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Finland

Executive Summary

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.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 3 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 20 of 190 http://www.doingbusiness.org/
en/rankings
Global Innovation Index 2019 6 of 129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2017 USD 3,318 https://apps.bea.gov/international/
factsheet/factsheet.cfm?Area=306
World Bank GNI per capita 2018 USD 48,280 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

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 from a Finnish company to 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 preferential treatment like tax holidays or other subsidies not available to all 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 the World Trade Organization (WTO), in addition to the protection offered by Finland’s bilateral investment treaties with sixty-seven countries. The corporate income tax rate is 20 percent.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Regulation of the European Parliament and the Council on establishing a framework for the national security screening of high-risk foreign investments into the Union entered into force on April 10, 2019. At the moment, 14 Member States, including Finland, have national screening systems in place.

The law governing foreign investments is the Act on the Monitoring of Foreign Corporate Acquisitions in Finland (172/2012). The Ministry of Economic Affairs and Employment (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 approve the acquisition.

Amendments to national legislation (Act on the Screening of Foreign Corporate Acquisitions in Finland) are under review in a working group chaired by the Ministry of Economic Affairs and Employment, the Act is amended to meet EU FDI Screening Regulation which entered into force in March 2019. The amendments to the Act are expected to enter into force in October 2020.

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).

For defense acquisitions, monitoring applies to all foreign owners, who must apply for prior approval. “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.

On February 26, 2019, the Finnish Parliament approved a law (HE 253/2018) that requires non-EU/ETA foreign individuals or entities to receive Defense Ministry permission before they purchase land in Finland. Even companies registered in Finland, but whose decision-making bodies are at least of one-tenth non-EU/ETA origin will have to seek a permit. The law, which took effect in the beginning of 2020, states that non-EU/ETA property purchasers can still buy residential housing and condominiums without restrictions.

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 enterprises, 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: https://www.wto.org/english/tratop_e/tpr_e/tp457_e.htm .

The Research Institute of the Finnish Economy (ETLA) regularly publishes reviews of different sectors and factors that may affect investment: https://www.etla.fi/en/publication/dp1267-en .

Business Facilitation

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: https://www.prh.fi/en/kaupparekisteri.html . The Business Information System BIS (“YTJ” in Finnish, https://www.prh.fi/en/kaupparekisteri/rekisterointipalvelut/ytj.html ) 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: https://www.suomi.fi/company/responsibilities-and-obligations/permits-and-obligations . Improvements made in 2016 to the residence permit system for foreign specialists, defined as those with a specific field of 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 (https://enterfinland.fi/eServices ) available since November 2016 has made it easier for family members to acquire a residence permit. In 2019, media reported that the average processing times for foreign specialist residency permits more than doubled (52 days) and in some instances even longer.

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 appoint an external auditor.

Finland ranks 20th according to the World Bank Group’s 2020 Doing Business Index; it ranked 31st on “Starting a Business” (http://www.doingbusiness.org/data/exploreeconomies/finland ). 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 2020 World Economic Forum Global Gender Gap Index. The employment gap between men and women aged 15-64 is the third lowest in the OECD. Finland is currently one of the top-ranked countries that have reached parity in educational attainment.

Outward Investment

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 operates16 regional offices in Finland and focuses on agricultural technology, clean technology, connectivity, e-commerce, 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: https://www.businessfinland.fi/en/do-business-with-finland/home /. 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.

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 https://www.finlex.fi/en/laki/kaannokset/2012/en20120746_20130258.pdf .

See the Financial Supervisory Authority’s overview of regulations for listed companies here: https://www.finanssivalvonta.fi/en/capital-markets/issuers-and-investors/regulation-of-listed-companies/ . Finland is currently not a member of the UNCTAD Business Facilitation Program https://businessfacilitation.org/ .

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: https://oikeusministerio.fi/en/act-on-the-openness-of-government-activities . The Act on the Openness of Government Activities can be found here: https://www.finlex.fi/en/laki/kaannokset/1999/en19990621 .

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: https://worldjusticeproject.org/our-work/research-and-data/wjp-rule-law-index-2020 . Finland ranks fourth on World Bank’s Global Indicators of Regulatory Governance: http://rulemaking.worldbank.org/en/data/explorecountries/finland .

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: https://www.suomi.fi/company/responsibilities-and-obligations/permits-and-obligations .

See also the Ministry of Employment and the Economy’s Regulated Trade guidelines: https://tem.fi/en/regulation-of-business-operations . 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.

The Competition Act allows the government to block mergers where the result would harm market competition. The Finnish Competition and Consumer Authority (FCCA) issued guidelines in 2011: https://www.kkv.fi/en/facts-and-advice/competition-affairs/merger-control/ .

EnterpriseFinland/Suomi.fi (https://www.suomi.fi/company/ ) 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: https://www.finlex.fi/en/laki/kaannokset/ .

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: https://www.kkv.fi/en/facts-and-advice/competition-affairs/ .

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: https://www.credendo.com/country-risk/finland .

Dispute Settlement

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: https://www.finlex.fi/en/laki/kaannokset/2011/en20110394.pdf . 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: https://arbitration.fi/mediation/mediation_rules/ .

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”: https://arbitration.fi/arbitration/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: https://arbitration.fi/wp-content/uploads/sites/22/2019/12/arbitration-rules-of-the-finland-chamber-of-commerce-2020.pdf  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: https://arbitration.fi/arbitration/ 

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.

Bankruptcy Regulations

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), https://www.finlex.fi/fi/laki/kaannokset/1993/en19930047 , 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.

The bankruptcy ombudsman, https://www.konkurssiasiamies.fi/en/index.html , supervises the administration of bankruptcy estates in Finland. The Act on the Supervision of the Administration of Bankruptcy Estates dictates related Finnish law: https://www.konkurssiasiamies.fi/material/attachments/konkurssiasiamies/konkurssiasiamiehentoimistonliitteet/6JZrLGPN1/Act_on_the_Supervision_of_the_Administration_of_Bankruptcy_Estates.pdf .

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: http://www.doingbusiness.org/data/exploretopics/resolving-insolvency .

4. Industrial Policies

Investment Incentives

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. http://www.ely-keskus.fi/en/web/ely-en/business-and-industry;jsessionid=0B09A1B237B74FAC485AAD7C8E068DBF .

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: https://www.finnvera.fi/eng/start/applying-for-financing/when-setting-up-a-business?source=3165 . 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: https://www.investinfinland.fi/our-services . Support for innovative business ventures can also be obtained from the Foundation for Finnish Inventions: http://www.wipo.int/sme/en/best_practices/finland.htm .

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: http://finlex.fi/en/laki/kaannokset/2006/en20060624 . A LLC must be reported for registration within three months from the signing of the memorandum of association: https://www.prh.fi/en/kaupparekisteri/yrityksen_perustaminen/osakeyhtio.html . 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: http://finlex.fi/en/laki/kaannokset/1999/en19990523 ), 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: https://tietosuoja.fi/en/organisations .

5. Protection of Property Rights

Real Property

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: https://www.maanmittauslaitos.fi/en/real-property .

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 Finnish Copyright Act can be found at: https://wipolex.wipo.int/en/text/397616 . Guidelines applicable for international use were published in 2016 and can be found at: https://www.cupore.fi/en/publications/cupore-s-publications/assessing-the-operation-of-copyright-and-related-rights-systems-141052-14122016 .

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: https://www.finlex.fi/fi/laki/alkup/2018/20180595  (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.

The link to WIPO’s list of IPR legislation can be found at: https://wipolex.wipo.int/en/legislation/profile/FI .

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles here: https://www.wipo.int/directory/en/details.jsp?country_code=FI .

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: https://www.finanssiala.fi/en/material/FFI-Finnish-Banking-in-2018.pdf 

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): https://www.vero.fi/en/detailed-guidance/guidance/48411/taxation-of-virtual-currencies3/  The October 2019 guidelines are at: https://www.vero.fi/en/detailed-guidance/guidance/48411/taxation-of-virtual-currencies2/ .

Foreign Exchange and Remittances

Foreign Exchange

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.

Remittance Policies

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: http://www.fatf-gafi.org/countries/d-i/finland/documents/mer-finland-2019.html .

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), https://www.solidium.fi/en/holdings/holdings/) .

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: https://www.finlex.fi/en/laki/kaannokset/2007/en20071368 .

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: https://vnk.fi/en/value-of-state-holdings . The GOF has majority ownership of shares in two listed companies (Finnair and Fortum) and owns shares in 36 commercial companies: https://vnk.fi/en/state-shareholdings-and-parliamentary-authorisations  (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: https://vake.fi/enhome .

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 https://vnk.fi/en/legislation-and-corporate-governance 

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.

Privatization Program

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.

More info about state ownership can be found here : https://vnk.fi/en/government-ownership-steering .

8. Responsible Business Conduct

The Government promotes Corporate Social Responsibility (CSR) through the Ministry of Employment and the Economy CSR Guidelines (https://tem.fi/en/key-guidelines-on-csr ). 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: https://tem.fi/en/handling-specific-instances-of-the-oecd-guidelines-for-multinational-enterprises .

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: https://tukes.fi/en/industry/conflict-minerals .

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.

Labor and environmental laws and regulations are not waived to attract or retain investments and the Government published a guide to socially responsible public procurement in November 2017: http://julkaisut.valtioneuvosto.fi/handle/10024/160318 .

The Corporate Responsibility Network (FiBS) is the leading corporate responsibility network in Finland and has more than 300 members: https://www.fibsry.fi/briefly-in-english/ . 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: https://www.humanrightscentre.fi/monitoring/ .

The Securities Market Association, https://cgfinland.fi/en/ , developed and updated (2019) the Finnish Corporate Governance Code for companies listed on the Helsinki Stock Exchange: ﷟ https://business.nasdaq.com/list/Rules-and-Regulations/European-rules/nasdaq-helsinki/index.html .

9. Corruption

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 https://oikeusministerio.fi/en/anti-corruption-activities .

The Ministry of Justice is maintaining an Anti-Corruption.fi website, https://korruptiontorjunta.fi/en/home , 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: https://www.finlex.fi/en/laki/kaannokset/2009/en20090273.pdf . The Act on Political Parties (10/1969) concerning the funding of political parties is at: https://www.finlex.fi/fi/laki/kaannokset/1969/en19690010.pdf . The National Audit Office of Finland keeps a register containing election-funding disclosures at: http://www.vaalirahoitusvalvonta.fi  (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 ethical Guidelines of the Finnish Prosecution Service can be found from a new website that was opened on October 1, 2019. https://syyttajalaitos.fi/en/the-ethical-guidelines .

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: https://www.transparency.org/exporting_corruption/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.

Other reforms are also ongoing and seem to be pointing to the right direction, including in relation to institutional arrangements: http://www.oecd.org/corruption/Finland-phase-4-follow-up-report-ENG.pdf .

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

Markku Ranta-Aho
Head of Financial Crime Division
National Board of Investigation
P.O. Box 285, 01310 Vantaa, Finland
markku.ranta-aho@poliisi.fi

Jaakko Korhonen
Chairperson
Transparency Finland
info@transparency.fi

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: http://www.ilo.org/dyn/normlex/en/f?p=1000:11110:0::NO:11110:P11110_COUNTRY_ID:102625 .

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: https://www.finnvera.fi/eng/export/export-credit-guarantee-operations/export-credit-guarantee-operations . 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.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2019 $268,000 2018 $276,743 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2017 $2.0 2017 $3,318 BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Host country’s FDI in the United States ($M USD, stock positions) 2018 $5,338 2018 $13,409 BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Total inbound stock of FDI as % host GDP 2018 26.7% 2018 24.5% UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

* Source for Host Country Data:

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 71,504 100% Total Outward 127,878 100%
Sweden 22,946 32.1% The Netherlands 33,503 26.2%
Luxembourg 13,237 18.5% Sweden 26,167 20.5%
The Netherlands 12,014 16.8% Ireland 12,813 10.0%
Denmark 3,902 5.5% Denmark 8,265 6.5%
Germany 2,530 3.5% Norway 5,513 4.3%
“0” reflects amounts rounded to +/- USD 500,000.
Table 4: Sources of Portfolio Investment
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%
Ireland 54,592 14.4% Ireland 48,945 21.8% Denmark 16,237 10.5%
Luxembourg 48,615 12.8% Luxembourg 43,194 19.2% Germany 13,744 8.9%
Sweden 33,972 9.0% Cayman Islands 16,763 7.5% France 13,085 8.5%
Denmark 23,001 6.0% United Kingdom 12,173 5.4% Netherlands 11,235 7.3 %

14. Contact for More Information

HelsinkiPolEconAll@state.gov

Portugal

Executive Summary

Portugal’s economic recovery and positive pro-business policies increased market attractiveness in 2019. The country’s notable recovery since concluding an EU/IMF bailout adjustment program in 2014 culminated in a first-ever budget surplus in 2019.  Following the crisis, Portugal recovered its investment-grade sovereign bond ratings and saw its Finance Minister, Mário Centeno, become head of Eurogroup Finance Ministers. While Portugal continues to hold strong potential for U.S. investors, the Covid-19 pandemic has had a serious impact on the economy. The depth of Portugal’s economic downturn and the resulting effect on the banking and tourism sectors depend on the length of global travel restrictions and retail closures.

In 2019, Portugal attracted €9.2 billion in FDI inflows, including €122 million from the United States. Unemployment dropped to 6.5 percent and GDP growth was 2.2 percent, falling from 2.6 percent in 2018. Despite slowing growth, Portugal has continued to reduce its public debt, which fell to 117.7 percent of GDP in 2019, compared to 121.5 percent the year before. Nonetheless, the country’s high debt-to-GDP ratio remains a weak point.

The services sector, particularly Portugal’s tourism industry, served as an engine of economic recovery, while textiles, footwear, and agriculture moved up the value chain and became more export-oriented over the last decade. The auto sector, together with heavy industry, technology, agriculture, construction and energy remain influential clusters. In 2019, Portugal also unveiled a package of urban mobility and transport infrastructure tenders, privileging railway, as it attempts to ramp up public investment.

The banking sector faced considerable challenges in recent years, including the costly central bank-led resolution of Banco Espírito Santo in 2014 and Banif in 2015. Even so, banks regained momentum during 2019, restructuring and strengthening capital structures to address the lingering stock of non-performing loans. They will now be in the frontline of the Covid-19 economic shock, with a likely rise in foreclosures, bad loans and bankruptcies.

Portugal’s economy is fully integrated in the European Union (EU). Portugal’s primary trading partners are Spain, France, Germany, the United Kingdom and the United States. Portugal complies with EU law for equal treatment of foreign and domestic investors. Portugal has reduced the bureaucratic hurdles to establishing a business over the last few years, even introducing a website named Simplex, designed to help ‘cut the red tape.’

Beyond Europe, Portugal maintains significant links with former colonies including Brazil, Angola, Mozambique, Cape Verde and Guinea-Bissau.  Portugal is one of 19 Eurozone members; the European Central Bank (ECB) acts as central bank for the euro (EUR) and determines monetary policy.

Table 1: Key Metrics and Rankings​
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 30 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 39 of 190 http://www.doingbusiness.org/
en/rankings
Global Innovation Index 2019 32 of 129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 USD 2.8 billion http://apps.bea.gov/international/
factsheet/
World Bank GNI per capita 2018 USD 21,990 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Toward Foreign Direct Investment

The Government of Portugal recognizes the importance of foreign investment and sees it as a driver of economic growth, with an overall positive attitude towards FDI.  Portuguese law is based on a principle of non-discrimination, meaning foreign and domestic investors are subject to the same rules.  Foreign investment is not subject to any special registration or notification to any authority, with exceptions for a few specific activities.

The Portuguese Agency for Foreign Investment and Commerce (AICEP) is the lead for promotion of trade and investment.  AICEP is responsible for the attraction of foreign direct investment (FDI), global promotion of Portuguese brands, and export of goods and services.  It is the primary point of contact for investors with projects over EUR 25 million or companies with a consolidated turnover of more than EUR 75 million.  For foreign investments not meeting these thresholds, AICEP will make a preliminary analysis and direct the investor to assistance agencies such as the Institute of Support to Small- and Medium- Sized Enterprises and Innovation (IAPMEI), a public agency within the Ministry of Economy that provides technical support, or to AICEP Capital Global, which offers technology transfer, incubator programs, and venture capital support.  AICEP does not favor specific sectors for investment promotion. It does, however, provide a “Prominent Clusters” guide on its website  where it advocates investment in Portuguese companies by sector.

The Portuguese government maintains regular contact with investors through the Confederation of Portuguese Business (CIP), the Portuguese Chamber of Commerce and Industry, among other industry associations.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no legal restrictions in Portugal on foreign investment.  To establish a new business, foreign investors must follow the same rules as domestic investors, including mandatory registration and compliance with regulatory obligations for specific activities.  There are no nationality requirements and no limitations on the repatriation of profits or dividends.

Non-resident shareholders must obtain a Portuguese taxpayer number for tax purposes.  EU residents may obtain this number directly with the tax administration (in person or by means of an appointed proxy); non-EU residents must appoint a Portuguese resident representative to handle matters with tax authorities.

There are national security limitations on both foreign and domestic investments with regard to certain economic activities.  Portuguese government approval is required in the following sectors: defense, water management, public telecommunications, railways, maritime transportation, and air transport.  Any economic activity that involves the exercise of public authority also requires government approval; private sector companies can operate in these areas only through a concession contract.

Portugal additionally limits foreign investment with respect to the production, transmission, and distribution of electricity, the production of gas, the pipeline transportation of fuels, wholesale services of electricity, retailing services of electricity and non-bottled gas, and services incidental to electricity and natural gas distribution.  Concessions in the electricity and gas sectors are assigned only to companies with headquarters and effective management in Portugal.

Investors wishing to establish new credit institutions or finance companies, acquire a controlling interest in such financial firms, and/or establish a subsidiary must have authorization from the Bank of Portugal (for EU firms) or the Ministry of Finance (for non-EU firms).  Non-EU insurance companies seeking to establish an agency in Portugal must post a special deposit and financial guarantee and must have been authorized for such activity by the Ministry of Finance for at least five years.

Portugal enacted a national security investment review framework in 2014, giving the Council of Ministers authority to block specific foreign investment transactions that would compromise national security.  Reviews can be triggered on national security grounds in strategic industries like energy, transportation and communication. Investment reviews can be conducted in cases where the purchaser acquiring control is an individual or entity not belonging to the European Union.  In such instances, the review process is overseen by the relevant Portuguese ministry according to the assets in question.

Other Investment Policy Reviews

In February 2019, the OECD presented its latest Economic Survey of Portugal , including an updated macro overview and a set of policy recommendations.

Business Facilitation

To combat the perception of a cumbersome regulatory environment, the Government has created a ‘cutting red tape’ website branded ‘Simplex  that details measures taken since 2005 to reduce bureaucracy, and the Empresa na Hora (“Business in an Hour”) program that facilitates company incorporation by citizens and non-citizens in less than 60 minutes.  More information is available at Empresa na Hora .

In 2007, the Government established AICEP, a promotion agency for investment and foreign trade that also manages industrial parks and provides business location solutions for investors through its subsidiary AICEP Global Parques.

Established in 2012, Portugal’s “Golden Visa” program gives fast-track residence permits to foreign investors meeting certain conditions, including making capital transfers, job creation or real estate acquisitions.  Other measures implemented to help attract foreign investment include the easing of some labor regulations to increase workplace flexibility and EU-funded programs.

Portuguese citizens can alternatively register a business online through the “Citizen’s Portal” available at Portal do Cidadão .  Companies must also register with the Directorate General for Economic Activity (DGAE), the Tax Authority (AT), and with the Social Security administration.  The government’s standard for online business registration is a two to three day turnaround but the online registration process can take as little as one day.

Portugal defines an enterprise as micro-, small-, and medium-sized based on its headcount, annual turnover, or the size of its balance sheet.  To qualify as a micro-enterprise, a company must have less than 10 employees and no more than EUR 2 million in revenues or EUR 2 million in assets.  Small enterprises must have less than 50 employees and no more than EUR 10 million in revenues or EUR 10 million in assets. Medium-sized enterprises must have less than 250 employees and no more than EUR 50 million in revenues or EUR 43 million in assets.  The Small- and Medium-Sized Enterprise (SME) Support Institute (IAPMEI)  offers financing, training, and other services for SMEs based in Portugal.

More information on laws, procedures, registration requirements, and investment incentives for foreign investors in Portugal is available at AICEP’s website .

Outward Investment

The Portuguese government does not restrict domestic investors from investing abroad.  On the contrary, it promotes outward investment through AICEP’s customer managers, export stores and its external commercial network that, in cooperation with the diplomatic and consular network, are operating in about 80 markets.  AICEP  provides support and advisory services on the best way of approaching foreign markets, identifying international business opportunities of Portuguese companies, particularly SMEs.

3. Legal Regime

Transparency of the Regulatory System

The Government of Portugal employs transparent policies and effective laws to foster competition, and the legal system welcomes FDI on a non-discriminatory basis, establishing clear rules of the game. Legal, regulatory, and accounting systems are consistent with international norms. Public finances and debt obligations are transparent, with data regularly published by the Bank of Portugal, the IGCP debt management agency, and the Ministry of Finance. Regulations drafted by ministries or agencies must be approved by Parliament, and, in some cases, by European authorities. All proposed regulations are subject to a 20 to 30 day public consultation period during which the proposed measure is published on the relevant ministry or regulator’s website.  Only after ministries or regulatory agencies have conducted an impact assessment of the proposed regulation, can the text be enacted and published. The process can be monitored and consulted at the official websites of Parliament  and of the Official Portuguese Republic Journal .  Ministries or regulatory agencies report the results of the consultations through a consolidated response published on the website of the relevant ministry or regulator.

Rule-making and regulatory authorities exist across sectors including energy, telecommunications, securities markets, financial and health.  Regulations are enforced at the local level through district courts, on the national level through the Court of Auditors, and at the supra-national level through EU mechanisms including the European Court of Justice, the European Commission, and the European Central Bank. The OECD , the European Commission , and the IMF  also publish key regulatory actions and analysis. UTAO , the Parliamentary Technical Budget Support Unit, is a nonpartisan body composed of economic and legal experts that supports parliamentary budget deliberations by providing the Budget Committee with quality analytical reports on the executive’s budget proposals. In addition, the Portuguese Public Finance Council  conducts an independent assessment of the consistency, compliance with stated objectives, and sustainability of public finances, while promoting fiscal transparency.

The legal, regulatory, and accounting systems are transparent and consistent with international norms.  Since 2005, all listed companies have been required to comply with International Financial Reporting Standards as adopted by the European Union (“IFRS ”), which closely parallels the U.S. GAAP-Generally Accepted Accounting Principles.  Portugal’s Competition Authority enforces adherence to domestic competition and public procurement rules.  The European Commission further ensures adhesion to EU administrative processes among its member states.

Public finances are generally deemed transparent, closely scrutinized by Eurostat and monitored by an independent technical budget support unit, UTAO, and the Supreme Audit Institution ‘Tribunal de Contas.’  Over the last decades, Portugal has also consolidated within the State accounts many state-owned enterprises, making budget analysis more accurate.

International Regulatory Considerations

Portugal has been a member of the EU since 1986, a member of the Schengen area since 1995, and joined the Eurozone in 1999.  With the Treaty of Lisbon’s entry into force in 2009, trade policy and rules on foreign direct investment became exclusive EU competencies, as part of the bloc’s common commercial policy. The European Central Bank is the central bank for the euro and determines monetary policy for the 19 Eurozone member states, including Portugal. Portugal complies with EU directives regarding equal treatment of foreign and domestic investors. Portugal has been a member of the World Trade Organization since 1995.

Legal System and Judicial Independence

The Portuguese legal system is a civil law system, based on Roman law.  The hierarchy among various sources of law is as follows: (i) Constitutional laws and amendments; (ii) the rules and principles of general or common international law and international agreements; (iii) ordinary laws enacted by Parliament; (iv) instruments having an effective equivalent to that of laws, including approved international conventions or decisions of the Constitutional Court; (v) regulations used to supplement and implement laws. The country’s Commercial Company Law and Civil Code define Portugal’s legal treatment of corporations and contracts.  Portugal has specialized family courts, labor courts, commercial courts, maritime courts, intellectual property courts, and competition courts.  The judicial system is independent of the executive branch.

Regulations or enforcement actions are appealable, and are adjudicated in national Appellate Courts, with the possibility to appeal to the European Court of Justice. The judicial system is independent of the executive branch and the judicial process procedurally competent, fair, and reliable. Regulations and enforcement actions are appealable.

Laws and Regulations on Foreign Direct Investment

The Bank of Portugal defines FDI as “an act or contract that obtains or increases enduring economic links with an existing Portuguese institution or one to be formed.” A non-resident who invests in at least 10 percent of a resident company’s equity and participates in the company’s decision-making is considered a foreign direct investor. The Embassy is not aware of any new laws over the last 12 months that regulate FDI, or significant decisions that have changed how foreign investors or their investments are treated.  Current information on laws, procedures, registration requirements, and investment incentives for foreign investors in Portugal is available at AICEP’s website .

Competition and Anti-Trust Laws

The domestic agency that reviews transactions for competition-related concerns is the Portuguese Competition Authority and the international agency is the European Commission’s Directorate General for Competition. Portuguese law specifically prohibits collusion between companies to fix prices, limit supplies, share markets or sources of supply, discriminate in transactions, or force unrelated obligations on other parties.  Similar prohibitions apply to any company or group with a dominant market position. The law also requires prior government notification of mergers or acquisitions that would give a company more than 30 percent market share in a sector, or mergers or acquisitions among entities that had total sales in excess of €150 million in the preceding financial year.  The Competition Authority has 60 days to determine if the merger or acquisition can proceed. The European Commission may claim authority on cross-border competition issues or those involving entities large enough to have a significant EU market share.

Expropriation and Compensation

There have been no recent cases of expropriation of foreign assets or companies in Portugal.

Under Portugal’s Expropriation Code, the government may expropriate property and its associated rights if it is deemed to support the public interest, and upon payment of prompt, adequate, and effective compensation.  The code outlines criteria for calculating fair compensation based on market values. The decision to expropriate as well as the fairness of compensation can be challenged in national courts.

Dispute Settlement

ICSID Convention and New York Convention

Portugal has been a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention – also known as the Washington Convention) since 1965.  Portugal has been a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since January 1995. Portugal’s national arbitration law No. 63-2011 of December 14, 2011 enforces awards under the 1958 New York Convention and the ICSID Convention.

Investor-State Dispute Settlement

Portugal ratified the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards, and in 2002 ratified the 1975 Inter-American Convention on International Commercial Arbitration.

Portugal’s Voluntary Arbitration Law, enacted in 2011, is based on the UNCITRAL Model Law, and applies to all arbitration proceedings based in Portugal.  The leading commercial arbitration institution is the Arbitration Center  of the Portuguese Chamber of Commerce and Industry.

The government promotes non-judicial dispute resolution through the Ministry of Justice’s Office for Alternative Dispute Resolution (GRAL) , including conciliation, mediation, or arbitration.  Portugal has no bilateral investment or free trade agreements containing investor-state dispute settlement provisions with the United States.  The World Bank’s International Center for Settlement of Investment Disputes (ICSID) database shows no cases of investment disputes, pending or concluded, between foreign investors and Portugal. Portuguese courts recognize and enforce foreign arbitral awards issued against the government.  There have been no recent extrajudicial actions against foreign investors.

International Commercial Arbitration and Foreign Courts

Arbitration is the preferred alternative dispute resolution mechanism in Portugal.  The country has a long-standing tradition of arbitration in administrative and contract disputes.  It has also become the standard mechanism for resolving tax disputes between private citizens or companies and tax authorities, as well as in pharmaceutical patent disputes.

Portugal has four domestic arbitration bodies: 1) The Arbitration Center of the Portuguese Chamber of Commerce and Industry (CAC); 2) CONCORDIA (Centro de Conciliacao, Mediacao, de Conflictos de Arbritragem); 3) Arbitrare (Centro de Arbitragem para a Propriedade Industrial, Nomes de Dominio, Firmas e Denominacoes); and 4) the Instituto de Arbitragem Commercial do Porto.  Each arbitration body has its own regulations, but all of them comply with the Portuguese Arbitration Law 63/11, which came into force in March 2012. The Arbitration Council of the Centre for Commercial Arbitration also follows New York Convention, Washington Convention, and Panama Convention guidelines. Arbitration Law 63/11 follows the standard established by the UNCITRAL Model Law, but is not an exact copy of that text.

Under the Portuguese Constitution, the Civil Code of Procedure (CCP) and the New York Convention, applied in Portugal since 1995, awards rendered in a foreign country must be recognized by the Portuguese courts before they can be enforced in Portugal.  There is no legal authority in Portugal on the enforceability of foreign awards set aside at the seat of the arbitration. The CCP sets forth the legal regime applicable to all judicial procedures related to arbitration, including appointment of arbitrators, determination of arbitrators’ fees, challenge of arbitrators, appeal (where admissible), setting aside, enforcement (and opposition to enforcement) and recognition of foreign arbitral awards.

While Portugal’s judicial system has historically been considered inefficient, the country has taken several important steps, including simplifying land registry procedures and increasing the portfolio of online services.

Bankruptcy Regulations

Portugal’s Insolvency and Corporate Recovery Code defines insolvency as a debtor’s inability to meet his commitments as they fall due.  Corporations are also considered insolvent when their liabilities clearly exceed their assets. A debtor, creditor, or any person responsible for the debtor’s liabilities can initiate insolvency proceedings in a commercial court.  The court assumes the key role of ensuring compliance with legal rules governing insolvency proceedings, with particular responsibility for ruling on the legality of insolvency and payment plans approved by creditors. After declaration of insolvency, creditors may submit their claims to the court-appointed insolvency administrator for a specific term set for this purpose, typically up to 30 days.  Creditors must submit details regarding the amount, maturity, guarantees, and nature of their claims. Claims are ranked as follows: (i) claims over the insolvent’s estate, i.e. court fees related to insolvency proceedings; (ii) secured claims; (iii) privileged claims; (iv) common, unsecured claims; (v) subordinated claims, including those of shareholders.  Portugal ranks highly – 15th of 190 countries – in the World Bank’s Doing Business Index “Resolving Insolvency” measure.

4. Industrial Policies

Investment Incentives

The Portuguese government offers investment incentives that can be tailored to individual investors’ needs and capital, based on industry, investment size, and project sustainability, including grants, tax credits and deferrals, access to loans and reduced cost of land. Investment agency AICEP actively recruits investors across the globe, intermediating the terms on a case-by-case basis for the larger investments. The Autonomous Regions of Madeira  and the Azores also offer investment incentives. Since Portugal is an EU Member, potential investors may be able to access European aid programs providing further incentives to invest in Portugal.  Such funds have been used by Portugal to co-finance key investments in the areas of research and development, information and communications technology, transport, water, solid waste, energy efficiency and renewable energy, urban regeneration, health, education, and culture. Through Portugal Ventures, a state-financed private equity company, the government has a risk capital arm that finances the growth of the Portuguese entrepreneurship ecosystem. This entity is part of the public business sector, operating under the same terms and conditions that apply to private companies and subject to the general domestic and community competition rules. As a venture capital firm, its funds are under the supervision of the Portuguese Securities Market Commission, CMVM.

Foreign Trade Zones/Free Ports/Trade Facilitation

Portugal has one foreign trade zone (FTZ)/free port in the Autonomous Region of Madeira, established in 1987.  Continued operation of the International Business Centre of Madeira ’s corporate tax regime is authorized by EU rules on incentives granted to member states.  Industrial and commercial activities, international service activities, trust and trust management companies, and offshore financial branches are all eligible.  Companies established in the foreign trade zone/free port enjoy import- and export-related benefits, financial incentives, tax incentives for investors and companies. In March 2019, the EU Commission expressed concern that Portuguese authorities are not providing proper oversight of tax breaks offered in the Madeira FTZ to ensure they comply with EU regulations.  Under EU rules, company profits benefitting from income tax reductions must originate exclusively from activities carried out in Madeira and these companies must create and maintain jobs in Madeira, conditions the Commission is concerned Portuguese authorities may have failed to respect.

Performance and Data Localization Requirements

Portugal does not impose performance requirements or mandate specific local employment conditions for foreign investors.  Qualification standards for investment incentives are applied uniformly to domestic and foreign investors. There is a high level of labor mobility between Portugal and other EU member states.  To work in Portugal, non-EU foreign nationals must be sponsored for a work permit by a Portuguese employer. There are no nationality-related restrictions that affect a foreign national’s ability to serve in senior management or on a board of directors.  Foreign or expatriate workers with appropriate work authorizations are entitled to the same rights and subject to the same laws as employees with Portuguese citizenship.

While Portugal does not force data localization, according to the Portuguese Data Protection Law (pursuant to the EU’s 1995 Data Protection Directive) “data controllers,” i.e., people or corporations that process personal data, must register with the National Commission for Data Protection (CNPD).  Data transfers outside of the EU are only allowed if the recipient country or company ensures an adequate level of protection. Portugal is subject to new rules stipulated in the EU’s General Data Protection Regulation .

There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption; the same rules apply to foreign IT providers as apply to national providers.

Data transfers to other countries within the EU do not require prior authorization from the CNPD.  Data transfers to countries outside the EU can only take place in compliance with the Data Protection Law, meaning the receiving state must also provide an adequate level of protection to personal data.  If the receiving state does not ensure an adequate level of protection, the CNPD can authorize the transfer under specific conditions, as outlined in Act 67/98. CNPD can also authorize a transfer or a set of transfers of personal data to a receiving state that does not provide an adequate level of protection only if the controller provides adequate safeguards to protect the privacy and fundamental rights and freedoms of individuals.  This can be through appropriate contractual clauses or if a transfer to the United States, through adherence to the U.S.-EU Privacy Shield principles. The CNPD is responsible for overseeing all enforcement of local data storage rules.

Generally, there are no excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility of foreign investors and their employees. Portugal does not follow ‘forced localization’, the policy in which foreign investors must use domestic content in goods or technology.

5. Protection of Property Rights

Real Property

Portugal reliably enforces property rights and interests. The Portuguese Constitution ensures the right to private property and grants Parliament the power to establish rules on the renting of property, the determination of property in the public domain, and the rules of land management and urban planning. The Civil Code of 1967 provides the right to absolute and full ownership, which can be restricted by mortgage, liens, or other security interests. Additional laws have established or modified rules on time-sharing, condominiums, and land registration.

Property registration can be done online at Predial Online . According to the World Bank’s 2020 Doing Business Index, the number of days to process registration stood at 10 in 2019.  Portugal ranked 35 out of 190 countries in the World Bank’s 2020 ease of registering property ranking. The cost to register a property remains slightly higher than average, at 7.3 percent of the property value. Foreign investors can directly own/purchase property freehold or leasehold, to build industrial and commercial premises or can purchase through a real estate company.

If legally purchased property is unoccupied, Portuguese law allows ownership to revert to other owners, including squatters, through an adverse domain process set out in Chapter VI of the Portuguese Civil Code (CCP), Article 1287.

Intellectual Property Rights

Intellectual property rights (IPR) infringement and theft are not common in Portugal.  It is fairly easy for investors to register copyrights, industrial property, patents, and designs with Portugal’s Institute of Industrial Propert y (INPI) and the Inspectorate-General of Cultural Activities  (IGAC).  IPR can be registered online for a small fee.  The Portuguese government adopted the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and provisions of the General Agreement on Tariffs and Trade (GATT) in 2003.  Portugal is a member of the World Intellectual Property Organization (WIPO) and party to many of its treaties, including the Berne Convention, the Paris Convention, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty.

Portuguese legislation for the protection of IPR has been consistent with World Trade Organization (WTO) rules and EU directives since 2004.  The Arbitration Centre for Industrial Property, Domain Names, and Company Names (ARBITRARE) was established in 2009 to facilitate voluntary arbitration of IPR disputes in English or Portuguese, and in 2012 the government created an IPR court with two judges.  Portugal is a participant in the eMAGE and eMARKS projects, which provide multilingual access to databases of trademarks and industrial designs.  Portugal’s Food and Economic Security Authority (ASAE), in partnership with other national law enforcement agencies, provides statistics on seizures of counterfeit goods here .  Authorities actively prosecute IPR violations.

Portugal is not included in the U. S. Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles .

6. Financial Sector

Capital Markets and Portfolio Investment

Portugal has a generally positive attitude toward foreign portfolio investment. The Portuguese stock exchange is managed by Euronext Lisbon, part of the NYSE Euronext Group, which allows a listed company access to a global and diversified pool of investors.  The Portuguese Stock Index-20, PSI20, is Portugal’s benchmark index representing the largest and most liquid companies listed on the exchange. The Portuguese stock exchange offers a diverse product portfolio: shares, funds, exchange traded funds, bonds, and structured products, including warrants and futures.

The Portuguese Securities Market Commission  (CMVM) supervises and regulates securities markets, and is a member of the Committee of European Securities Regulators and the International Organization of Securities Commissions. Portugal has an effective regulatory system that encourages and facilitates portfolio investment and tries to promote liquidity in the markets for investors to effectively enter and exit sizeable positions.

Portugal respects IMF Article VIII by refraining from placing restrictions on payments and transfers for current international transactions.  Credit is allocated on market terms, and foreign investors are eligible for local market financing. Private sector companies have access to a variety of credit instruments, including bonds.

Money and Banking System

Portugal has 151 credit institutions, of which 62 are banks, with a wide penetration of banking services across the country.  Portugal’s banking assets totaled €398 billion at the end of the third quarter of 2019, compared to €489 billion in 2014.

Portuguese banks sharply reduced non-performing loan portfolios since the eurozone debt crisis, leaving them in a healthier position to withstand future shocks.  Total loans stood at just above €200 billion at the end of the third quarter of 2019, with a non-performing loan ratio of 8.3 percent ratio, compared to over 17% in 2016.  Banks’ return on equity and on assets remained in positive territory in 2019.  In terms of capital buffers, the Common Equity Tier 1 ratio improved to 13.9 percent as of June 2019, from 13.2% in June 2017.

Foreign banks are allowed to establish operations in Portugal.  In terms of decision-making policy, a general ‘four-eyes policy’ with two individuals approving actions must be in place at all banks and branches operating in the country, irrespective of whether they qualify as international subsidiaries of foreign banks or local banks.  Foreign branches operating in Portugal are required to have such decision-making powers that enable them to operate in the country, but this requirement generally does not prevent them from having internal control and rules governing risk exposure and decision-making processes, as customary in international financial groups.

No restrictions exist on a foreigner’s ability to establish a bank account and both residents and non-residents may hold bank accounts in any currency.  However, any transfers of €10,000 or more must be declared to Portuguese customs authorities.

Foreign Exchange and Remittances

Foreign Exchange

Portugal has no exchange controls and there are no restrictions on the import or export of capital.  Funds associated with any form of investment can be freely converted into any world currency.

Portugal is a member of the European Monetary Union (Eurozone) and uses the euro, a floating exchange rate currency controlled by the European Central Bank (ECB).  The Bank of Portugal is the country’s central bank; the Governor of the Bank of Portugal participates on the board of the ECB.

Remittance Policies

There are no limitations on the repatriation of profits or dividends.  There are no time limitations on remittances.

Sovereign Wealth Funds

The Ministry of Labor, Solidarity, and Social Security manages Portugal’s Social Security Financial Stabilization Fund (FEFSS), with total assets of around €20 billion.  It is not a Sovereign Wealth Fund (SWF) and does not subscribe to the voluntary code of good practices (Santiago Principles), or participate in the IMF-hosted International Working Group on SWFs.  Among other restrictions, Portuguese law requires that at least 50 percent of the fund’s assets be invested in Portuguese public debt, and limits FEFSS investment in equity instruments to that of EU or OECD members.  FEFSS acts as a passive investor and does not take an active role in the management of portfolio companies.

7. State-Owned Enterprises

There are currently over 40 major state-owned enterprises (SOEs) operating in Portugal in the banking, health care, transportation, water, and agriculture sectors. Portugal’s only SOE with revenues greater than one percent of GDP is the Caixa Geral de Depositos (CGD) Bank. CGD has the largest market share in customer deposits, commercial loans, mortgages, and many other banking services in the Portuguese market.

Parpublica  is a government holding company for several smaller enterprises that audits and reports on smaller SOEs. The activities and accounts of Parpublica are fully disclosed in budget documents and audited annual reports. In addition, the Ministry of Finance publishes an annual report on SOEs through a specialized monitoring unit, UTAM  that presents annual performance data by company and sector. When SOEs are wholly owned, the government appoints the board. However, when SOEs are not majority-owned, the board of executives and non-executives nomination depends on the negotiations between government and the remaining shareholders, and in some cases on negotiations with European Authorities as well.

Portuguese law stipulates that SOEs must compete under the same terms and conditions as private enterprises, subject to Portuguese and EU competition laws.

In 2008, Portugal’s Council of Ministers approved resolution no. 49/2007, which defined the Principles of Good Governance for SOEs according to OECD guidelines. The resolution requires SOEs to have a governance model that ensures the segregation of executive management and supervisory roles, to have their accounts audited by independent entities, to observe the same standards as those for companies publicly listed on stock markets, and to establish an ethics code for employees, customers, suppliers, and the public.  The resolution also requires the Ministry of Finance’s Directorate General of the Treasury and Finances to publish annual reports on SOEs’ compliance with the Principles of Good Governance. Credit and equity analysts generally tend to criticize SOEs’ over-indebtedness and inefficiency, rather than any poor governance and ties to government.

Privatization Program

Portugal launched an aggressive privatization program in 2011 as part of its EU-IMF-ECB bailout, including state-owned enterprises in the air transportation, land transportation, energy, communications, and insurance sectors.  Foreign companies have been among the most successful bidders in these privatizations since the program’s inception. The bidding process was public, transparent, and non-discriminatory to foreign investors.

8. Responsible Business Conduct

There is strong awareness of responsible business conduct in Portugal and broad acceptance of the need to consider the community among the key stakeholders of any company.  The Group of Reflection and Support for Business Citizenship (GRACE) was founded in 2000 by a group of companies, primarily multinational enterprises, to expand the role of the Portuguese business community in social development.

The Ministry of Economy and AICEP encourage foreign and local enterprises to observe the OECD Guidelines for Multinational Enterprises, and both agencies jointly comprise the National Contact Point (NCP) for the promotion of these guidelines or facilitation of resolving disputes that may arise regarding the Guidelines.  The Portuguese Business Ethics Association (APEE) is dedicated to promoting corporate social responsibility and works in collaboration with the Ministry of Economy’s Directorate-General of Economic Activities.  It promotes events like Social Responsibility Week and celebrates protocols and agreements with companies to assure they follow responsible business conduct principles incorporated into the labor code.

Portugal’s Competition Authority both encourages and enforces competition rules, including ethical business practices.  The Competition Authority operates a leniency program  for companies that self-identify lapses. There have not been any high profile, controversial instances of private sector impact on human rights.  The Portuguese government enforces domestic laws effectively and fairly through the domestic courts system, and through the supra-national European Court of Human Rights.  Within its constitution, Portugal states that constitutional precepts concerning fundamental rights must be interpreted and completed in harmony with the Universal Declaration of Human Rights.

The Portuguese legal and regulatory framework on corporate governance includes not only regulations and recommendations from the Portuguese Securities Market Commission (CMVM), but also specific legal provisions from the Portuguese Companies Code and the Portuguese Securities Code. CMVM promotes sound corporate governance for listed companies by setting out a group of recommendations and regulations on the standards of corporate governance. CMVM regulations are binding for listed companies.

Non-governmental organizations also promote awareness of environmental and good governance issues in business.  These include Quercus Portugal, which publishes guidelines and organizes events to promote environmental responsibility in business practices, and Transparencia e Integridade Associacao Civica (TIAC), which produces reports on corruption on everything from football match-fixing to conflicts of interest in public and private enterprise.  TIAC also allows whistle-blowers to anonymously submit reports of corruption through their website.

Portugal does not participate in the Extractive Industries Transparency Initiative (EITI) or the Voluntary Principles on Security and Human Rights. The country’s two main umbrella unions, CGTP-Confederação Geral dos Trabalhadores Portugueses and UGT-União Geral dos Trabalhadores, also regularly denounce and combat non-compliant business practices, particularly when it comes to labor rights violations.

9. Corruption

U.S. firms do not identify corruption as an obstacle to foreign direct investment. Portugal has made legislative strides toward further criminalizing corruption.  The government’s Council for the Prevention of Corruption, formed in 2008, is an independent administrative body that works closely with the Court of Auditors to prevent corruption in public and private organizations that use public funds.  Transparencia e Integridade Associacao Civica, the local affiliate of Transparency International, also actively publishes reports on corruption and supports would-be whistleblowers in Portugal.

In 2010, the country adopted a law criminalizing violation of urban planning rules and increasing transparency in political party funding. In 2015, Parliament unanimously approved a revision to existing anti-corruption laws that extended the statute of limitations for the crime of trading in influence to 15 years and criminalized embezzlement by employees of state-owned enterprises with a prison term of up to eight years. The laws extend to family members of officials and to political parties.

Still, according to a 2018 report by the Council of Europe’s Group of States against Corruption (GRECO), Portugal should improve efforts to reform its legal framework to prevent corruption from MPs, judges, and prosecutors. The report concluded that Portugal has only satisfactorily implemented one of fifteen previous recommendations. Three have been partly implemented, and eleven have not yet been implemented. The situation is qualified by GRECO as “globally unsatisfactory.” GRECO, however welcomed  a reform to bolster integrity, enhance accountability and increase transparency of a wide range of public office holders, including MPs.

Portugal has laws and regulations to counter conflict-of-interest in awarding contracts or government procurement.

The Portuguese government encourages (and in some cases requires) private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials.  Most private companies use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials. As described above, the Competition Authority operates a leniency program for companies that self-identify infringements of competition rules, including ethical lapses.

Portugal has ratified and complies with both the UN Convention against Corruption and the OECD Anti-Bribery Convention.

Resources to Report Corruption

Council for the Prevention of Corruption
Avenida da Republica, 65
1050-189, Lisbon, Portugal
+351 21 794 5138
Email: cp-corrupcao@tcontas.pt

Contact at “watchdog” organization:

Transparency International – Transparencia e Integridade Associacao Civica
Rua dos Fanqueiros, 65-3º A
1100-226, Lisbon, Portugal
+351 21 8873412
Email: secretariado@transparencia.pt

10. Political and Security Environment

Since the 1974 Carnation Revolution, Portugal has had a long history of peaceful social protest.  Portugal experienced its largest political rally since its revolution in response to proposed budgetary measures in 2012. Public workers, including nurses, doctors, teachers, aviation professionals, and public transportation workers organized peaceful demonstrations periodically in protest of salary levels and other measures throughout 2018.

11. Labor Policies and Practices

Numerous labor reform packages aimed at improving productivity were implemented after the 2011 bailout, but overall low labor productivity remains a challenge. In January 2020, the annualized monthly minimum wage increased to €741, from €700.

After the difficulties of the eurozone debt crisis, when many Portuguese migrated out of the country along with some resident migrants, net-migration became positive again in 2017 and strengthened since. The number of legal foreign residents in Portugal stands at around 480,000, the highest level since records started in 1976. The largest communities of workers come from Brazil, Cape Verde, Romania, Ukraine, UK, China, France, Italy, Angola and Guinea-Bissau. The employment rate of foreign workers is similar to that of Portuguese nationals at around 75%. In the southern Algarve region, the tourism sector employs most of the migrant workers. Alentejo and the coastal regions of central Portugal, with their intensive agriculture sectors, hosts substantial Asian workers’ communities, namely from Bangladesh.

Employers are allowed to conduct collective dismissals linked to adverse market or economic conditions, or due to technological advancement, but must provide advance notice and severance pay. Depending on the seniority of each employee, an employer must provide between 15 to 75 days of advance notice, and pay severance ranging from 12 days’ to one month’s salary per year worked. Employees may challenge termination decisions before a Labor Court.  Labor laws are uniformly applicable and enforced, including in Portugal’s foreign trade zone/free port in the Autonomous Region of Madeira.

Collective bargaining is common in Portugal’s banking, insurance, and public administration sectors. More information is available at the Directorate General for Labor Relations site .

Portugal has labor dispute resolution mechanisms in place through Labor Courts and Arbitration Centers.  Labor strikes are more common than in the United States, but are nonviolent and of short duration. Labor laws are not waived in order to attract or retain investment.

Portugal is a member of the International Labor Organization (ILO), and has ratified all eight Fundamental Conventions as well as all four Governance (Priority) Conventions.

The Labor Code caps the work schedule at eight hours per day, and 40 hours per week. The public sector employee workweek, with certain exclusions, was capped at 35 hours in July 2016.  Employees are entitled to at least 22 days of annual leave per year. Employers must pay employees a Christmas and vacation bonus, both equivalent to one month’s salary.

12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs

Portugal is a country with low political risk; there is no active DFC program in Portugal.  However, DFC is authorized to operate in Portugal.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2018 €204,304    2018 $240,675 www.worldbank.org/en/country 
eurostat 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2018 €1,825 2018 $ 2,825 BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Host country’s FDI in the United States ($M USD, stock positions) 2018 €1,258 2018 $1,029 BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Total inbound stock of FDI as % host GDP N/A N/A 2018 56.9% UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 
  

* Source for Host Country Data: Bank of Portugal   

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 155,913 100% Total Outward 62,016 100%
Netherlands 32,792 21% Netherlands 13,710 22%
Luxembourg 29,223 19% Spain 13,402 22%
Spain 20,010 13% Angola 3,766 6%
United Kingdom 10,966 7% Brazil 3,634 6%
France 8,965 6% United Kingdom 3,444 6%
“0” reflects amounts rounded to +/- USD 500,000.
Table 4: Sources of Portfolio Investment
Portfolio Investment Assets
Top Five Partners (Millions, current US Dollars)
Total Equity Securities Total Debt Securities
All Countries 158,941 100% All Countries 42,159 100% All Countries 116,782 100%
Spain 25,973 16% Luxembourg 16,549 39% Spain 23,506 20%
Luxembourg 19,574 12% Ireland 6,632 16% Italy 18,382 16%
Italy 17,855 11% United States 5,598 13% France 10,347 9%
France 14,883 9% Spain 3,925 9% Netherlands 7,453 6%
United States 13,238 8% France 1,324 3% Germany 6,753 6%

14. Contact for More Information

Embassy of the United States
Avenida das Forças Armadas 1600-081
+351 21-770-2000
Email: icsportugalqueries@state.gov

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