You can also establish a company, outlet, branch or office abroad. Find out what country’s or countries’ legislation and tax practices apply and when.
Consider setting up a company or branch abroad if, for example, business development, product service or product support require a permanent presence in the target market.
Establishing a production unit abroad might also be an option in view of low production costs, requirements concerning the need to produce the goods locally, savings in the area of transport costs or the need to get the product to customers in the target country quickly.
Before you make your decision, familiarise yourself in greater detail with, for example, the country profiles and other reviews available from Team Finland. You can also make use of the expert assistance from your region’s business development company and the views expressed by actors and operators in the target country.
If yours is a large Finnish company, first choose whether the new company should be your company’s existing subsidiary or branch. When making your decision, use, for example, the Team Finland organisations (e.g. chambers of commerce), the Tax Administration and the business development company in your region.
If you establish an entirely new company or subsidiary abroad, comply with the local legislation with regard to its legal form, registration and practices.
You may also establish a branch or outlet for your Finnish company abroad. In that case your company will function as a foreign enterprise from the target country’s point of view.
Make use of the experts in the home country and the target country at the various stages of establishment: the Team Finland networks and the Finnish consulate in the target country, for example. Also network with companies in the target region, so that you have a feeling for the local business culture.
If your company was established directly abroad or it is a subsidiary, the local taxation practices and legislation will apply.
If there are subsidiaries in a number of countries, each one must comply with the legal provisions in the relevant target country. Remember, however, that a subsidiary’s possible link to the parent company in the home country also means that the laws of Finland must apply.
If your company has a branch abroad, you must pay tax to Finland on the income you receive from Finland and abroad. Finnish tax laws apply to the income you receive from abroad and the Finnish Accounting Act applies to bookkeeping.
If your branch has a permanent establishment abroad, its income is taxed in accordance with the local tax provisions. Accounting practices comply with local laws.
If you pay tax on the same income both to Finland and abroad, you can claim double exemption relief in Finland on your company’s tax return. If the target country has levied tax in contravention of a tax agreement, apply to that country for a refund of tax.
Further information on the application of Finnish law is available from the Tax Administration.
If your employee is a local resident in the target country, their taxation and pay are normally subject to the laws of the relevant country, even if the party making payment is a Finnish company.
Foreign employees are not normally paid the employer’s social security contributions, and no health insurance contribution payable to Finland is deducted from their pay.
If you recruit Finnish persons permanently resident abroad for your company abroad, a tax-at-source card must be acquired from a Finnish tax office for them in order to determine their tax treatment.
If your company is to post its Finnish employees abroad, find out what country they will have to pay their taxes to, whether their pay is tax-free by virtue of the six month rule, and whether they will continue to be covered by the Finnish social security system.
Read more about postings abroad for Finns on the Posted workers website.Opens in a new window.