What does company liquidation really mean?
Think of a company as a living entity. It begins with formation, grows through activity, and eventually, when its purpose is fulfilled, it must be properly closed. Company liquidation is a structured legal process where a company’s affairs are settled, debts are paid, and any remaining assets are distributed before it officially ceases to exist.
In Finland, liquidation is not merely a formality. It’s a regulated legal procedure governed by the Finnish Companies Act, ensuring that all parties, shareholders, creditors, employees, and tax authorities are treated fairly.
Whether your company has completed its business goals, faced financial challenges, or simply no longer needs to operate, understanding the Finnish liquidation process helps you close it correctly and legally.
Understanding the Finnish legal framework
Company liquidation in Finland is governed by several key laws and institutions:
Finnish Companies Act (624/2006) regulates voluntary liquidation, the liquidator’s duties, and the overall process.
Bankruptcy Act (120/2004) applies when a company is insolvent and cannot meet its financial obligations.
Finnish Patent and Registration Office (PRH) maintains the Trade Register and processes liquidation notices.
Finnish Tax Administration (Verohallinto) oversees taxes, VAT deregistration, and clearance certificates.
Understanding these authorities helps directors avoid common mistakes such as incomplete filings or delays in deregistration.
Types of company liquidation in Finland
There are three main ways a Finnish company can be closed, depending on its financial situation and goals.
1. Voluntary liquidation (Voluntary Dissolution)
Voluntary liquidation is the most common route when a company is solvent, meaning it can pay all its debts.
It’s usually initiated by a shareholders’ resolution to close the business.
The process involves:
The shareholders formally decide to enter liquidation and appoint a liquidator (can be an individual or professional firm).
The liquidator files the notice of liquidation with the PRH (Trade Register).
A public announcement is published, giving creditors time (usually around 3 months) to submit any claims.
The liquidator pays all debts, collects receivables, and distributes remaining assets to shareholders.
After final accounts are approved, the company is deregistered from the Trade Register.
Voluntary liquidation typically takes 6–12 months, depending on the company’s structure and outstanding obligations.
Tip: Always verify that all taxes, accounting records, and employment obligations are settled before starting the process. 1Office can act as your appointed liquidator, managing filings, reports, and communication with PRH and Verohallinto.
2. Compulsory liquidation (Bankruptcy proceedings)
If the company is insolvent, meaning it cannot pay its debts when due, liquidation happens through bankruptcy proceedings rather than voluntary dissolution.
Here’s how it works:
A creditor or the company itself can file for bankruptcy with the local District Court.
Once approved, the company’s control passes to a bankruptcy administrator, who forms a bankruptcy estate to manage all assets.
The administrator sells assets, settles claims, and distributes proceeds according to priority rules.
After the process, the company is struck off from the Trade Register.
The main difference from voluntary liquidation is control: once in bankruptcy, the company’s management no longer makes decisions. It’s handled under the court’s supervision.
1Office’s consultants can assist you in assessing alternatives to bankruptcy, such as restructuring or voluntary liquidation if the company still holds value or solvency.
3. Summary (Simplified) dissolution
If your company has no assets, debts, or activity, the Finnish PRH allows a summary dissolution. It is a fast and affordable way to close a dormant company.
Eligibility requirements:
The company has filed all annual accounts.
No ongoing business operations.
No assets or liabilities.
All shareholders agree to the closure.
The PRH reviews the case and removes the company from the register without appointing a liquidator.
This process usually takes 2–3 months and costs significantly less than a full liquidation.
1Office can help verify eligibility and file the summary dissolution documentation on your behalf.
Liquidation vs. bankruptcy: Key differences
| Aspect | Liquidation | Bankruptcy |
|---|---|---|
| Initiated by | Shareholders | Creditors or company itself |
| Financial state | Solvent | Insolvent |
| Goal | Close company and distribute assets | Repay creditors through estate |
| Control by | Liquidator | Bankruptcy administrator |
| Duration | 6–12 months | 12–24 months |
| Outcome | Company dissolved | Company removed after estate closure |
Understanding this distinction is vital. Starting liquidation when the company is already insolvent could result in legal risks for directors.
Step-by-step liquidation process in Finland
- Shareholders’ resolution
The shareholders pass a formal resolution to liquidate the company and appoint a liquidator. Notification to PRH
The liquidator files the official notice with the Finnish Patent and Registration Office.Creditor notification
PRH publishes a call to creditors, giving them a set period (typically 3 months) to submit claims.Liquidator’s duties
The liquidator collects company receivables, sells assets, and settles all debts and taxes.Final financial statements
After payments, the liquidator prepares the final accounts and report for shareholder approval.Asset distribution
Any remaining funds are distributed to shareholders according to ownership.Deregistration
The company is officially removed from the Finnish Trade Register.
Average Duration: 6–12 months
Typical Cost Range: 1,500–3,000 EUR depending on company size and complexity.
Director’s responsibilities and liabilities
During liquidation, directors remain responsible for ensuring:
Company records are accurate and up to date.
No assets are hidden or transferred unlawfully.
All creditors are treated fairly.
Failure to comply may expose directors to personal liability under the Finnish Companies Act.
Appointing an independent, professional liquidator such as 1Office helps prevent such risks.
Employees and final payments in Finland
Liquidation affects employees immediately:
All employment contracts end.
Employees are entitled to final wages, holiday pay, and severance if applicable.
The company must report all payments to the Incomes Register and withhold taxes accordingly.
Unpaid wages have priority over other unsecured debts during settlement.
Dealing with creditors
The liquidator must:
Notify known creditors directly and via public notice.
Review and approve valid claims.
Distribute payments in a legally defined order:
Secured creditors
Tax debts and employee wages
Other unsecured creditors
If debts cannot be settled, the liquidation may convert into bankruptcy.
Tax obligations during liquidation in Finland
Liquidation triggers several tax-related duties:
VAT deregistration. Submit final VAT return and close VAT registration.
Corporate income tax. File final tax return including liquidation proceeds.
Withholding tax. If funds are distributed to shareholders, appropriate taxes must be withheld.
Tax clearance certificate. Obtain final confirmation from Verohallinto that all tax matters are settled.
1Office’s in-house tax experts manage this process to ensure full compliance and avoid delays in deregistration.
Why professional assistance matters
DIY liquidation often leads to rejected filings, legal errors, or unpaid tax liabilities that surface later.
Professional guidance saves time and prevents compliance risks.
At 1Office Finland, we handle everything: from preparing documents and acting as your liquidator to coordinating with PRH, creditors, and tax authorities.
Why choose 1Office Finland for company liquidation
When you work with 1Office Finland, you get a partner who understands both the legal requirements and practical realities of closing a company.
Our strengths:
Expertise in Finnish corporate law. Experienced consultants handling liquidations for both Finnish and international companies.
End-to-end service. We take care of all filings, public notices, and final reports.
Dedicated contact person. Direct communication with your assigned liquidation consultant.
Transparent pricing. Fixed fees without hidden costs.
Compliance and risk management. Full legal and tax alignment to protect directors from personal liability.
Multilingual team. Services available in English, Finnish, and several other languages.
Frequently asked questions
How long does company liquidation take in Finland?
Typically 6 to 12 months. Simple cases may close faster; complex or creditor-heavy cases take longer.
Can a director act as liquidator?
Yes, but it’s safer to appoint an independent expert. Professional liquidators ensure neutrality and compliance.
How much does liquidation cost?
Expect around 1,500–3,000 EUR depending on the company’s structure. 1Office offers a transparent fixed-price package.
What if my company has no debts or assets?
You may qualify for a simplified summary dissolution. 1Office can verify this and handle all paperwork.
Can foreign founders liquidate a Finnish company remotely?
Yes. With 1Office Finland’s assistance, the process can be managed fully online with digital signatures.
Final thoughts
Closing a company in Finland is a serious legal process, but with the right support, it doesn’t have to be complicated.
Whether you need a voluntary liquidation, bankruptcy guidance, or a simplified dissolution, 1Office Finland ensures your business closure is handled lawfully, efficiently, and stress-free.
