2022 Investment Climate Statements: Finland

Policies Towards Foreign Direct Investment

The Finnish government is open to foreign investment. A mixture of domestic and EU competition rules govern mergers and acquisitions. Finnish tax authorities treat the transfer of shares from a Finnish company to a foreign non-EU company as a taxable event.

Finland does not grant foreign-owned firms preferential treatment such as tax holidays or other subsidies. Instead, Finland relies on policies that seek to offer both domestic and international firms a favorable business environment, educated work force, and well-functioning infrastructure. Companies benefit from beneficial 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-three countries. Finland’s corporate income tax rate, 20 percent, is the lowest in the Nordics and one of the lowest in the EU

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, 18 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 requirements, the necessary amendments to Finland’s national legislation (the Act on the Screening of Foreign Corporate Acquisitions in Finland) were entered into force in October 2020. TEM acts as the national point of contact with the EU and its member states for collaboration and the exchange of information.

In a May 2021 report, the Organization for Economic Cooperation and Development (OECD) noted that Finland has relatively few restrictions to foreign (non-EEA) ownership, but that there is some uncertainty around the implementation of Finland’s FDI screening mechanism. To improve Finland’s ability to attract and retain FDI, the OECD recommended Finland to increase the predictability and transparency of FDI screening processes. In addition, the OECD stated that publishing further guidance and reporting on implementation practice, such as average processing times, could increase legal certainty for foreign investors.

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.

Regarding the 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 formatting of the application and notification submitted to the Ministry of Economic Affairs and Employment. However, the Ministry does provide drawn up instructions for use when preparing the application/notification. The application and notification must also be accompanied by a form containing certain information required by the EU Regulation. Starting January 1, 2021, TEM charges a fee of EUR 5,000 for the processing of each application. The Decree on the Chargeable Performances of TEM (1182/2020) entered into force on January 1, 2021 and will remain in force until March 31, 2022. For more see: https://tem.fi/en/frontpage

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. 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 

Private ownership is common in Finland, and the participation of foreign companies or individuals is generally 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 . 

In May 2021, the OECD released a report on the Impact of Regulation on International Investment in Finland. Despite its openness to trade and investment, Finland lags behind the other Nordic countries and Baltic countries as a destination for foreign investment. In 2019, foreign direct investment (FDI) to Finland accounted for 31 percent of GDP – less than in 2010 and well below the 49 percent average in the peer countries. The report finds that Finland’s comparative advantage in knowledge-based services is reflected in the high degree of foreign penetration in these sectors. Finnish salaries for high-skilled workers are considered relatively competitive compared to other Nordics. High-quality institutions, transparent regulation, economic and political stability also contribute to a strong business climate.

Finland has few explicit restrictions to FDI and relatively low barriers to trade and investment in some sectors, which contribute to attracting inward FDI. Finland maintains few barriers in professional services sectors and has a favorable regulatory environment for digitally enabled services. Investors in Nordic-Baltic countries enjoy a high level of regulatory integration within the region, and regulatory harmonization within the Single Market has lowered barriers for investors within the EEA.

OECD noted that there are, however, several challenges that may be preventing Finland from exploiting its full potential as a destination for FDI: uncertainty around the implementation of its FDI screening mechanism and setting up a business takes longer in Finland than in other countries in the region. For more see: https://www.oecd-ilibrary.org/sites/b1bf8bee-en/index.html?itemId=/content/publication/b1bf8bee-en 

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

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 June 2022, Finland is introducing a long-term D visa and will implement a 14-day fast track service (expedited residence permit procedure) for senior specialist or start-up entrepreneurs and their families, in order to significantly increase immigration of skilled labor.

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 scored second highest in EU’s Digital Economy and Society Index 2021 DESI, leading in human capital, integration of digital technology and digital public services. 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 second in the 2021 World Economic Forum Global Gender Gap Index. Finland has had a woman in the Prime Minister position for 13 of the last 50 years. In addition, 46 percent of parliamentarians are women, the 9th highest share in the world. In Finland, already 76.6 percent of women actively participate in the labor force, and more women than men are in professional and technical roles. However, women’s estimated earned income is 72.1 percent of men’s – differences in hours worked and childcare responsibilities contribute to earning disparities between genders.

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 operates 16 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. A full list of Finland investment agreements, is at ttps://investmentpolicy.unctad.org/international-investment-agreements/countries/71/finland .

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-soveltamiseksi3/ (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 .

Finland is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting and a party to the two-pillar plan to address the tax challenges arising from the digitalization of the economy.

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 key employees living in Finland for more than six months, and who are guaranteed the status of resident taxpayer, are taxed at a flat rate of 32 percent as of February 7, 2022. For detailed tax guidance, see the Finnish Tax Administration’s website: https://www.vero.fi/en/detailed-guidance/guidance/106825/taxation-of-key-employees/and the Tax Survival kit by the Finnish Tax Administration (February 2021) https://www.businessfinland.fi/491a6f/globalassets/julkaisut/invest-in-finland/tax-survival-kit-10.2.2021.pdf. 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 permit 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 permit 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 permit application. The permit can initially be issued for a maximum of two years, after which it can be renewed. The permit 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 and https://www.businessfinland.fi/en/do-business-with-finland/startup-in-finland/startupkit and https://migri.fi/en/start-up-entrepreneur.

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://unctad.org/topic/enterprise-development/business-facilitation

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 .

In September 2021, the Ministry of Economic Affairs and Employment released a Sustainable Development Goals (SDG) Finance Roadmap – Finnish Roadmap for Financing a Decade of SDG Action 2021- report, where environmental, social and corporate governance (ESG) is promoted, as records show increasingly a positive relation between good ESG practices and investment returns and volatility. More information here: https://tem.fi/en/developing-finlands-sustainable-finance-ecosystems .

Finland ranks third on the World Justice Project (WJP) Rule of Law Index (2021) 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-2021 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

In 2019, Finland passed the EU’s General Data Protection Regulation (GDPR) directive, which in parts rules conditions for the secondary use of private-sector health and social data. A single data permit authority (Findata) was established to oversee the entire data-sharing process: https://findata.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/

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 2021, Finland submitted two notifications of technical regulations and conformity assessment procedures to the WTO and has submitted 105 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. On June 24, 2021, the Finnish Competition Act was amended to implement the EU ECN+ Directive, helping competition authorities to be more effective enforcers and to ensure proper functioning of the internal market. More information here: https://valtioneuvosto.fi/en/-/1410877/competition-act-amendments-aimed-at-improving-enforcement-enter-into-force-on-24-june

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.

A December 2021 study on the need to expand the merger filing obligation by the Finnish Competition and Consumer Authority (FCCA) shows that the current national turnover thresholds allow harmful merges to escape the scrutiny of the authority. FCCA proposes that the current turnover thresholds in merger control should be lowered and, in addition, the FCCA be granted the right to require a notification when the thresholds are not met: https://www.kkv.fi/en/current/press-releases/fcca-study-expanding-the-obligation-to-notify-mergers-would-create-significant-consumer-benefit/#main-content

FCCA issued merger control guidelines in 2011: https://arkisto.kkv.fi/globalassets/kkv-suomi/julkaisut/suuntaviivat/en/guidelines-1-2011-mergers.pdf

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://credendo.com/en/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 229 parties in 2021, the majority (208) 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/wp-content/uploads/sites/22/2020/01/arbitration-rules-of-the-finland-chamber-of-commerce-2020.pdf

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 in Finnish 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 . 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.businessfinland.fi/en/do-business-with-finland/invest-in-finland/invest-in-finland. More on Business Finland’s incentives: https://www.businessfinland.fi/en/do-business-with-finland/invest-in-finland/business-environment/incentives/incentives-short and incentives fact sheet : https://mediabank.businessfinland.fi/l/CGccrMLqwN5d

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  https://www.keksintosaatio.fi/en/keksintosaatio-etusivu-english/

As part of the Sustainable Growth Program (the recovery and resilience plan), Finland is promoting energy investment and energy infrastructure projects that reduce greenhouse gas emissions in Finland and support Finland’s 2035 carbon neutrality target. The 520 million eur funding promotes climate objectives and new business opportunities in sustainable growth for companies. For more see: https://tem.fi/en/-/energy-investments-of-finland-s-sustainable-growth-programme-promote-the-green-transition )

Finland’s feed-in premium scheme for renewable electricity production (wind power, biogas, forest chips and wood fuels) entered into force in 2011 (Act No. 1396/2010). Wind power, biogas power and wood-based fuel power stations accepted in the feed-in system were paid a subsidy meeting the difference between the target price and the electricity’s market price for a 12-year period. Support for wind power was closed the end of 2017, biogas and wood-based fuel power plant end of 2018 and wood chip power plants in mid-March 2021.

Finnish tax legislation provides certain tax incentives for using renewable energy sources (for example, simplified excise taxation and possibility to apply for a tax refund). For more see: https://www.vero.fi/en/About-us/newsroom/news/uutiset/2021/taxation-changes-2022/

Government aid is available for the implementation of energy audits, investments that conserve energy and investments related to the use of renewable energy as well as for European Skills, Competences, Qualifications and Occupations (ESCO) projects. For more see: https://www.motiva.fi/en/solutions/policy_instruments/energy_aid

In Finland, the level of energy taxation is higher than the minimum tax levels set by the EU. According to Finnish Energy, a lobby organization for the energy sector, companies operating in Finland are disadvantaged in international competition due to Finland’s high energy taxation. Electricity tax on industry is lower than that on consumers and other businesses, but it is still high on the international scale.

In Finland, the current national policy is to tax energy production based on the carbon intensity of the fuel used, leaving renewable energy sources outside this tax. These carbon-based tax incentives for renewable energy production promote technologies with higher maturity and lower subsidy needs.

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. In Finland, uncleared goods can be stored in temporary warehouses or customs warehouses. There are no free zones or special economic zones in Finland.

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.

To improve availability of workforce in sectors with labor shortage, a regional LMT pilot was launched in September 2021 through February 2023. Common guidelines on work permits in selected areas are introduced to increase labor mobility between regions and ease permit processes.

Finland participates actively in the development of the EU’s Digital Single Market (DSM) 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 February 2021, an Advisory Board for Network Security (NSAB) was established to assess and develop the security of domestic communications networks and to support decision-making by the authorities. 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 5G security 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 fourth in the world of 129 countries in the Property Rights Alliance 2021 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/apartments-and-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. A draft government resolution has been prepared on the intellectual property rights (IRP) strategy. The aim of the draft IRP strategy, which was circulated for comment in January 2022, is that in 2030 the Finnish IPR legislation will support innovations and creative work. 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. Assessment of the Finnish Copyright system can be found at: https://www.cupore.fi/en/research/research-projects/assessment-of-the-finnish-copyright-system 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/en/laki/kaannokset/2018/en20180595 . The Finnish Act implementing the EU Whistleblower Protection Directive is scheduled to be presented to Parliament in spring 2022. According to the Finnish draft act, all companies employing 50 people or more must establish an internal reporting channel, with a transition period for businesses employing 50–249 people extending to December 2023.

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 2021, according to the Grey Economy Crime statistics, Finnish customs authorities inspected 17,530 suspected counterfeit goods (with a value of USD 2 074). 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. The further decline is most recently due to a steep slowdown in transports from Russia in addition to the impact of the COVID pandemic. 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 2021 Notorious Markets List for reportedly hosting a Flokinet server associated with infringing activity, and reportedly hosting FLVTO web server in Finland.

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/members/en/details.jsp?country_id=57

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 2021 Finland had USD 17.5 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. Due to in-group mergers, the number of credit institutions operating in Finland dropped by 18 to 228 in 2020. Total assets of the domestic banking groups and branches of foreign banks operating in Finland amounted to USD 951 billion in Q3 2021 . For more information see: https://www.finanssiala.fi/wp-content/uploads/2021/07/FA-Julkaisu-Finnish_Banking_2020.pdf

In October 2021, Handelsbanken, Finland’s fifth biggest banking group with a 5 percent market share, announced decision to divest its businesses in Finland.

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 2020 the capital adequacy ratio of the Finnish banking sector was 21.2 percent, above the EU average. Measured in Core Tier 1 Capital, the ratio was 18.1 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 6.4 percent, well above the average ROE for all EU banking sectors (2.3 percent). Standard & Poor’s in March 2022 reaffirmed Finland’s AA+ long term credit rating and stable outlook while Fitch kept Finland’s credit rating at AA+ in November 2021. The Finnish banking sector is dominated by four major banks (OP Financial Group, Nordea, Municipality Finance and Danske Bank), which together hold 80 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’s balance sheet is approximately twice the size of the GDP of any of the Nordic economies. 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 17 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, and only a FIN-FSA registered virtual currency provider may market its currency and services 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 October 5, 2021, FATF concluded that Finland’s measures to combat money laundering and terrorist financing are delivering good results, but that deficiencies on the lack of specific requirements for risk-based supervision and monitoring of non-profit organizations (NPOs) at risk of terrorist financing (TF) abuse and sharing information promptly with competent authorities remain unaddressed. Finland passed new legislation (the Act on Money Collection 2020), completed its National Risk Assessment of Money Laundering and Terrorist Financing (NRA 2021) in March 2021 and developed an Action Plan for National Risk Assessment of Money Laundering and Terrorist Financing 2021– 2023. Finland’s AML/CFT legislation was amended in 2019 to introduce the Finnish Trade Register of beneficial owners of legal entities and foreign trusts. The National AML/CFT Coordination Group has also developed a public AML/CFT website to improve the understanding of ML/TF risks and provide guidance on reporting suspicious transactions for obliged entities. FATF’s Mutual Evaluation Report of Finland, October 2021: https://www.fatf-gafi.org/publications/mutualevaluations/documents/fur-finland-2021.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. Finland is in the process of amending the Act on the Bank and Payment Accounts Control System and the Act on the Financial Intelligence Unit (FIU) to implement the EU Directive on access to financial information.

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 9.2 billion (March 2022), 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 State Shareholdings and Ownership Steering Act (1368/2007) and the Act Amending the State Shareholdings and Ownership Steering Act ( 1315/2016) regulates the administration of state-owned companies: https://www.finlex.fi/en/laki/kaannokset/2007/en20071368 and https://www.finlex.fi/fi/laki/alkup/2016/20161315 (only in Finnish).

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 33 billion as of March 2022 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 2022). 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 2030. 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. 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 – 2018). Solidium’s share sales totaled some USD 10.2 billion (2010 – 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 April 2020, seeking to maximize overall social and financial benefits, make use of the corporate assets to promote domestic ownership, diversify the economy, create innovations and support sustainable structural change.

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). As the EU-level CSR legislation is being drafted, a proposal for an EU Directive on corporate sustainability due diligence was released in March 2022, Finland is preparing to draft national CSR legislation based on the Government Program.

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 45.4 million or balance sheet exceed more than USD 22.7 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 the Finnish government is not a member of ICoCA, the international Code of Conduct for Private Security Service providers’ Association.

The Finnish Ministry of Economic Affairs and Employment (TEM) has appointed a working group to support preparations on due diligence, in addition to review a judicial analysis on a CSR Act. The Committee’s term is January 2021 to December 2023.

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 largest corporate responsibility network in the Nordic countries 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 MVO Nederland CSR Risk Checker identified two country risks for Finland: Labor rights (labor conditions/contracts and working hours) and Environment (soil and ground water contamination). More info here: https://www.mvorisicochecker.nl/en/worldmap

The Securities Market Association, https://cgfinland.fi/en/, developed and updated (2020) the Finnish Corporate Governance Code for companies listed on the Helsinki Stock Exchange: https://cgfinland.fi/en/corporate-governance-code/ and https://business.nasdaq.com/list/Rules-and-Regulations/European-rules/nasdaq-helsinki/index.html .

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
• Xinjiang Supply Chain Business Advisory

Department of the Treasury

• OFAC Recent Actions

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor;
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain

Climate Issues

Finland is strongly committed to the EU’s joint reduction target under the UNFCCC and the Paris Agreement and is aiming to become the world’s first carbon-neutral welfare society by 2035. Finland is updating the Climate Change Act to develop more stringent targets for emissions by 2030. Finland’s Annual Climate Report 2021 suggests that while emissions declined in 2020, achieving carbon neutrality by 2035 will require additional action.

The national targets set in the Finnish Government Plan (2019) are more stringent than EU-imposed obligations. Under current legislation, Finland’s national target is to achieve a minimum reduction of 80 percent in emissions by 2050 compared to 1990 levels. PM Marin’s government has set a goal to achieve carbon neutral status by 2035 and carbon negative status shortly thereafter.

Finland was the first country in the world to set a carbon tax in 1990, and Finnish power plants and industries have participated in the EU Emissions Trading System since 2005. Finland supports the development of carbon markets also around the world and promote the gradual phase-out of fossil fuel subsidies.

In 2020, the Finnish Government announced plans to form a Climate Fund focusing on combating climate change, boosting low-carbon industry and promoting digitalization. Approximately 65 percent of the Climate Fund’s investments relate to climate change and about 35 percent to climate-related digitalization. Depending on the funding category and target, the funding by the Climate Fund can vary between 1 and 20 million euros.

Finland ranks first on the 2021 Information Technology and Innovation Foundation’s (ITIF’s) Global Energy Innovation Index (GEII). The GEII reveals varied contributions nations make to the global innovation system. Finland, a top contributor overall to the global energy innovation system, ranks first for entrepreneurial experimentation and market formation, a ranking it also held in 2016. Finland’s top score is in market readiness and technology adoption, which assesses a nation’s demand-pull on clean energy innovation through its energy efficiency and clean energy consumption.

On MIT’s Green Future Index, Finland ranked sixth among 76 leading countries and territories. The index measures progress and commitment towards building low carbon future. According to the index, Finland fosters an extensive green tech R&D ecosystem, with leading-edge renewables (such as green hydrogen) and food tech.

Finland ranked sixth on the 2020 Green Growth Index, measuring performance in meeting Sustainable Development Goal (SDG) targets.

Ecological sustainability is one of Finland’s main goals and Finland also aims to be a forerunner of ecological public procurement. Finland’s first National Public Procurement Strategy, launched September 2020, focuses on developing strategic management and promoting procurement expertise. To support the achievement of ecological, social and economic goals in society through public procurement it is important to develop a strong culture of knowledge-based management. For more see: https://vm.fi/en/-/national-public-procurement-strategy-identifies-concrete-ways-in-which-public-procurement-can-help-achieve-wider-goals-in-society

In April 2021, the Finnish Government adopted a government resolution on Finland’s national risk assessment and action plan on money laundering and terrorist financing. The assessment found that all sectors experience challenges in identifying signs of terrorist financing and sectors with the highest risk of money laundering are money remitters (hawala operators) and virtual currency providers.

Finland’s money laundering and terrorist financing national action plan (2021-2023) sets out measures to reduce the risks of money laundering and terrorist financing. More information here: https://valtioneuvosto.fi/en/-/10623/highest-risk-sectors-are-money-remittances-and-provision-of-virtual-currencies

The National Risk Assessment of 2018 does not list corruption as a risk in Finland, nor does the 2017 Security Strategy for Society.

Over the past decade, Finland has ranked in the top three on Transparency International’s (TI) Corruption Perceptions Index (CPI). In 2021, Finland was ranked first on the CPI, and ranked third in the world on the Democracy Index civil liberties score with an overall score of 9.27. Finland scored 10 in electoral process and pluralism, 9.29 in the functioning of the government, 8.89 in political participation, 8.75 in political culture and 8.41 in civil liberties. 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://tem.fi/en/-/guide-offers-smes-practical-anti-corruption-tips The Ministry of Justice is maintaining an Anti-Corruption.fi website, https://korruptiontorjunta.fi/en/combating-corruption-in-finland, 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. In December 2021, the working group report on the Transparency Register was sent out for comments, with the aim of having the government proposal before Parliament in spring 2022. The Finnish Association of Communications Professionals (ProCom) keeps a voluntary lobbyist registry (in Finnish).

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. Finland adopted the first national anti-corruption strategy in May 2021. The Strategy is in line with the UN Sustainable Development Goals (2030 Agenda) and the recommendations issued by the UN, the OECD, the Council of Europe and the European Union to Finland to reinforce its anti-corruption work.

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 (section 80: mandatory exclusion criteria).

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating 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

Contact at a “watchdog” organization:

Mari Laakso
Chairperson
Transparency Finland
Mari.Laakso@transparency.fi

While instances of political violence in Finland are rare, extremism exists, and anti-immigration and anti-Semitic incidents do occur. Stickers and posters with anti-Semitic images and messages were on the synagogue of Helsinki’s Jewish congregation in neighborhoods with significant Jewish populations and on public property throughout 2021. The vandalism ranged from targeted to apparently random, and similar incidents had occurred numerous times over the previous three years. Some of the anti-Semitic graffiti and stickers claimed to be from the banned neo-Nazi Nordic Resistance Movement (NRM). Stickers specifically targeted Jewish community members at lesbian, gay, bisexual, transgender, queer, and intersex (LGBTQI+) pride events.

In 2019, 15 anti-Semitic acts of vandalism against the Israeli Embassy over an 18-month period prompted an official demarche. The NRM is banned in Finland, as is its Facebook page. However, in January 2021 the daily newspaper Helsingin Sanomat reported that the NRM continued to operate out of public sight and without a clear name. In June 2021 prosecutors charged nine members of the NRM with engaging in illegal association for continuing NRM activities under the organization of the group Toward Freedom! (Kohti Vapautta! in Finnish) and leading a demonstration at Tampere Central Market in October 2020. 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 two years.

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.

In December 2021, the Finnish Intelligence Service (SUPO) announced that the first terrorism investigation on the extreme right in Finland has started. Although the investigation is exceptional, it does not affect SUPO’s terrorist threat assessment, according to which the most significant threat is posed by lone operators or small groups inspired by far-right or radical Islamist ideology. According to SUPO’s most recent 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 2021 in the Fragile States Index based on political, social, and economic indicators including public services, income distribution, human rights, and the rule of law. Marsh’s Political Risk Map 2021, based on Marsh Specialty’s World Risk Review platform, provides risk ratings for 197 countries on a 0.1 to 10 scale, with 10 representing the highest risk and 0.1 the lowest. Finland was rated low risk, with ratings ranging from 1.2 to 3.9.

Finland has a long tradition of trade unions. The country has a unionization rate of 59 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. The report, launched March 2021, concluded that local bargaining continues to have a great potential in the field of so-called normally binding 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 2020, there were 108 strikes in Finland, compared to 107 in 2019. Though most labor disputes are resolved relatively quickly, some recent labor disputes have been protracted and have led to supply chain disruptions affecting business operations in the United States and other markets.

In September 2021, Statistics Finland reported that between 2010 and 2020, the number of working-age people has fallen by 136,000 persons, and during the next two decades the working age population is expected to decrease more slowly or by 76,000 persons by 2040. While the number of people belonging to the younger age groups declined over the period 2015 – 2020 period in Finland, the age group of 60 years and older continued to increase. By the end of 2020, the number of people aged 60 or older was over 1.6 million of Finland’s total population of roughly 5.53 million people.

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 with an employment history of at least five years (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. In a December 2019 press release, the Minister of Social Affairs and Health called the activation model unfair and announced that the model is abolished starting January 1, 2020.

Transparency International estimate the size of Finland’s informal economy to be 13 percent, representing approximately USD 39 billion at GDP PPP levels. According to Finland’s Ministry of Interior, the share of the grey economy of GDP range from USD 1.2 to 16.6 billion. In June 2020, a Strategy and Action Plan for tackling the Grey Economy and Economic Crime (2020-2023) was adopted. For more see Grey Economy and Economic Crime website: https://www.vero.fi/en/grey-economy-crime/ 

*Source for Host Country Data:
Economic data: https://www.stat.fi/til/vtp/2020/vtp_2020_2021-12-17_tau_001_fi.html
Foreign Direct Investment: https://pxnet2.stat.fi/PXWeb/pxweb/en/StatFin/StatFin__yri__ssij/statfin_ssij_pxt_12gu.px/  

HelsinkiPolEconAll@state.gov