Doing Business in the Nordic and Baltic Region

1. Doing Business in the Nordic and Baltic Region FINLAND Markus Myhrberg Partner, Attorney at Law LEXIA

2. Finland

3. Basic Facts about Finland Size: 390 903 km² Population: 5.4 M (18 habitants per km²) State formation date: 6 December 1917 Capital city: Helsinki Political system: parliamentary republic Official languages: Finnish, Swedish Member of the EU: since 1 January 1995 Currency: euro (€)

4. Basic Facts about Finland GDP: $266553 M in 2011 (IMF), 37th in the world ($ 36,395 per capita, 23th) Economy: One of the most open, competitive & successful economies in Europe due to political stability & sustained growth (AAA; S&P, Moody’s) Strong in: Information and clean technology, games, paper and metal industry, ship building, machinery, pharma and scientific instruments (e.g. included in the Curiosity explorer on Mars)

5. Rankings • 3#, Global competitiveness report 2012-13 (World Economic Forum) • Best business environment in the world (period 2009-2013, Economist Intelligence Unit) • The best availability of scientists and engineers in the world (WEF) • 7# Global competitiveness index 2010-12 (World Economic Forum) • Best country in the world (Newsweek, August 2010) • Best basic education in the world (PISA)

6. Finland- Strengths - • Expertise and innovation (among the EU’s innovation leaders) • Unique co-operation between education, research and industry • Great logistics and communications networks • Transparent legislation, lack of bureaucracy • IPR protection, signatory to all major international IP treaties • One of the least corrupted countries in the world • Safety, clean environment Euro as currency • Honest and straightforward people • Excellent geographical location

7. The Finnishnature… The finnishnature...

8. Finland Labour market • Highly educated workforce receptive to new technologies (e.g. vast amount of skilled IT-personnel) • Applicable collective bargaining agreements (union agreements) quite common • Increasing flexibility one of the main objectives • No minimum wage ruling in the law, but included in most of the union agreements Social system • Comprehensive social security • Several mandatory provisions for the benefit of employees • 22-25% of the salary to be paid by the employer as social security, pension and other insurance costs

9. Finland- Investment possibilities - Industries • Cleantech • ICT & Games • Mining • Research, Development and Innovation • Travel • Healthcare & wellbeing • Ship building, machinery

10. Setting up a Business in Finland • The nationality of a foreigner determines which permits or registrations are needed when moving to Finland  • Depending on the corporate form, a permit of the National Board of Patents and Registration may be needed (if permanent place of residence outside the EEA)  • In limited company (Oy) only for the board members/CEO • Insurances and unemployment fund for entrepreneurs mandatory, mostly do not apply to foreigners livingabroad • Business and organization ID •  provided once the foundation of a business is recorded in the • Finnish Business Information System

11. Setting up a Business in Finland • Company types • limited company • sole proprietorship • partnership (general and limited) • joint venture • different tax implications • special permits • registration procedures

12. Setting up a Business in Finland • Share capital requirements: • Private limited companies Euro 2,500 • Public limited companies Euro 80,000 • Board of Directors is mandatory • minimum one member and one alternate member. • at least one of the Board members must be EEA resident • No directors needed, a Finnish representative required in some situation • CEO has to be from the EEA • Establishment agreement between shareholders, no notary required

13. Finland- Taxation - • Corporate income tax 24,5 % (as of 1.1.2014 20 %) • Tax obligations depend on whether the company has a permanent establishment in Finland • mandatory registration in the Finnish VAT register if the foreign company has a fixed establishment in Finland •  obligation to file VAT registration form in some cases even without permanent establishment, e.g. company selling goods or services to consumers • employer registration: mandatory for companies with permanent establishment in Finland for income-tax purposes the company will be treated as a Finnish payer of wages

14. Finland- Taxation - • Withholding tax on dividends 24,5,% • EEA 0% (at least 10 % ownership) • Finnish-Russian tax treaty > 12/5% (ownership 30%, investment more than USD100,000) • Interests and royalties 0% • Foreign natural persons in general > 30% • Tax treaties > 0% (if the company has paid) • Sale of shares made by foreign companies in most cases tax-free under Finnish taxation • Quite straightforward taxation system, limited possibilities to deduction in the company taxation • R&D deduction based on the paid salaries 15-400K • No results needed… • IPR Box to be introduced (royalties -50%)

15. Finland- Working and Residence Permits - • Residence permit is required for foreigners staying in Finland for 90 days or longer (does not apply on EU/EEA citizens and Nordic countries) • Residence permit for a self-employed person also required in order to engage in trade in Finland • Applying residence permit, permit grounds, temporary/permanent residence permit • Residence permit for an employed person: usuallygranted for a specificoccupationalposition/sector • Researchers, executives, concultants, educationalworketc.

16. Thank you! Markus Myhrberg Partner, Attorney Mobile: +358 (0)40 505 5343 markus.myhrberg@lexia.fi