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), ship building, 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. Health, social services, and pension reforms are also being discussed.
At the end of 2016, the total stock of FDI in Finland totaled EUR 746.26 billion, of which equity accounted for EUR 60.8 billion and the value of debt capital for EUR 13.4 billion. By country, Sweden contributes the biggest stock of foreign direct investment in Finland (46 percent), followed by the Netherlands (16 percent), and Denmark (7 percent). Investments from China increased dramatically in 2016.
The GOF has taken steps to attract additional investment by cutting the corporate tax rate from 24.5 percent to 20 percent in 2014, simplifying the residence permit system for foreign experts, and creating a network called Business Finland that promotes foreign investment and the country’s international image. This one-stop shop brings together the services of a variety of state-funded agencies. Both foreign and domestic companies can benefit from GOF investment incentives, research and development support, and innovation systems.
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. Finnish companies are very active in the fields of information technology, energy, biotech, and clean technology, sectors that the government has selected – along with Arctic expertise – as priorities in their innovation policy. With excellent transportation links to the Nordic-Baltic region and Russia, Finland can be a good hub for establishing regional operations.
The Finnish MyData initiative is a relatively new human-centric system that is designed so that access to personal data would remain under the control of the individual instead of organizations (such as businesses or the government, among others). This initiative may impact foreign digital service companies, depending on how it is ultimately developed and implemented.
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 helping Finnish SMEs go international, encouraging foreign direct investment in Finland, and promoting tourism. Business Finland has around 600 staff, nearly 40 offices abroad, and operates 20 regional offices in Finland. Business Finland is part of the Team Finland network and its website is https://www.businessfinland.fi/en/do-business-with-finland/home/. Invest in Finland is the official investment promotion agency, and is part of Business Finland.
|TI Corruption Perceptions Index||2017||3 of 175||http://www.transparency.org/
|World Bank’s Doing Business Report “Ease of Doing Business”||2017||13 of 190||doingbusiness.org/rankings|
|Global Innovation Index||2017||8 of 128||https://www.globalinnovationindex.org/
|U.S. FDI in Partner Country (M USD, stock positions)||2016||USD 3,395||http://www.bea.gov/
|World Bank GNI per capita||2016||USD 45,050||http://data.worldbank.org/
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Finnish government is open to foreign direct investment. There are no general regulatory limitations relating to acquisitions. A mixture of domestic and EU competition rules govern mergers and acquisitions. Finland does not preclude foreign investment, but some tax policies may make it unattractive to investors. Finnish tax authorities treat the movement of ownership of shares in a Finnish company into a foreign company as a taxable event, though Finland complies with EU directives that require it to allow such transactions based in other EU member states without taxing them.
Finland does not grant foreign-owned firms any special treatment like tax holidays or other subsidies that are not available to other firms. Instead, Finland relies on policies that seek to offer both domestic and international firms better operating conditions, an educated labor force, and well-functioning infrastructure. Companies benefit from preferential trade arrangements through Finland’s membership in the EU and World Trade Organization (WTO), in addition to the protection offered by Finland’s bilateral investment treaties with more than sixty-five countries. The corporate income tax rate is 20 percent.
On January 1, 2018, Finpro, the Finnish trade promotion organization, and Tekes, the Finnish Funding Agency for Innovation, united to become Business Finland. Business Finland is now the single operator helping Finnish SMEs go international, encouraging foreign direct investment in Finland, and promoting tourism. Business Finland supports the Government’s objectives to spread the Finnish innovation system and double SME export volumes by 2020. Business Finland has around 600 staff, nearly 40 offices abroad, and operates 20 regional offices in Finland. Business Finland is part of the Team Finland network and its website is . Invest in Finland is the official investment promotion agency, and is part of Business Finland.
Limits on Foreign Control and Right to Private Ownership and Establishment
The law that governs foreign investments is the Act on the Monitoring of Foreign Corporate Acquisitions in Finland. The Ministry of Employment and the Economy (TEM) monitors and confirms foreign corporate acquisitions. TEM decides whether an acquisition conflicts with “vital national interests” including securing national defense as well as safeguarding public order and security. If TEM finds that a key national interest is jeopardized, it must refer the matter to the Council of State, which may refuse to confirm the acquisition.
In the civilian sector, TEM primarily monitors transactions related to Finnish enterprises considered critical to maintaining functions fundamental to society, such as energy, communications, or food supply. Monitoring only applies to foreign owners domiciled outside the EU and European Free Trade Association (EFTA). More information is at: .
For defense acquisitions, foreigners must apply for prior confirmation and monitoring covers all foreign owners. “Defense” includes all entities that supply or have supplied goods or services to the Finnish Ministry of Defense, the Finnish Defense Forces, the Finnish Border Guard, as well as entities dealing in dual-use goods. The substantive elements in evaluating the application are identical to those applied to other corporate acquisitions.
Right to private ownership
Private ownership is normal in Finland, and in most fields of business participation by foreign companies or individuals is unrestricted. When the government privatizes state-owned companies, both private and foreign participation is allowed except in enterprises operating in sectors related to national security.
TEM is the authority responsible for monitoring and confirming corporate acquisitions. Filing an application/notification is voluntary, but the Ministry may request information connected to a foreigner’s corporate acquisition. The law does not specify a time limit for filing, and a foreign owner may file either before or after the transaction. A transaction is considered approved if the Ministry does not request additional information, initiate further proceedings within six weeks, or refuse to confirm the transaction within three months. The Ministry cannot render opinions before an application is filed. It is, however, possible for investors to contact the Ministry for guidance beforehand. There is no official template for the notification, but it must include information on the monitored entity’s pre-and post-transaction ownership structure and the acquiring entity’s ownership structure. If known, an acquiring entity must also state its intentions relating to the monitored entity. There are no fees.
Other Investment Policy Reviews
Finland has been a member of the WTO and the EU since 1995. The WTO conducted its Trade Policy Review of the European Union (including Finland) in May 2017: . The Organization for Economic Cooperation and Development (OECD) 2018 economic survey can be found here: http://www.oecd.org/eco/surveys/economic-survey-finland.htm. The Research Institute of the Finnish Economy (ETLA) regularly publishes reports that review different sectors and factors that may impact investment: .
All businesses in Finland must be publicly registered at the Finnish Trade Register. Businesses must also notify the Register of any changes to registration information and most must submit their financial statements (annual accounts) to the register. The website is: . The Business Information System BIS (“YTJ” in Finnish, ) is an online service enabling investors to start a business or organization, report changes, close down a business, or conduct searches.
Permits, licenses, and notifications required depend on whether the foreign entrepreneur originates from a Nordic country, the European Union, or elsewhere. The type of company also affects the permits required, which can include the registration of the right to residency, residence permits for an employee or self-employed person, and registration in the Finnish Population Information System. A foreigner may need a permit from the Finnish Patent and Registration Office to serve as a partner in a partnership or administrative body of a company. For more information: . Improvements made in 2016 to the residence permit system for foreign experts, defined as those with special expertise, a university degree, and who earn at least EUR 3,000 gross per month, should help attract experts to Finland. An online permit application ( ) available since November 2016 has made it easier for family members to acquire a residence permit.
The practice of some trades in Finland requires only notification or registration with the authorities. Other trades, however, require a separate license; companies should confirm requirements with Finnish authorities. Entrepreneurs must take out pension insurance for their employees, and certain fields obligate additional insurance. All businesses have a statutory obligation to maintain financial accounts, and, with the exception of small companies, businesses must also appoint an external auditor.
Finland is the 13th best country in the world for doing business, according to the World Bank Group’s 2018 Doing Business Index; it ranked 26th on “Starting a Business” ( ). According to a 2016 study (FDI Attractiveness Scoreboard) by the European Commission, Finland is the most attractive EU country for FDI in terms of the political, regulatory and legal environment.
Gender inequality is low in Finland, which ranks third in the 2017 World Economic Forum Global Gender Gap Index. The employment gap between men and women aged 15-64 is the second lowest in the OECD, and women are well represented among top politicians, and increasingly on the boards of companies and among entrepreneurs. However, the gender pay gap is wide, partly because women are under-represented in well-paid jobs. The government has set targets to increase the employment of minorities in fields where they were under-represented.
Business Finland, part of the Team Finland network, helps Finnish SMEs go international, encourages foreign direct investment in Finland, and promotes tourism. Business Finland has a staff of around 600 persons and nearly 40 offices abroad. It operates in 15 different regions in Finland and focuses on agrotechnology, cleantech, connectivity, ecommerce, education, ICT and digitalization, mining, and mobility as a service. While many of Business Finland’s programs are export-oriented, they also seek to offer business and network opportunities. More info here: . In 2018, the Ministry of Education and Culture launched the Team Finland Knowledge network to enhance international education and research cooperation and the export of Finnish educational expertise. The United States will be one of the initial focus countries.
2. Bilateral Investment Agreements and Taxation Treaties
Finland does not have a bilateral investment treaty (BIT) agreement or FTA with the United States. Finland has concluded BITs with: Albania, Algeria, Argentina, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Chile, China, Croatia, the Czech Republic, Dominican Republic, Egypt, El Salvador, Estonia, Ethiopia, Georgia, Guatemala, Hong Kong, Hungary, India, Indonesia, Iran, Jordan, Kazakhstan, Kenya, Korea, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Macedonia, Malaysia, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Namibia, Nepal, Nigeria, Oman, Panama, Peru, Philippines, Poland, Qatar, Romania, Russia, Serbia, Slovakia, Slovenia, South Africa, Sri Lanka, Tanzania, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, and Vietnam. A full list of Finland investment agreements, including copies of the actual documents, is at: .
As an EU member state, Finland is also a signatory to any treaty or agreement, including free trade agreements, signed by the European Union. Finland is a signatory to the WTO Trade Facilitation Agreement (TFA), which entered into force on 22 February 2017.
Finland and the United States signed a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital (TIAS 12101) that entered into force on December 30, 1990. On March 5, 2014, Finland signed a Foreign Account Tax Compliance Act (FATCA). The Finnish tax administration guidance regarding FATCA is at: and (available only in Finnish and Swedish).
The salary and fringe benefits paid to qualifying foreign employees living in Finland for more than six months are taxed at a flat rate of 35 percent, for a maximum assignment period of 48 months in Finland. For detailed tax guidance, see the Finnish Tax Administration’s website: and the Finnish Foundation for Share Promotion’s Tax Guide for Investors (2015): .
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 (2017-2018) 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 fifth on World Bank’s Global Indicators of Regulatory Governance: .
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 2016, Finland submitted no notifications of technical regulations and conformity assessment procedures to the WTO, and has submitted 75 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.
A working group set up to reform the Competition Act concluded in March 2017 that the Act should be further amended with regard to inspections, sanctions and information exchange between authorities, among others. For more information see the Competition Act (No. 948/2011) at: .
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. Property ownership and the right to conduct business are limited to those with the right of domicile in the Aland Islands. This does not prevent people from settling in, or trading with, the Aland Islands. 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: . 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 1 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 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 234 international parties in 2017, one was from the United States. 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 as early as 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 implemented into Finnish Law. The Finland Chamber of Commerce is discussing amendments with the Ministry of Justice regarding the need to make the Act fully consistent with the Model Law, something that would increase Finland’s attractiveness as a venue for international arbitration.
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 arbitral award is final and binding. FAI promotes the settlement of disputes through arbitration, commonly using the “FAI Rules”: . In 2014, a Guide to the Finnish Arbitration FAI Rules was 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: and .
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 Bankruptcy Act includes provisions on the prerequisites for initiating bankruptcy, bankruptcy proceedings, claims in bankruptcy, administration and the management and sales of assets: . Companies bankrupt elsewhere may file for bankruptcy in Finland if they have Finnish assets. Finland has consistently applied its commercial and bankruptcy laws, with secured interests in property recognized and enforced.
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 2018 World Bank’s Doing Business Report, Finland ranks second out of 190 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. Business aid is coordinated by 15 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: .
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
The free 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.
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 outside of privacy issues encourages a light regulatory approach in this area. Data transfers from Finland to non-EU countries must abide by EU Data Protection Directive 95/46/EC, which will be replaced by the General Data Protection Regulation (GDPR) on May 25, 2018.
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 property rights, and secured interest in property, both movable and real, is recognized and enforced. Finland ranked second of 127 countries in the Property Rights Alliance 2017 International Property Rights Index (IPRI) that concentrates on the 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 27th out of 190 countries in the ease of Registering Property according to the World Bank’s 2018 Doing Business Report. In Finland, real property formation, mutation, 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 IPR, and Finland adheres to numerous related international agreements. Finland is a member of the World International Property Organization (WIPO). Finland’s national IPR strategy 2014-2020 (in Finnish) is at: .
The Finnish Copyright Act is at: . A set of guidelines applicable for international use, was published in 2016 and can be found at: . Trademark applicants or proprietors not domiciled in Finland are required to have a representative resident in the European Economic Area. Currently, Finland is preparing to implement the new EU Trademark Directive and amend the Finnish Trademark Act. The new Trademark Act is estimated to enter into force in early 2019. The current Trademark Act is at .
Patent rights are consistent with international standards, and a granted patent is valid for 20 years. However, the regulatory framework regarding 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 301 Watch List in 2009, but was removed from the list in 2015 given that the term for such patents has expired. U.S. industry continues to identify concerns in several EU Member States, including Finland, with respect to transparency and the opportunity to engage in policies related to pricing and reimbursement. This reportedly creates uncertainty and adversely impacts market access and incentives for further innovation. The 2017 Special 301 report can be found at: .
The protection of trade secrets has been ensured mainly by way of criminal legislation and proceedings, but also under the Unfair Business Practices Act subject to the jurisdiction of the Market Court: The government plans to submit a bill to Parliament in spring 2018 implementing the EU Directive on the protection of undisclosed know-how and business information (2016/943). The 2015 International Association for the Protection of Intellectual Property (AIPPI) group report on Finnish legal protection of trade secrets can be found at: .
Finnish customs officers have ex-officio authority to seize and destroy counterfeit goods. IPR enforcement in Finland is based on EU regulation (EU) 608/2013. Finnish authorities seized 45,900 counterfeit goods items with a value of 3.45 million USD in 2016, according to Finnish Customs statistics.
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 March 2018 Finland had EUR 8.6 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 has since 2003 been 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 2016, there were 274 credit institutions operating in Finland and total assets of the domestic banking groups and branches of foreign banks operating in Finland amounted to 526 billion USD. 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.
Obtained capital and accumulated profit strengthened the banking sector’s capital adequacy in 2016. At the end of the year, the overall capital adequacy ratio was 23.9 percent, one of the strongest in Europe. Measured in Core Tier 1 Capital, the ratio was 21.7 percent. The average CET1 ratio in the EU banking sector was 14.2 percent at the end of 2016. Return on equity (ROE) was 8.2 percent, and the cost ratio (costs divided by profits) also improved, reaching 54 percent in 2016. Standard & Poor’s announced in September 2017 that it was retaining Finland’s AA+ credit rating, while Fitch kept Finland’s credit rating at AA+ in February 2018. Moody’s lowered its triple-A rating to Aa1 in June 2016, keeping it there in October 2017.
Nordea, which has the leading market position among household and corporate customers in Finland, became a member of the “we.trade” consortium in November 2017. The consortium is building a platform aiming to make domestic and cross-border commerce easier for European companies by harnessing the power of distributed ledger and block chain technology. The Finnish State Treasury released cryptocurrency guidelines in February 2018: .
Foreign Exchange and Remittances
Foreign Exchange Policies
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 49 standards. FATF has praised Finland for improving its anti-money laundering legal framework:
Sovereign Wealth Funds
Solidium is an investment 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 twelve listed companies; the market value of Solidium’s equity holdings is approximately EUR 8.3 billion (March 2018, ).
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.
The GOF, directly or through Solidium, is a significant owner in 16 companies listed on the Helsinki stock exchange. The market value of all State shareholdings was approximately EUR 24.2 billion as of April 2018. More info can be found here: . As of March 2016, the GOF has majority ownership of shares in two listed companies (Finnair and Fortum) and owns shares in 35 commercial companies: (March 2018). The business development company Vake was established in 2016 and should be fully operational in 2018. Vake’s role is to manage the State shareholdings under its control and to create conditions for reform.
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. The Government also proposed to lower the limit for retaining a strategic interest to 33.4 percent.
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. The ensuing transport systems are scheduled to be operational by 2026. Three wholly state-owned companies 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. The Finnish Ministry of Transport and Communications and VR have negotiated a rail traffic service purchase agreement covering long-distance services as well as commuter services outside the Helsinki Region. The agreement is valid until December 31, 2019, and affords the VR Group exclusive rights for passenger rail services.
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 EUR 412 million from 2010 to 2016. Solidium’s share sales totaled some EUR 4.4 billion from June 2009 – January 2018. Proceeds are primarily used for repayment of central government debt, with a smaller proportion 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 at 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 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. 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.
The Corporate Responsibility Network (FiBS) is the leading corporate responsibility network in Finland and has 314 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 Internal Security Program of 2017 does not list corruption as a risk in Finland and there is no dedicated national anti-corruption strategy. Over the past decade, Finland has placed first or second on Transparency International’s (TI) Corruption Perceptions Index (CPI). In 2017, TI ranked Finland third, saying that Finland still faces issues related to “old-boys’ networks” and because of 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. In January 2017, Helsinki announced plans for a new 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 a mandatory ground for exclusion from public contracts.
Corruption in Finland is covered by the Criminal Code and sanctions 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 follows 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 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. The ethical Guidelines of the Finnish Prosecution Service were published in December 2016: .
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, and a TI progress report released in August 2015 rated Finland’s enforcement as moderate: .
In March 2017, the OECD Working Group on Bribery noted Finland has been active in enforcing its foreign bribery laws. However, all of the cases that progressed to prosecution resulted in acquittal, and the OECD recommended assigning cases to courts or judges with specialized experience and that Finland provide detailed training to law enforcement and the judiciary: . In March 2018, 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 forthcoming 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 which meets a few times a year to discuss and exchange information.
Resources to Report Corruption
Contact at government agency or agencies are responsible for combating corruption:
Contact at government agency:
Head of Financial Crime Division
National Board of Investigation
P.O. Box 285, 01310 Vantaa, Finland
Contact at “watchdog” organization Contact at watchdog organization:
Jaakko Korhonen, Chairperson , Chairperson
10. Political and Security Environment
There are no instances of political violence in Finland. Some isolated anti-immigration incidents, including the September 2016 death of a Finnish citizen after an altercation with the neo-Nazi Nordic Resistance Movement, sparked large anti-racism rallies. There have been some subsequent demonstrations calling for a stop to deportations of asylum seekers and counter-protests to these demonstrations in central Helsinki, but they have been rare and relatively small. 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, making it the first of its kind since the end of World War II.
The Fund for Peace (FFP) ranked Finland as the most stable country in the world again in 2017 based on political, social, and economic indicators including public services, income distribution, human rights, and the rule of law. According to BMI Research, Finland will remain one of the most politically stable countries globally over the 10-year forecast period (2016-25) because of the well-established and functioning state bureaucracy, effective rule of law, personal freedoms and civil liberties, and some of the world’s most progressive gender equality legislation.
11. Labor Policies and Practices
Finland has a long tradition of trade unions. The country has a unionization rate of 75 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. 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 2016, there were a total of 69 strikes in Finland, compared to 163 in 2015
In 2016, Statistics Finland estimated that the working age population would shrink by well over 100,000 persons by 2030. With the robust economic growth in 2016 and 2017, labor shortages are starting to appear in the social, health, and construction sectors.
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 is to determine whether a basic income, received without conditions, incentivizes recipients to seek paid work. Separately, new legislation that entered into force on January 1, 2018, stipulated that unemployed persons will forfeit 4.65 percent of benefits unless, during a three-month period, they either: a) find employment for 18 hours, b) receive at least 241 euro in income from entrepreneurial activity, c) participate in a five-day training course, or d) be available for other services offered by an employment office, such as attend training courses. The aim is to get an estimated 8,000 long-term unemployed people back to work by making unemployment less attractive. Unions opposed the action vigorously.
12. OPIC 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
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Table 3: Sources and Destination of FDI
|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||80,734||100%||Total Outward||111,110||100%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Table 4: Sources of Portfolio Investment
|Portfolio Investment Assets|
|Top Five Partners (Millions, US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||340,642||100%||All Countries||189,387||100%||All Countries||151,255||100%|
|United States||57,415||16.9%||Ireland||41,683||22.0%||United States||20,230||13.4%|
14. Contact for More Information
U.S. Embassy Helsinki