When starting operations in Finland, one of the first and most important decisions you’ll face is choosing the right legal form for your business. The legal structure you choose determines your liability, taxation, compliance obligations, and even how potential partners and investors perceive your company.

Finland recognises seven main types of business entities, each with its own benefits and limitations. In this guide, we’ll walk through the options available to foreign entrepreneurs, their key requirements, and the pros and cons to help you make an informed decision.

When starting your operations in Finland, you will need to choose a legal form most suitable to your business plan. In this summary, we will briefly compare the pros and cons of three legal forms to help you make the right decision.

The seven main business entities in Finland

1. Private Limited Company (Osakeyhtiö – Oy)

• The most common and trusted business form in Finland.

• No minimum share capital requirement.

• Limited liability: owners are only liable up to their investment.

• Suitable for both small and large businesses.

• Best choice for attracting investors and building credibility with partners.

2. Public Limited Company (Julkinen osakeyhtiö – Oyj)

• Designed for large companies.

• Requires minimum share capital of €80,000.

• Must have at least 3 board members.

• Can list shares publicly.

• Heavier governance and reporting obligations compared to Oy.

3. Branch of a Foreign Company

• Not a separate legal entity, operates under the foreign parent company.

• Must register with the Finnish Trade Register and appoint a local representative.

• Useful for testing the Finnish market or running a project without setting up a new company.

• Full accounting obligations both in Finland and in the home country.

4. Sole Trader (Toiminimi)

• Simplest form, no minimum capital or registration fee required.

• Business starts after filing a notification.

• Unlimited personal liability for business debts.

• Suitable for freelancers and very small-scale entrepreneurs.

5. General Partnership (Avoin yhtiö – Ay)

• Requires at least two partners, all with unlimited liability.

• Partnership agreement can be oral or written.

• More suited for small, trust-based businesses.

6. Limited Partnership (Kommandiittiyhtiö – Ky)

• Requires at least one general partner (unlimited liability) and one limited partner (liability limited to their contribution).

• Good option when one partner invests but does not manage day-to-day operations.

7. Cooperatives and Foundations

• Cooperatives are common for agriculture, housing, and collective enterprises.

• Foundations are typically used for non-profit purposes.

Formation requirements in Finland

• Oy and Oyj: must register with the Finnish Trade Register. An Oy only exists after registration.

• Branch: requires official documents from the home country and a Finnish representative.

• Sole Trader: begins upon notification, no separate registration fee.

• Ay and Ky: formed through a partnership agreement; registration needed for public record.

Timeframe: typically 3–4 weeks for registration.

Taxation in Finland in 2025 

• Corporate income tax: 20% on profits for all companies.

• VAT: Standard rate 25.5%. VAT registration required if annual turnover exceeds €20,000.

• VAT in the Digital Age (ViDA): phased in from March 2025 to 2035, introducing new EU-wide VAT rules.

• Dividends taxation:

  • From listed companies: 85% taxable as capital income (tax rate 30% / 34% above €30,000), 15% exempt.

  • From unlisted companies: taxation depends on dividend amount relative to net assets.

• Dividends for entities: usually tax-exempt, with some exceptions.

Accounting and compliance in Finland

• Accounting standards: Finnish Accounting Standards (FAS). Public companies must also comply with IFRS.

• Audit requirements: small companies may be exempt if they meet at least 2 of these 3 criteria in consecutive years:

  • Balance sheet total ≤ €100,000

  • Revenue ≤ €200,000

  • Average employees ≤ 3

• Filing deadlines: financial statements and tax returns must be submitted within 4 months after financial year-end.

• Governance:

  • Oy: minimum 1 board member (if only 1, a deputy must be appointed).

  • Oyj: minimum 3 board members, with stricter governance rules.

• At least one board member must reside in the EEA. Non-EEA board members require a permit.

Pros and cons of different legal forms in Finland

Which legal form should you choose?

• Short-term projects or market testing → A branch or operating with your foreign company may be best.

• Freelancers or very small businesses → A sole trader offers the simplest setup.

• Long-term growth and credibility → A Private Limited Company (Oy) is the most recommended option for foreign entrepreneurs.

• Larger businesses and investors → A Public Limited Company (Oyj) is suitable if you plan to scale big and possibly go public.

• Special structures → Partnerships, cooperatives, or foundations may be chosen for niche business purposes.

Need help deciding?

Every business case is unique. The right choice depends on your goals, industry, and long-term plans in Finland.

At 1Office, we help foreign entrepreneurs register companies, branches, or sole trader businesses in Finland. Our starting packages include registrations, legal address, state fees, and ongoing accounting support to ensure compliance from day one.

Contact us or book a consultation to find out which business form is the right fit for you.