Finland is a Nordic country in northern Europe, bordering Sweden, Norway and Russia, with a long Baltic Sea coastline. It joined the European Union in 1995 and uses the euro, so companies already active in the EU single market can operate there under familiar rules. Its open, export-oriented economy draws on technology, engineering, manufacturing and forest-based industries, alongside a growing services sector.
Businesses are drawn to Finland by its stable institutions, educated workforce and largely digital public administration. Registering a company, reporting payroll and dealing with the tax authority are mostly done online through shared national services. In return, employers work within detailed labour laws, sector-wide collective agreements and a payroll reporting system that expects near real-time data. This guide covers the main points to know before setting up a company and hiring staff in Finland.
Quick Overview
The facts below give a starting point. Rates, fees and thresholds change regularly, so confirm current figures with the relevant authority before making decisions.
- Capital: Helsinki
- Currency: Euro (EUR)
- Official languages: Finnish and Swedish
- EU membership: Member of the European Union since 1995
- Main business entity types: Private limited company (osakeyhtiö, Oy), public limited company (Oyj), general partnership, limited partnership, co-operative, private trader, and branch of a foreign company
- Company registration: Finnish Trade Register, kept by the Finnish Patent and Registration Office (PRH), with notifications filed through the joint Finnish Business Information System (YTJ)
- Tax authority: Finnish Tax Administration (Vero), which also maintains the Incomes Register for payroll reporting
Process of setting up a business in Finland
The legal form decides who is liable for the business's debts, how it is managed and what must be filed. Foreign businesses wanting a separate Finnish entity usually choose a private limited company (Oy), whose shareholders are liable only up to their investment. An Oy can be formed with or without share capital; if it has none, the Trade Register records the share capital as zero. A public limited company (Oyj) is mainly used where shares are offered to the public.
Other forms suit different needs. In a general partnership, at least two partners run the business under a partnership agreement and are personally liable for its debts. A limited partnership adds silent partners whose liability is capped at their agreed contribution. Individuals often operate as a private trader, and member-owned businesses can form a co-operative. A foreign company can instead register a branch, which is not a separate legal person, so the parent remains responsible for its activities.
Residence rules also apply to company officers. For an Oy, at least one ordinary board member and the managing director should live in the European Economic Area (EEA); otherwise a permit from PRH is needed. What counts is where the person permanently lives, not their citizenship.
A single start-up notification, filed through YTJ, covers both PRH and the Tax Administration, each of which processes the parts relevant to its registers. From 1 January 2026, notifications for limited companies can only be filed online, and the service is offered in Finnish and Swedish. The main steps for an Oy are:
- Choose and check the name. It must be clearly distinguishable from names already registered and include "Oy" or "osakeyhtiö". PRH offers an online name check.
- Prepare the founding documents. The founders sign a memorandum of association and adopt articles of association covering the shares, any share capital, the first board and the line of business.
- File the start-up notification. Submit it with its attachments through YTJ within three months of signing the memorandum, and pay the processing fee. The company comes into existence when it is entered in the Trade Register.
- Receive the Business ID. Once recorded, the company receives a Business ID (Y-tunnus) used with authorities, banks and customers.
- Join the tax registers. The same notification can request entry in the Prepayment Register, the VAT Register and the Employer Register. Prepayment registration means clients do not withhold tax from payments to the company.
- Register for VAT where required. Businesses selling goods or services liable to VAT normally must register; check the current turnover threshold with the Tax Administration.
- Set up as an employer. Register as an employer if paying wages regularly, and arrange the statutory insurances described below before staff start.
- Keep records current. Report beneficial owners and changes to the board, managing director or address, and file approved financial statements for every financial period, even if the company has not traded.
A foreign company registering in Finland without a subsidiary also files a start-up notification, with documents such as a home-country trade register extract. The Tax Administration then assesses whether it has a permanent establishment in Finland, which affects the registers it needs and how its income and payroll are taxed. Guidance on forming an Oy is available from the Finnish Patent and Registration Office.
Hiring Employees in Finland
The Employment Contracts Act, the Working Hours Act and the Annual Holidays Act set minimum standards, and collective agreements build on them. The Occupational Safety and Health Administration checks that employers follow both the law and any applicable collective agreement.
Employment contracts
An employment contract can be oral, written or electronic, but a written contract is the safer choice. Where the main terms are not in writing, the employer must provide a written statement of them: certain core terms, such as the trial period, within days of the start of work, and the rest within one month. Contract terms cannot fall below the minimum set by the applicable collective agreement.
Employment is open-ended by default. A fixed-term contract has traditionally needed a justified reason, such as covering an absence, seasonal work or a time-limited project; otherwise it may be treated as permanent. Amendments in force from 2026 allow, in limited cases, a fixed-term contract of up to 12 months without a justified reason, subject to restrictions and information duties, so check the current conditions before using this option.
Working hours and overtime
Regular working time is generally limited to eight hours a day and 40 hours a week, and weekly hours can be averaged over up to 52 weeks. Many collective agreements set shorter hours. Total working time, including overtime, must not exceed an average of 48 hours a week over four months, although collective agreements may extend this period.
Overtime must be agreed each time, and employees may refuse it. By law, the first two hours of daily overtime are paid at time and a half and later hours at double time, while weekly overtime is paid at time and a half. Overtime pay can be exchanged for equivalent time off by agreement. Work on Sundays, church holidays, Independence Day and May Day is generally paid at double time. Employees are also entitled to breaks, daily rest and a weekly rest period, though collective agreements may vary these rules. A summary is available on Suomi.fi.
Minimum wage and collective agreements
Finland has no statutory national minimum wage. Minimum pay is set in sector collective agreements negotiated by employers' organisations and trade unions. A national agreement that is representative of its sector can be confirmed as generally applicable (universally binding), and every employer in that sector must then follow its minimum terms, whether or not it is a member of the signing employers' organisation. Confirmed agreements are published officially.
These agreements usually also cover working hours, overtime, sick pay, holiday pay and notice periods. Where no agreement applies, the law entitles the employee to normal, reasonable pay. Identifying the agreement that covers a role is therefore an essential first step before making an offer.
Annual leave and public holidays
Annual leave is earned over a holiday credit year running from 1 April to 31 March. A month counts if the employee works at least 14 days or 35 hours in it. Employees earn two days of leave per qualifying month, rising to two and a half days once employment has lasted at least a year by 31 March, which in practice gives around five weeks a year. The summer portion is normally taken between May and September and the remainder as winter leave. Collective agreements may provide more.
Public holidays include New Year's Day, Epiphany, Good Friday, Easter Sunday and Monday, May Day, Ascension Day, Midsummer Day, All Saints' Day, Independence Day (6 December), Christmas Day and Boxing Day, several of which move each year. Christmas Eve and Midsummer Eve are also commonly days off. Time off and pay on these days often depend on the collective agreement.
Probation, notice and termination
A trial period of up to six months can be agreed, but it must be stated explicitly in the contract. For a fixed-term contract, it cannot exceed half the contract's length. During the trial period either party may end employment without notice, provided the reason is not discriminatory or unrelated to the purpose of the trial. The employer may extend it after a long absence due to incapacity or family leave.
After the trial period, dismissal requires valid grounds: personal grounds, such as neglect of work duties, or financial and production-related grounds, where work has substantially and permanently decreased. An amendment from 2026 lowered the threshold for dismissal on personal grounds, but a proper reason is still required, and a warning and a chance to be heard usually come first. On financial grounds, the employer must generally consider other work or training, and larger employers may need to hold change negotiations. Pregnant employees, employees on family leave and employee representatives have special protection.
Statutory notice depends on length of service. The employer's period starts at 14 days and rises in steps to six months for long service, while employees generally have shorter periods. Contracts and collective agreements can adjust these within legal limits. Immediate cancellation is allowed only for particularly serious reasons and must be done promptly.
Social security and payroll obligations
Employers have several payroll and insurance obligations:
- Tax withholding: Income tax is withheld from wages according to each employee's tax card and paid to the Tax Administration monthly.
- Employer's health insurance contribution: Paid on wages and reported monthly in a separate employer's report.
- Earnings-related pension insurance (TyEL): Employers must insure employees with an employment pension provider of their choice, paying the premium and deducting the employee's share from wages.
- Unemployment insurance: Contributions are paid to the Employment Fund, with the employee's share deducted from wages.
- Occupational accident and disease insurance: Compulsory above a small annual wage amount. Group life assurance is also required where the sector's generally applicable collective agreement says so.
- Employer Register: Companies that pay wages regularly must register with the Finnish Tax Administration.
Every wage payment is reported to the national Incomes Register, generally within five calendar days of payday. The Tax Administration, pension providers, the Employment Fund, accident insurers and the Social Insurance Institution (Kela) all draw on this data. When an employer continues paying wages during sick leave or parental leave, Kela can pay the related allowance to the employer. Guidance is published by the Incomes Register, and an overview of statutory insurances is on Suomi.fi.
Hiring foreign employees
Nordic citizens can live and work in Finland without a residence permit. Citizens of other EU countries, Switzerland and Liechtenstein can also work freely but must register their right of residence if staying longer than three months. Most other nationals need a residence permit allowing work before they start.
The Finnish Immigration Service (Migri) handles work-based permits. The main routes are the residence permit for an employed person, which usually involves checking whether suitable workers are available locally, and specialist and EU Blue Card permits for highly qualified roles, which carry salary and qualification requirements. A fast-track service is available for some groups, including specialists. Applications are usually made online, with the employer adding the terms of employment. Thresholds and fees change each year, so check current details with Migri.
Employers must verify each foreign employee's right to work, keep records of it where inspectors can review them, and share certain information with employee representatives. Foreign employees are entitled to at least the terms of the applicable collective agreement. Their tax treatment depends on the length of stay: short stays may be taxed at source, while longer stays fall under the normal tax card system.
How easy is it to conduct business in Finland?
Finland offers reliable and transparent institutions, a predictable legal system and highly digital public services. Registration, tax registers and payroll reporting can largely be handled online. EU membership and the euro simplify trade and cross-border staffing within Europe, the workforce is well educated, and English is commonly used in international business.
There are also challenges. Statutory costs, particularly pension insurance, make employment more expensive than headline salaries suggest. Pay and conditions depend heavily on detailed sector collective agreements, and parts of employment law changed in 2026. Some official services are available only in Finnish or Swedish, so foreign companies often rely on local advisers, and non-EU hires require planning around permit processing.
For organisations employing people in several countries, payroll and HR software can make these obligations easier to manage. A well-configured system can hold country-specific pay rules, apply the correct working-time and leave calculations, keep employee and right-to-work records in one place, and produce the data needed for frequent statutory reporting such as Finland's Incomes Register. This reduces manual work and errors and gives HR and finance teams a consistent view of compliance across countries, though it works best alongside up-to-date local advice.
