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. Finland offers stability, functionality, high quality of living, and a highly developed digital infrastructure.

Key challenges for foreign investors include high personal and VAT tax rates, a rigid labor market and bureaucratic red tape in starting certain businesses and opening bank accounts, 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.

During 2019, the total value of FDI grew by USD 15.1 billion to USD 85.5 billion, of which equity accounted for USD 69.63 billion and the value of debt capital for USD 15.9 billion. Sweden accounts for 28 percent of Finland’s FDI; Luxembourg – 15 percent; the Netherlands – 15 percent; Norway – 6 percent; and Denmark 5 percent. Approximately 82 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 2020 3 of 180 http://www.transparency.org/research/cpi/overview
World Bank’s Doing Business Report 2020 20 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2020 7 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 3,745 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 50,010 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

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, 17 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.

To meet the EU FDI screening regulation amendments to national legislation (the Act on the Screening of Foreign Corporate Acquisitions in Finland) entered into force in October 2020. National law continues to be premised on a positive attitude towards foreign investments, but authorities can exercise control over the ownership of companies considered essential in terms of the security of supply and national security and, if necessary, restrict foreign ownership in such companies. The Ministry of Economic Affairs and Employment will act as the national contact point for cooperation and exchange of information between EU Member States and the European Union, and matters relating to the implementation of the EU Regulation establishing a framework for the screening of foreign direct investments. The Act also includes new provisions on the setting of conditions that attach to decisions of the Ministry of Economic Affairs and Employment regarding the approval of corporate acquisitions, inadmissibility of matters, circumvention of the Act, and the disclosure of secret information to public authorities. In addition, it will be necessary to apply for an advance approval by the Ministry of Economic Affairs and Employment when making corporate acquisitions in the security sector in the future.

In the non-military sector, Finnish companies considered critical for securing vital functions of society are subject to screening.

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.

In regards to defense industry, monitoring covers all foreign owners. In other sectors, screening only applies to foreign owners residing or domiciled outside the EU or EFTA. There are no formal requirements for the layout of the application and notification submitted to the Ministry of Economic Affairs and Employment. However, the Ministry has drawn up instructions for preparing the application/notification. The application and notification must also be accompanied by a form containing the information required by the EU Regulation. Starting January 1, 2021, TEM charges a fee of EUR 5,000 for the processing of each application for confirming a foreign corporate acquisition. For more see: https://tem.fi/en/acquisition 

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 real estate 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 early 2020, states that non-EU/ETA property purchasers can still buy residential housing and condominiums without restrictions. More info can be found here: https://www.defmin.fi/en/licences_and_services/authorisation_to_non-eu_and_non-eea_buyers_to_buy_real_estate#be2e4cd8 

Private ownership is common practice 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.

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 .

Finland, in the past three years, has not undergone an investment policy review by the World Trade Organization (WTO), the United Nations Committee on Trade and Development (UNCTAD), or the Organization for Economic Cooperation and Development (OECD).

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 December 2020, the Finnish Immigration Service reported that the average processing time for foreign specialist residency permits was two weeks. 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.

Finland, together with Sweden, Denmark, and the Netherlands scored the highest ratings in EU’s Digital Economy and Society Index 2020 DESI, naming these countries the global leaders in digitalization. DESI summarizes relevant indicators on Europe’s digital performance and tracks the evolution of EU Member States in digital competitiveness.

Gender inequality is low in Finland, which ranks third in the 2020 World Economic Forum Global Gender Gap Index. Finland has the lowest gender pay gap in the OECD, thanks to decades of gender friendly policies. The employment gap between disadvantaged groups and prime-age men is among the ten lowest in the OECD, albeit higher than in all the other Nordics.

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.

The government does not generally restrict domestic investors from investing abroad. The only exceptions are linked to matters of national security and national defense. The Defense Ministry is responsible for approving exports of arms for military use, while the National Police Board grants permission for the export of civilian weapons and the Foreign Ministry oversees exports of dual-use products. Export control seeks to promote responsible export of Finnish technology and to prevent the use of Finnish technology for the development of WMDs, for undesirable military ends, for uses against the interests of Finland, or for purposes that violate human rights.

Finland does not share a bilateral investment treaty (BIT) agreement or FTA with the United States. Finland has concluded BITs with: Albania, Algeria, Argentina, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Chile, China, Croatia, the Czech Republic, Dominican Republic, Egypt, El Salvador, Estonia, Ethiopia, Georgia, Guatemala, Hong Kong, Hungary, Indonesia, Iran, Jordan, Kazakhstan, Kenya, Korea, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, North Macedonia, Malaysia, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Namibia, Nepal, Nigeria, Oman, Panama, Peru, Philippines, Poland, Qatar, Russia, Serbia, Slovakia, Slovenia, South Africa, Sri Lanka, Tanzania, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, and Vietnam. A full list of Finland investment agreements, including copies of the actual documents, is at https://investmentpolicy.unctad.org/international-investment-agreements/countries/71/finland  and https://issuu.com/ulkoministerio/docs/maailmanmarkkinat_2018-2019  (in Finnish).

As an EU member state, Finland is also a signatory to any treaty or agreement, including free trade agreements, signed by the European Union. Finland is a signatory to the WTO Trade Facilitation Agreement (TFA), which entered into force on February 22, 2017.

Finland and the United States signed a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital (TIAS 12101) that entered into force in 1990. In 2014, the two countries signed an intergovernmental agreement to implement the U.S. Foreign Account Tax Compliance Act (FATCA) which fights tax evasion and fraud. The Finnish tax administration guidance regarding FATCA is at: https://www.vero.fi/globalassets/yritysasiakkaat/fatca-obligations-in-brief.pdf and https://www.vero.fi/syventavat-vero-ohjeet/ohje-hakusivu/48528/verohallinnon-ohje-suomen-ja-yhdysvaltain-v%C3%A4list%C3%A4-verotietojen-vaihtoa-koskevan-fatca-sopimuksen-soveltamiseksi/  (available only in Finnish and Swedish). For the full text of the FATCA agreement, see: https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Finland-3-5-2014.pdf .

For a list of Finland’s bilateral tax agreements, see: https://www.vero.fi/en/detailed-guidance/guidance/49062/tax_treatie/ .

The salary and fringe benefits paid to qualifying foreign employees living in Finland for more than six months are taxed at a flat rate of 32 percent as of January 1, 2020, for a maximum assignment period of 48 months in Finland. For detailed tax guidance, see the Finnish Tax Administration’s website: https://www.vero.fi/en/detailed-guidance/guidance/49113/taxation-of-employees-from-other-countries5/  and Tax Handbook for Startups and International Investors (2018) https://www.businessfinland.fi/48d01f/globalassets/julkaisut/invest-in-finland/tax-handbook-for-startups-and-international-investors-4_2018.pdf

In April 2018, Business Finland introduced a Startup visa to recruit more international talent and innovative companies to the fast-growing Finnish startup ecosystem. Business Finland must first provide a favorable assessment of a proposed application before the Startup visa application is sent to the Finnish Immigration Service. Business Finland evaluates whether the business model, team and resources show potential for rapid international growth. After the assessment, the applicant will receive an Eligibility Statement to be attached to the Startup visa application. The visa can initially be issued for a maximum of two years, after which it can be renewed. The visa does not involve investments from the Finnish government or financial support. For more information see: https://www.businessfinland.fi/en/do-business-with-finland/startup-in-finland/startup-permit 

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). The newly established Digital and Population Data Services Agency (2020) is responsible for developing and maintaining the national open data portal https://www.avoindata.fi/en 

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.

The current Government Program (issued in December 2019) sets openness of public information, including open data, application programming interface APIs and open source software, as key goals of the administration.

The status of Finland’s public finances is available at Statistics Finland, Finland’s official statistics agency: https://www.stat.fi/til/jul_en.html 

The status of Finland’s national debt is available at the State Treasury: https://www.treasuryfinland.fi/statistics/statistics-on-central-government-debt/#2fcc85c1 

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 2020, Finland submitted four notifications of technical regulations and conformity assessment procedures to the WTO and has submitted 103 notifications since 1995. Finland is a signatory to the WTO Trade Facilitation Agreement (TFA), which entered into force on February 22, 2017.

Finland follows European Union (EU) internal market practices, which define Finland’s trade relations both inside the EU and with non-EU countries. Restrictions apply to certain items such as products containing alcohol, pharmaceuticals, narcotics and dangerous drugs, explosives, etc. The import of beef cattle bred on hormones is forbidden. Other restrictions apply to farm products under the EU’s Common Agricultural Policy (CAP).

In March 1997 EU commitments required the establishment of a tax border between the autonomously governed, but territorially Finnish, Aland Islands and the rest of Finland. As a result, the trade of goods and services between the Aland Islands and the rest of Finland is treated as if it were trade with a non-EU area. The Aland Islands belong to the customs territory of the EU but not to the EU fiscal territory. The tax border separates the Aland Islands from the VAT and excise territory of the EU. VAT and excise are levied on goods imported across the tax border, but no customs duty is levied. In tax border trade, goods can be sold with a tax free invoice in accordance with the detailed taxation instructions of the Finnish Tax Administration.

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.

Finland is a party of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 1962. The provisions of the Convention have been included in the Arbitration Act (957/1992).

The Oikeus.fi website ( https://oikeus.fi/en/index.html ) contains information about the Finnish judicial system and links to the websites of the independent courts, the public legal aid and guardianship districts, the National Prosecution Authority, the National Enforcement Authority Finland, and the Criminal Sanctions Agency.

Laws and Regulations on Foreign Direct Investment

There is no primary or “one-stop-shop” website that provides all relevant laws, rules, procedures and reporting requirements for investors. 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 Antitrust 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/ .

In September 2020, the Nordic Competition Authorities released a joint memorandum on digital platforms, setting out the Nordic perspective on issues of competition in digital markets in Europe. For more see: https://www.kkv.fi/globalassets/kkv-suomi/julkaisut/pm-yhteisraportit/nordic-report-2020-digital-platforms-and-the-potential-changes-to-competition-law-at-the-european-level.pdf

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. An expropriation permit granted by the Government may be appealed against to the Supreme Administrative Court. 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 260 parties in 2020, the majority (238) 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.

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 Arbitration Institute of the Chamber of Commerce (FAI) launched its Mediation Rules under which FAI 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 Arbitration/Expedited Arbitration Rules”, which were updated in 2020: https://arbitration.fi/arbitration/guidelines-and-instructions/ 

The Finland Arbitration Institute (FAI) 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 these 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 data collected by the World Bank’s 2020 Doing Business Report, resolving insolvency takes 11 months on average and costs 3.5 percent of the debtor’s estate. The average recovery rate is 88 cents on the dollar. Globally, Finland ranked first of 190 countries on the ease of resolving insolvency in the Doing Business 2020 report : https://www.doingbusiness.org/content/dam/doingBusiness/country/f/finland/FIN.pdf

Investment Incentives

Foreign-owned companies in Finland are eligible for government and EU 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. EU finance is largely also channeled through the ELY Centers. http://www.ely-keskus.fi/en/web/ely-en/business-and-industry;jsessionid=0B09A1B237B74FAC485AAD7C8E068DBF .

Business Finland 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, Business Finland emphasizes also service-related, design, business, and social innovations. Startups and both SMEs and large companies can benefit from Business Finland 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. Business Finland’s innovation funding 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. https://www.investinfinland.fi/our-services .

Support for innovative business ventures can also be obtained from the Foundation for Finnish Inventions: https://www.wipo.int/members/en/details.jsp?country_id=57 

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. For more see: https://tulli.fi/en/businesses/customs-declarations/entry-and-temporary-storage 

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.

The legal basis for the limitation on admission of third country nationals for the purpose of employment is set out in the Council Resolution C274/3 of 1994. Labor Market Tests (LMT) are mechanisms that aim to ensure that migrant workers are only admitted after employers have seriously and unsuccessfully searched for local workers. As a tool to manage labor migration and to facilitate entry of certain categories of third-country national workers, Finland applies various exemptions from the LMT for certain categories of worker, according to national labor market needs. These categories include: highly qualified workers or top specialists, inter-corporate transferees (ICTs), posted workers, persons holding high ranking positions, sports professionals, workers in the field of research, science, art, and culture. LMT for persons already working in Finland and transferring to other sectors was removed in June 2019 in order to improve the labor mobility of foreign citizens already in the labor market.

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.

In February 2021, an Advisory Board for Network Security to assess and develop the security of domestic communications networks and to support decision-making by the authorities was established. The Board operation is based on the new provisions of the Act on Electronic Communications Services that entered into force in early 2021, and is part of the implementation of the EU guidelines and toolbox in Finland.

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 .

In November 2020, the Office of the Data Protection Ombudsman and the Finnish Information Society Development Center TIEKE started a pilot program providing micro enterprises and SMEs with information and tools to help ensure effective data protection. More information here: https://tietosuoja.fi/en/-/data-protection-opening-doors-into-europe-for-smes 

Real Property

The Finnish legal system protects and enforces property rights and secured interests in property, both movable and real. Finland ranked first of 129 countries in the Property Rights Alliance 2020 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 34th out of 190 countries in the ease of Registering Property according to the World Bank’s 2020 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. One of Prime Minister Marin’s goals is to draft a National IPR Strategy for Finland.

Treaties: 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, the WIPO Performances and Phonograms Treaty, and the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome Convention). Finland is party to the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Copyrights: 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 . Distribution of information on copyright and surveillance of rights is performed by the Copyright Information and Anti-Piracy Centre (CIAPC).

Trademarks: The new Finnish Trademarks Act entered into force in May 2019. With this Act, Finland implemented 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 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. Finland is party to the Madrid Protocol.

Trade secrets: 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).

Patents: Patent rights in Finland are consistent with international standards, and a granted patent is valid for 20 years. The Finnish Patent and Registration Office (PRH) website contains unofficial translations in English of the Patents Act, Patents Decree, and Patent Regulations https://www.prh.fi/en/patentit/lainsaadantoa.html . 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 USTR’s Special 301 Report Watch List in 2009 but was removed in 2015 when the term for relevant patents expired.

Designs: Finland is party to the Locarno Agreement and the Hague Agreement for Industrial Designs, and design are protected by the Finnish Registered Designs Act. The Designs Register at the Finnish Patent and Registration Office (PRH) contains entries about national designs, i.e. design rights, applied for and registered in Finland: https://mallioikeustietopalvelu.prh.fi/en .

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 2020, according to the Grey Economy Crime statistics, Finnish customs authorities inspected 119,337 suspected counterfeit goods (with a value of USD 240 million). The number and value of counterfeit goods detained by Finnish Customs have been in decline since 2013. 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 USTR’s 2020 Notorious Markets List for reportedly hosting a Flokinet server 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 .

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 end December 2020 Finland had USD 126 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 2019, there were 246 credit institutions operating in Finland and total assets of the domestic banking groups and branches of foreign banks operating in Finland amounted to USD 859 billion. For more information see: https://www.finanssiala.fi/en/publications/finnish-banking-in-2019/ 

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 2019 the capital adequacy ratio of the Finnish banking sector was 21.3 percent, above the EU average. Measured in Core Tier 1 Capital, the ratio was 17.6 percent. The capital adequacy of the Finnish banking sector remains well above the EU average. The Finnish banking sector’s return on equity (ROE) was 4.9 percent, slightly below the average ROE for all EU banking sectors (5.4 percent). Standard & Poor’s in March 2021 reaffirmed Finland’s AA+ long term credit rating and stable outlook while Fitch kept Finland’s credit rating at AA+ in November 2020. Moody’s kept Finland’s credit rating unchanged at Aa1 in July 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 Europe’s 21st largest bank (2020) 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. Commercially launched in January 2019, the we.trade’s technology is currently licensed by 16 banks across 15 countries.

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 : https://www.vero.fi/en/detailed-guidance/guidance/48411/taxation-of-virtual-currencies3/ 

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. In accordance with the Act, Customs has established a bank and payment accounts register and issue a regulation on a data retrieval system, which entered into force on 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.

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 12 listed companies; the market value of Solidium’s equity holdings is approximately USD 10.46 billion (March 2021), https://www.solidium.fi/en/holdings/holdings/ 

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 Government of Finland GOF, directly or through Solidium, is a significant owner in 16 companies listed on the Helsinki stock exchange. The market value of all State direct shareholdings was approximately USD 28 billion as of March 2021. More info can be found here: https://vnk.fi/en/government-ownership-steering/value-of-state-holdings . The GOF has majority ownership of shares in two listed companies (Finnair and Fortum) and owns shares in 33 commercial companies: https://vnk.fi/en/state-shareholdings-and-parliamentary-authorisations  (March 2021). The Finnish State development company Vake will be turned into a Climate Fund, focusing on combating climate change, driving digitalization and advancing low-carbon industry. More information can be found here: https://vake.fi/en/ 

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/government-ownership-steering/ownership-policy 

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. In November 2020, Estonian based Openrail Finland’s rail freight operations started in Finland. 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 2.89 billion (2007 – 2021). Solidium’s share sales totaled some USD 7.17 billion ( 2007 – 2021). 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 .

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 report on their CSR. The obligation to report non-financial information and corporate responsibility reports apply to large public interest entities i.e. listed companies, credit institutions and insurance companies with more than 500 employees. In addition, turnover must be greater than USD 48 million or balance sheet exceed more than USD 24 million.

Importing tin, tantalum, tungsten, and gold from conflict zones into the EU requires new procedures from businesses as of January 2021. The Act on the placing on the market of conflict minerals and their ores, which entered into force on January 1, 2021, improves the transparency of supply chains, and brings Finland’s conflict minerals regime into line with EU regulations.

Tukes, the Finnish Safety and Chemicals Agency, is the competent authority in Finland and Customs is given tasks related to the implementation of the Act. 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.

Finland is a supporter of the Montreux Document on pertinent international legal obligations and good practices for states related to operations of private military and security companies during armed conflict, but not a member of ICoCA, the international Code of Conduct for Private Security Service providers’ Association.

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 .

Additional Resources

Department of State

Department of Labor

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 2020, Finland was ranked third on the CPI. In 2020, TI however stated that Finland scores high on the CPI but isn’t spared from corruption. Gaps in Finland’s anti-money laundering supervisory framework could make Finland, along with other Nordic countries, very attractive to corrupt individuals and money launderers. In addition, Finland demonstrates “little to no enforcement against foreign bribery”, TI concluded.

Corruption in Finland is covered by the Criminal Code and penalties range from fines to imprisonment of up to four years. The Criminal Code divides bribery offences into two categories, giving of bribes to public officials or acceptance of bribes and giving or acceptance of bribes in business. Finland has statutory tax rules concerning non-deductibility of bribes. Finland does not have an authority specifically charged to prevent corruption, instead several authorities and agencies contribute to anti-corruption work.. 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 .

In 2020, Ministry of Employment and Economy released an Anti-Corruption guide intended for companies, especially SMEs, to provide them with guidance and support for promoting good business practices and corruption-free business relations both in Finland and abroad. For more see: https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/162227/MEAE_guidelines_2b_2020_ENG_Anti_corruption_guide_for_SMES_07052020.pdf?sequence=1&isAllowed=y 

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/en/index.html . 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 2020, a parliamentary working group was set up to establish a transparency lobbying register. I 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. In October 2020, the OECD working group on bribery said it recognizes Finland’s commitment to combat corruption, but is concerned about lack of foreign bribery enforcement. For more see Finland’s 4th evaluation report: http://www.oecd.org/corruption/Finland-phase-4-follow-up-report-ENG.pdf .

In October 2020, the Council of Europe’s anticorruption body GRECO (Group of States against Corruption) addressed 14 recommendations to Finland on preventing corruption and promoting integrity in central governments (top executive functions) and compliance with these recommendations. For more see GRECO’s 5th evaluation round, Finland compliance report: https://rm.coe.int/fifth-evaluation-round-preventing-corruption-and-promoting-integrity-i/1680a0b0ca . 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.

At the beginning of 2017, the Public Procurement Act based on the new EU directives on public procurement entered into force. Under the 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 

Salla Nazarenko
Chairperson
Transparency Finland
info@transparency.fi 

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. There were a few anti-Semitic incidents on International Holocaust Remembrance Day at the beginning of 2020, but the banning of NRM and COVID-19 have led to a marked decline in anti-Semitic incidents over the past year.

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.

According to the Finnish Intelligence Service (SUPO) 2020 yearbook, released in March 2021, the danger of extreme right-wing terrorism has grown in Finland, and SUPO has identified far-right operators with the capacity and motivation to mount a terrorist attack. Some indications of concrete preparation have also emerged. The threat of radical Islamist terrorism has remained at the previous level.

The Fund for Peace (FFP) ranked Finland as the most stable country in the world again in 2020 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”.

Finland has a long tradition of trade unions. The country has a unionization rate of 67 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. In Fall 2020, the government decided to commission a report on measures to strengthen the trust and negotiating competence required for local collective bargaining within both generally binding collective agreements and normally binding collective agreements. The aim is to develop and advance local collective bargaining through the system of 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 2019, there were 107 strikes in Finland, compared to 166 in 2018.

In September 2019, Statistics Finland reported that between 2010 and 2018, the number of working-age people has fallen by 122,000 persons, and during the next two decades the working age population is expected to decrease more slowly or by 111,000 persons by 2040. 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 introduced a two-year, nationwide, statutory and randomized 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, but it did improve mental wellbeing, confidence, and life satisfaction. The study found a mild positive effect on employment, particularly in certain categories, such as families with children.

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.

Not available.

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 $268.972 2019 $269.296 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2019 $0.704 bn 2019 $3.745 bn BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2019 $3.86 bn 2019 $14.826 bn BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2019 31.8 % 2019 29.26% UNCTAD data available at
https://stats.unctad.org/handbook/
EconomicTrends/Fdi.html 
  

* 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 85,821 100% Total Outward 146,470 100%
Sweden 24,259 28.3% The Netherlands 35,579 24.3%
Luxembourg 12,644 14.7% Sweden 28,842 19.7%
The Netherlands 12,593 14.7% Ireland 23,589 16.1%
Norway 5,464 6.4% Norway 7,394 5.0%
China, P.R., Mainland 4,153 4.8% Denmark 7,391 5.0%
“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 386,524 100% All Countries 238,719 100% All Countries 147,802 100%
United States 67,238 17% Ireland 54,623 23% Sweden 20,904 14%
Ireland 60,273 16% United States 51,713 22% United States 15,524 11%
Luxenbourg 52,416 14% Luxenbourg 46,845 20% Denmark 13,554 9%
Sweden 33,699 9% Caymand Islands 16,675 7% Germany 13,531 9%
Denmark 20,571 5% Sweden 12,793 5% France 12,947 9%

2021 Investment Climate Statements: Finland
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