Direct sales
Ownership structures
Can a foreign supplier set up its own unit to import and sell its products in your country?
Yes. Whether from the European Economic Area or not, foreign investments are welcome.
In general, there are no restrictions on ownership and ownership of stocks or business assets. However, should a person find himself in an extremely narrow business area that is seen as jeopardized to an important national interest, for example in the area of the prohibited export of dual-use goods, that person would be well advised under the Surveillance Act (1612/1992), to obtain formal approval from the Ministry of Employment and the Economy.
Any company incorporated and registered under Finnish law is considered Finnish regardless of ownership. However, the registration and management of a branch of a foreign company outside the European Economic Area requires the approval of the Commercial Register operated by the Finnish Patent and Registration Office (https://www.prh.fi/en/index). html). In general, consent is readily given.
Depending on which statute (articles of association) is required, the cost of starting a business varies between around 3,000 and 10,000 euros, including the fixed registration fee and setting up a bank account and tax account for the purpose of income tax, VAT and employer liabilities.
Regardless, migration laws can be a hurdle for people from countries other than the European Union or the European Economic Area who intend to personally contribute to work in Finland.
Can a foreign supplier be part owner of a local company of the importer of its products?
There are no quota restrictions for foreign participation.
What types of companies are best for an importer from a foreign supplier? How do they come about? Which laws do they regulate?
The limited liability company is by far the best suited. It can be formed by a person, be it physical or legal. Mainly, it is necessary to adopt the articles of association, which contains at least the company name, residence and field of activity, to sign the articles of association, which rarely fills out more than a sheet of paper, and to submit the report to the trade register. However, a person must be careful not to tamper with the trade name or brand of another person and be able to prove that the number of shares subscribed has been fully paid up in advance to a bank account within the European Union. This is also confirmed by an auditor. In addition, all directors must be registered.
Basically, the Companies Act (624/2006) and, for the formation procedure, the Trade Register Act (129/1979;) and Regulation (208/1979) regulate companies.
Restrictions
Does your jurisdiction restrict foreign companies from operating in the jurisdiction or restrict foreign investment in or ownership of domestic companies?
In general, the third-party operating restrictions are limited to foreigners outside the European Economic Area and mainly affect the areas of defense, banking, finance and insurance. In principle, there are no restrictions on ownership of stocks or business goods. A company engaged in a narrow line of business that is believed to jeopardize an important national interest, such as the dual-use prohibited goods business that requires a license to export, would be under the Surveillance Act (1612 /) well advised. 1992) to obtain formal approval from the Ministry of Employment and the Economy. Usually consent is given without further ado.
If a Finnish subsidiary conducts foreign business, at least one of the directors, including the managing director (e.g. CEO or President), must be resident in the European Economic Area, unless the commercial register grants an exception. The statutory auditor should be a nationally licensed or licensed auditor. If there is no person within the European Economic Area who is authorized to sign the subsidiary or branch name, there must be a registered agent in Finland for litigation service.
Holdings
Can the foreign supplier have a stake in the local entity that sells its products?
In principle, there are no restrictions on ownership of stocks or business goods. A company engaged in a narrow line of business that is believed to jeopardize an important national interest, such as the dual-use prohibited goods business that requires a license to export, would be under the Surveillance Act (1612 /) well advised. 1992) to obtain formal approval from the Ministry of Employment and the Economy. Usually consent is given without further ado.
Tax considerations
What are the tax considerations for overseas suppliers and for the formation of an importer owned by a overseas supplier? What taxes apply to overseas companies and individuals operating in your jurisdiction or having interests of their own in local businesses?
According to the main rule, foreign companies are only taxed on income obtained in Finland. When establishing an importer owned by a foreign supplier, no tax is levied, just a modest processing fee.
If the foreign company has a permanent establishment in Finland, it is taxable on all income attributable to PE. In addition, the foreign supplier may also be subject to customs duties, depending on his place of residence and the type and origin of the imported products. In addition, the supplier may be subject to vehicle purchase tax and excise duties in relation to its imports, such as those levied on tobacco, alcoholic beverages, non-alcoholic beverages and liquid fuels.
Since a foreign company is only taxed on income from Finland and is taxable on all income from the PE, sales, interest, royalties and capital gains are included, but costs, expenses and losses from the PE business are deductible. If the business of a PE results in a loss, the loss is deductible for the following 10 tax years using the same loss carryforward rules that apply to Finnish business entities. However, these rules do not apply if more than half of the company's ownership changes hands.
Dividends are generally completely tax-free in Germany and in accordance with the EU Parent-Subsidiary Directive, subject to the minimum participation requirement of 10 percent, or tax-free for a quarter, subject to the double taxation agreement between Finland and the country from which the dividends are distributed. The corporate tax rate is 20 percent. As there are currently no restrictions on small capitalization, a company can be funded from abroad, although some rather complicated rules apply to the deductibility of over € 500,000 in interest paid.
In general, tax treaties provide that taxes on dividends and royalties are withheld between 5 and 15 percent at source. However, if the EU Parent-Subsidiary Directive is applicable, no withholding tax is levied on a profit distribution such as dividends on a parent company that directly holds at least 10 percent of the equity of the profit-paying company. If the policy does not apply, dividend withholding tax is 15 percent.
For other non-resident corporations, the withholding tax rate is usually 20 percent for profit distribution, interest (if not completely tax-exempt) and license fees. For physical persons, the rate is 35 percent of income from employment, pensions and distributions from investment funds for employees, unless otherwise agreed in the tax treaty concluded with the recipient's country of residence. With the exception of the above, most Finnish foreign nationals' income is taxed on an assessment basis.
From the point of view of a foreign company choosing to use a limited liability company as a vehicle, it is noteworthy that Finland has concluded 116 double tax avoidance and tax evasion treaties, some of which are multilateral and take precedence over domestic tax law . The most common method of eliminating double taxation is through the ordinary credit method.
If there is no double taxation treaty with the country of residence of the foreign taxpayer, the tax laws of the country are determined by domestic tax laws.
Non-Finnish residents are taxed on income from the country in Finland, subject to applicable double taxation treaties. Under certain conditions and subject to approval of an application, salaried employees with special expertise may be eligible for a maximum period of four years to participate in a scheme that allows the employer to withhold 35 percent of the earned salary instead of income and municipal tax. Otherwise, regardless of their nationality, foreign workers will have to pay a progressive tax on their salary or wages if they stay in Finland for more than six months. If the stay does not exceed six months, the Finnish employer levies a 35 percent tax on the wage at source and withholds social security payments, unless the wages are paid by and debited by a foreign company. License fees for non-Finnish intellectual property owners are subject to a withholding tax of 28 percent. The tax rate is 30 percent for investment income and 34 percent for investment income of more than 30,000 euros.
In general, goods and services supplied in the course of doing business in Finland are subject to VAT. Although the general VAT rate is currently 24 percent, the rate for food, restaurant, and catering services is 14 percent, and the rate for categories such as books, subscription newspapers, cultural events, medicines, fitness services, passenger transportation, and accommodation is 10 percent.
Property tax is levied on the taxable value of the property, regardless of whether it is land or buildings. The transfer of ownership of shares in a limited liability company is generally subject to a transfer tax of 1.6 percent of the agreed price. When real estate is transferred, the tax rate is 4 percent.
Law specified date
Right off
Please provide the date when the above information is correct.
December 18, 2020.