more than EUR 10,000 must make a declaration upon entering or leaving the EU. As a Financial Action Task Force (FATF) member, Finland observes most of FATF’s 40 recommendations. In its Mutual Evaluation Report of Finland, released April 16, 2019, FATF concluded that Finland’s measures to combat money laundering and terrorist financing are delivering good results, but that Finland needs to improve supervision to ensure that financial and non-financial institutions are properly implementing effective AML/CFT controls. To improve supervision, a money laundering supervision register of the State Administrative Agency (AVI) and a register of beneficial owners controlled by the Finnish Patent and Registration Office were set up on July 1, 2019. In addition, the responsibility of preparing amendments to the Act on Preventing Money Laundering and Terrorist Financing was transferred to the Ministry of Finance (in charge of national FATF coordination) on January 1, 2019. FATF’s Mutual Evaluation Report of Finland, April 2019: .
In Finland, the Fifth Anti-Money Laundering Directive was implemented, among other things, by means of the Act on the Bank and Payment Accounts Control System, which entered into force on May 1, 2019. Its provisions on the bank and payment account data retrieval system and on the bank and payment account registry will apply from September 1, 2020. The Ministry of the Interior has set up a legislative project to implement the EU directive on access to financial information at national level. The directive contains rules to facilitate the use of information held in bank account registries by the authorities for the purpose of preventing, detecting, investigating or prosecuting certain offences. The government proposal drafted is scheduled to be submitted to Parliament in September 2020.
Sovereign Wealth Funds
Solidium is a holding company that is fully owned by the State of Finland. Although it is not explicitly a sovereign wealth fund, Solidium’s mission is to manage and increase the long-term value of the listed shareholdings of the Finnish State. Solidium is a minority owner in 13 listed companies; the market value of Solidium’s equity holdings is approximately USD 96.4 billion (April 2020), .
7. State-Owned Enterprises
State Owned Enterprises (SOEs) in Finland are active in chemicals, petrochemicals, plastics and composites; energy and mining; environmental technologies; food processing and packaging; industrial equipment and supplies; marine technology; media and entertainment; metal manufacturing and products; services; and travel. The Ownership Steering Act (1368/2007) regulates the administration of state-owned companies: .
In general, SOEs are open to competition except where they have a monopoly position, namely in alcohol retail and gambling. The Ownership Steering Department in the Prime Minister’s Office has ownership steering responsibility for Finnish SOEs, and is responsible for Solidium, a holding company wholly owned by the State of Finland and a minority owner in nationally important listed companies.
The GOF, directly or through Solidium, is a significant owner in 17 companies listed on the Helsinki stock exchange. The market value of all State shareholdings was approximately USD 25 billion as of April 2020. More info can be found here: . The GOF has majority ownership of shares in two listed companies (Finnair and Fortum) and owns shares in 36 commercial companies: (April 2020). The Finnish State development company Vake was established in 2016 and became fully operational in 2018. Vake’s role is to manage the State shareholdings under its control and to create conditions for reform. More information can be found here: .
Finnish state ownership steering complies with the OECD Principles of Corporate Governance.
The Parliamentary Advisory Council in the Prime Minister’s Office serves in an advisory capacity regarding SOE policy; it does not make recommendations regarding the actual business in which the individual companies are engaged. The government has proposed changing its ownership levels in several companies and increasing the number of companies steered by the Prime Minister’s Office. Parliament decides the companies in which the State may relinquish its sole ownership (100 percent), its control of ownership (50.1 percent) or minority ownership (33.4 percent of votes). For more see
In April 2020, the Government issued a new resolution on ownership policy, which will guide state-owned companies for the duration of the government term (until spring 2023). The Government Resolution on ownership policy will continue to pursue a predictable, forward-looking ownership policy that safeguards the strategic interests of the state. State ownership will be assessed from the perspectives of overall benefit to the national economy, development of the operations and value of companies, and the efficient distribution of resources. The new Government Resolution on ownership policy strongly emphasizes the fight against climate change, the use of digitalization and issues of corporate social responsibility.
Finland opened domestic rail freight to competition in early 2007, and in July 2016, Fenniarail Oy, the first private rail operator on the Finnish market, began operations. Passenger rail transport services will be opened to competition in stages, starting with local rail services in southern Finland. Based on an agreement between Finnish State Railways (VR) and the Ministry of Transport and Communications, VR has exclusive rights to provide passenger transport rail services in Finland until the end of 2024. The exclusive right applies to all passenger rail transport in Finland, excluding the commuter train transport services, provided by the Helsinki Regional Transport Agency (HSL). HSL put its commuter train transport services out for tender in February 2020, VR won the tender and will continue provide passenger rail service for the next ten years. The value of southern Finland commuter train services is USD 67 million per year, with 200 000 daily passengers. Three wholly state-owned enterprises will be separated from Finnish State Railways (VR) to create a level playing field for all operators: a rolling stock company, a maintenance company, and a real estate company. Cross-border transportation between Finland and Russia was opened to competition in December 2016. Trains to and from Russia can be operated by any railroad with permission to operate in the EU. This was earlier VR’s exclusive domain. Fenniarail Oy has an agreement with VR regarding information exchange between authorities in Finland and Russia, approvals of rail wagons on the Finnish rail network and the safety of rail wagons. The agreement was signed in January 2017 for an initial trial period.
Parliament makes all decisions identifying the companies in which the State may relinquish sole ownership (100 percent of the votes) or control (minimum of 50.1 percent of the votes), while the Government decides on the actual sale. The State has privatized companies by selling shares to Finnish and foreign institutional investors, through both public offerings and directly to employees. Sales of direct holdings of the State totaled USD 1.72 billion from 2010 to 2019. Solidium’s share sales totaled some USD 6.33 billion from June 2010 – February 2020. According to the present Government Program, the proceeds from the sale of state assets are primarily to be used for the repayment of central government debt. Up to 25%, but no more than USD 168 million of any annual revenues exceeding USD 448 million, may be used for projects designed to strengthen the economy and promote growth.
The Government issued a new resolution on state-ownership policy in May 2016, seeking to ensure that corporate assets held by the State are put to more efficient use to boost economic growth and employment.
8. Responsible Business Conduct
The Government promotes Corporate Social Responsibility (CSR) through the Ministry of Employment and the Economy CSR Guidelines ( ). The Committee on Corporate Social Responsibility acts as the Finnish National Contact Point (NCP) for the effective implementation of the OECD Guidelines for Multinational Enterprises (MNEs), together with the Ministry of Economic Affairs and Employment: .
The government’s SOE policy establishes CSR as a core value of SOEs. Finnish companies perceive that the central component of responsible business conduct or corporate responsibility is to conduct due diligence to ensure compliance with law and regulations. There are no national codes for CSR in Finland; rather, Finnish companies and public authorities have promoted global CSR codes, such as the OECD Guidelines for Multinational Enterprises; the UN Global Compact for Business and Human Rights; ILO principles; EMAS; ISO standards; and the Global Reporting Initiative (GRI).
The Directive of the European Parliament and the Council on the disclosure of non-financial information has been implemented via amendments to the Finnish Accounting Act, requiring affected organizations to make the first report in 2018. The obligation to report non-financial information and corporate responsibility reports will apply to large public interest entities with more than 500 employees. There are 150 Finnish companies that publish annual CSR reports that were not previously obligated to do so.
Importing tin, tantalum, tungsten and gold from conflict zones into the EU requires new procedures from businesses as of January 2021. Tukes, the Finnish Safety and Chemicals Agency, is the competent authority to carry out checks to ensure compliance with the requirements relating to the import of conflict minerals in Finland. The checks will begin in 2022. For more information: .
Finland is committed to the implementation of the OECD Guidelines for Multinational Enterprises, the ILO Declaration on Fundamental Principles and Rights at Work, and the tripartite declaration of principles concerning multinational enterprises and social policy by the ILO.
Finland has joined the Extractive Industries Transparency Initiative (EITI), which supports improved governance in resource-rich countries. Finland is not a member of the Voluntary Principles on Security and Human Rights Initiative.
In October 2019, The Ministry of Economic Affairs and Employment commissioned a judicial analysis of regulation and legislation on corporate social responsibility. An analysis will be prepared of ways in which human rights and environmental due diligence could be incorporated into legislation affecting companies. The analysis will focus on establishing a method for nationally implementing corporate social responsibility legislation based on a due diligence obligation.
The Corporate Responsibility Network (FiBS) is the leading corporate responsibility network in Finland and has more than 300 members: . The Human Rights Center (HRC), administratively linked to the Office of the Parliamentary Ombudsman, encourages foreign and local enterprises to follow the most important international norms: .
The National Risk Assessment of 2018 does not list corruption as a risk in Finland, nor does the 2017 Security Strategy for Society and there is no dedicated national anti-corruption strategy. In April 2020, the Ministry of Justice appointed an anti-corruption working group to draft Finland’s Anti-Corruption Strategy 2020-2023. The term of the working group ends in March 2023.
Over the past decade, Finland has ranked in the top three on Transparency International’s (TI) Corruption Perceptions Index (CPI). In 2019, Finland was ranked third on the CPI.
Corruption in Finland is covered by the Criminal Code and penalties range from fines to imprisonment of up to four years. Both giving and accepting a bribe is considered criminal and Finland has statutory tax rules concerning non-deductibility of bribes. Finland does not have an authority specifically charged to prevent corruption. The Ministry of Justice coordinates anti-corruption matters, but Finland’s EU anti-corruption contact is the Ministry of the Interior. The National Bureau of Investigation also monitors corruption, while the tax administration has guidelines obliging tax officials to report suspected offences, including foreign bribery, and the Ministry of Finance has guidelines on hospitality, benefits, and gifts. The Ministry of Justice describes its anti-corruption efforts at .
The Ministry of Justice is maintaining an Anti-Corruption.fi website, , providing both ordinary citizens and professional operators with impartial and fact-based information on corruption and its prevention in Finland. The goal is a transparent, impartial and corruption-free culture and society.
The Act on a Candidate’s Election Funding (273/2009) delineates election funding and disclosure rules. The Act requires presidential candidates, Members of Parliament, and Deputy Members to declare total campaign financing, the financial value of each contribution, and donor names for donations exceeding EUR 1,500: . The Act on Political Parties (10/1969) concerning the funding of political parties is at: . The National Audit Office of Finland keeps a register containing election-funding disclosures at: (available in Finnish and Swedish). Election funding disclosures must be filed with the National Audit Office of Finland within two months of election results being confirmed.
Finland does not regulate lobbying; there is no requirement for lobbyists to register or report contact with public officials. However, in March 2019, a parliamentary working group headed by the Speaker urged the establishment of a lobbying register to improve transparency regarding possible interest groups influences on members of Parliament. The working group said the registry would initially cover national-level decision making, later being extended to municipal and regional decision-making organs. The group is calling for the registry — already in use in the European Parliament — to be implemented during this government term. In accordance with the Government Program of Prime Minister Marin, an Act on a Transparency Register will be enacted in Finland on the basis of parliamentary preparation and in consultation with civil society. The purpose of the act is to improve the transparency of decision-making and, by doing this, to prevent undue influence and reinforce public confidence.
The following are ratified or in force in Finland: the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime; the Council of Europe Civil Law Convention on Corruption; the Criminal Law Convention on Corruption; the UN Convention against Transnational Organized Crime; and, the UN Anticorruption Convention. Finland is a member of the European Partners against Corruption (EPAC).
Finland is a signatory to the OECD Convention on Anti-Bribery, but Transparency International released a progress report in September 2018 rating Finland as having “little to no enforcement” and opining that the most significant deterioration of the level of enforcement had taken place in Finland: .
In March 2019, the OECD Working Group on Bribery noted that Finland has shown limited progress in addressing the Working Group’s concerns. In 2017 the Working Group stated that Finland still faces issues related to “old-boys’ networks,” and noted several conflict of interest scandals in 2017 that involved issues concerning blurred lines between public and private interests, and public office holders who had not recused themselves from decisions affecting them. Nonetheless, in the latest report the Working Group notes that Finland has taken steps to amend its Criminal Code on sanctions and to develop guidance specifically targeting SMEs.
In March 2018, in its fifth evaluation round the Council of Europe’s anticorruption body GRECO (Group of States against Corruption) issued recommendations to Finland for preventing corruption among ministers, senior government officials and members of law enforcement agencies (the police and the Border Guard). The report recommended that Finland adopt and implement a national anticorruption strategy and pay special attention to the risks related to privatization in the planned health, social services and regional government reform.
The National Bureau of Investigation is responsible for the investigation of organized and international crimes, including economic crime and corruption, and operates an anti-corruption unit to detect economic offences. The Ministry of Justice has set up a specialist network, the anti-corruption cooperation network, which meets a few times a year to discuss and exchange information. The committee drafted an anti-corruption strategy for Finland and submitted it to the Ministry of Justice in 2017. The government has not yet adopted the strategy. Finnish Defense Forces, the Prime Minister’s Office and the Finnish Center for Integrity in Sports joined the anti-corruption network in 2020.
In November 2018, the City of Helsinki announced plans for a new whistleblower hotline service to anonymously inform authorities about suspected corruption.
At the beginning of 2017, a new Public Procurement Act based on the new EU directives on public procurement entered into force. Under the new law, a foreign bribery conviction remains mandatory grounds for exclusion from public contracts.
Resources to Report Corruption
Head of Financial Crime Division
National Board of Investigation
P.O. Box 285, 01310 Vantaa, Finland
10. Political and Security Environment
While instances of political violence in Finland are rare, extremism exists, and anti-immigration and anti-Semitic incidents do occur. In 2019, 15 anti-Semitic acts of vandalism against the Israeli Embassy over an 18-month period prompted an official demarche. The neo-Nazi Nordic Resistance Movement (NRM) is banned in Finland, as is its Facebook page, however the NRM website is accessible and features new content almost daily.
It is illegal in Finland to share violent content such as footage of Christchurch massacre, but it is still being disseminated and no one has been prosecuted. In August 2017, a stabbing attack took place in central Turku, in southwest Finland in which two pedestrians were killed and eight injured. Finnish authorities considered the attack a terrorist act and its perpetrator was convicted on terrorism charges, making it the first incident of its kind in Finland since the end of World War II.
The Fund for Peace (FFP) ranked Finland as the most stable country in the world again in 2019 based on political, social, and economic indicators including public services, income distribution, human rights, and the rule of law. Marsh’s Political Risk Map 2020, exploring the changing risk environment, highlighting the implications for firms operating globally, rates Finland as a broadly stable country, scoring 78.8 (out of 100) in its Short-Term Political Risk Index (STPRI). Finland scores particularly well in the ‘security and external threats’ and ‘social stability’ sub-components of the scores, but its ‘policy-making process’ and ‘policy continuity’ scores are somewhat suppressed by the unwieldy nature of the five-party coalition that was formed after the April 2019 parliamentary elections.
11. Labor Policies and Practices
Finland has a long tradition of trade unions. The country has a unionization rate of 71 percent, and approximately 90 percent of employees in Finland participate in the collective bargaining system. Extensive tripartite cooperation between the government, employer’s groups, and trade unions characterize the country’s labor market system. Any trade union and employers’ association may make collective agreements, and the Ministry decides on the validity of the agreement. The Act on Employment Contracts regulates employment relationships regarding working hours, annual leave, and safety conditions, although minimum wages, actual working hours, and working conditions are determined to a large extent through collective agreements instead of parliamentary legislation. Collective bargaining and collective labor agreements are generally binding. In recent years, local labor market partners have been given more flexibility to enforce the collective agreements.
Finland adheres to most ILO conventions; enforcement of worker rights is effective. Freedom of association and collective bargaining are guaranteed by law, which provides for the right to form and join independent unions, conduct legal strikes, and bargain collectively. The law prohibits anti-union discrimination and any obstruction of these rights. The National Conciliator under the Ministry of Employment and the Economy assists negotiating partners with labor disputes. The arbitration system is based on the Act on Mediation in Labor Disputes and the Labor Court is the highest body for settlement. The ILO’s Finland Country profile can be found here: .
The Ministry of Employment and the Economy is responsible for drafting labor legislation and the Ministry of Social Affairs and Health is responsible for enforcing labor laws and regulations via the Occupational Safety and Health (OSH) authorities of the OSH Divisions at the Regional State Administrative Agencies, which operate under the Ministry of Social Affairs and Health. Finnish authorities adequately enforce contract, wage, and overtime laws. New legislation concerning the hiring of foreign workers in Finland entered into force on June 18, 2016. Its objective is to intensify monitoring and to ensure improved compliance with the terms of employment in Finland. Finland allows the free movement of EU citizen workers. During 2018, there were 166 strikes in Finland, compared to 103 in 2017.
In November 2018, Statistics Finland estimated that the working age population is expected to decrease by 57,000 persons by 2030, from 3.431 million people at the end of 2018. In March 2020, Statistics Finland reported that the number of persons aged at least 70 in Finland at the end of 2019 was 874 000 (or 16% of the population). The number of persons aged 70 or more has grown by 100,000 in three years.
The government reformed social protection and unemployment security to encourage people to accept job offers, shorten unemployment periods, reduce structural unemployment and save public resources. The unemployed are granted a labor market subsidy, which, if linked to earnings as is the case for about 60 percent of the unemployed, guarantees moderate income for a period up to 400 working days. Those without jobs after the 400-day period need to demonstrate that they are actively pursuing employment to continue receiving benefits. The period of eligibility was shortened from 500 days to 400 days starting on January 1, 2017, except for those with a work history shorter than three years (reduced to 300 days), and for those aged over 58 (remains 500 days).
On January 1, 2017, Finnish authorities started a two-year, universal basic income trial. The goal was to determine whether a basic income, received without conditions, incentivizes recipients to seek paid work. The government concluded that the basic income experiment did not increase the employment of participants during the first trial year. The primary income recipients, during the first trial year, did not succeed in the open labor market better or worse than the people outside the trial did. The results for the latter trial year will be published in 2020. Based on the survey, those who received the basic income felt their well-being at the end of the experiment was better than those outside the trial.
In 2017, the center-right government of Juha Sipila introduced the “Activation Model” (AM), which mimicked the Danish unemployment insurance system. The AM became effective on January 1, 2018 and was applied to basic (flat-rate) unemployment benefits (paid by the Social Insurance Institution, Kela) and income-related schemes (paid by unemployment funds). The aim of the AM was to tighten the conditions for benefit eligibility, in order to encourage activation of the unemployed, reduce the duration of periods in unemployment and increase the employment rate. AM experiences were mixed, and union opposed the action vigorously. Ministry of Social Affairs and Health abolished the activation model for unemployment security starting January 1, 2020. 12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
The U.S. Overseas Private Investment Corporation (OPIC) and Finnvera (the former Finnish Guarantee Board) share an agreement to encourage joint U.S.-Finnish private investments in Russia and the Baltic States. For more information see: . Finland is a member of the Multilateral Investment Guarantee Agency (MIGA).
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Please note that the following tables include FDI statistics from three different sources, and therefore will not be identical. Table 2 uses BEA data when available, which measures the stock of FDI by the market value of the investment in the year the investment was made (often referred to as historical value). This approach tends to undervalue the present value of FDI stock because it does not account for inflation. BEA data is not available for all countries, particularly if only a few US firms have direct investments in a country. In such cases, Table 2 uses other sources that typically measure FDI stock in current value (or, historical values adjusted for inflation). Even when Table 2 uses BEA data, Table 3 uses the IMF’s Coordinated Direct Investment Survey (CDIS) to determine the top five sources of FDI in the country. The CDIS measures FDI stock in current value, which means that if the U.S. is one of the top five sources of inward investment, U.S. FDI into the country will be listed in this table. That value will come from the CDIS and therefore will not match the BEA data.
* Source for Host Country Data:
|Direct Investment from/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||71,504||100%||Total Outward||127,878||100%|
|“0” reflects amounts rounded to +/- USD 500,000.|
|Portfolio Investment Assets|
|Top Five Partners (Millions, current US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||379,092||100%||All Countries||224,457||100%||All Countries||154,637||100%|
|United States||64,543||17.0%||United States||49,011||21.8%||Sweden||22,267||14.4%|
|Denmark||23,001||6.0%||United Kingdom||12,173||5.4%||Netherlands||11,235||7.3 %|