Temporary operations of a foreign company
Your foreign company may operate in Finland temporarily without a permanent place of business. In this case, the company will typically not need to pay all its taxes in Finland. However, you should find out whether your company is required to sign up to the Tax Administration’s registers, and make sure you submit the necessary notifications to the Tax Administration. If your activities are subject to a permit, contact the competent authority and find out whether the authority requires a permit, notification or registration.
The Act on the Provision of Services lays down provisions that a company operating in another country in the European Economic Area is entitled to temporarily engage in business in Finland. This means that the company does not have to establish a branch office in Finland if it only has slight and temporary operations in Finland.
However, the right of a foreign company to temporarily engage in business activities does not apply to all industries. Among other industries, insurance and financial services, transport and port services, provision of temporary workers, certain health care services, and security service are excluded from this right. Always check whether your company will be able to operate temporarily in Finland without a branch office based on your industry.
If your company operates in Finland temporarily, it does not typically have to pay all its taxes in Finland.
Submit your foreign company's start-up notification using the paper forms obtained from the Business Information System (YTJ). The Tax Administration will use this as the basis for determining the registers where you must include your company.
Your company must join the VAT register under certain circumstances, for instance, if it sells products or services to private individuals in Finland.
Your company does not have to register in the prepayment register or pay income tax for its business income. However, it will still have to pay taxes for rental income earned from real property in Finland, for instance. Submit a report of your business operations in Finland to the Tax Administration within four months since the end of the financial year. If your company only has individual assignments in Finland, you can apply for a tax-at-source card with 0 per cent tax percentage.
Becoming registered in the Employer Register is not mandatory. If your employees spend over six months in Finland, submit annual information on their wages to the Tax Administration.
Your company will usually not have to be registered in the trade register if your business operations in Finland are minor and temporary. However, if the operations are continuous and you engage in them from a permanent place of business, you must submit a start-up notification of a branch of a foreign trader to the trade register.
The tax authority considers your company’s operations temporary if your company has no permanent place of business in Finland. A permanent place of business is formed based on different criteria in income and VAT taxes.
From the perspective of income taxes, a place of business can be permanent from both geographical and temporal viewpoint. The operations at the establishment may only include the management and administration of your company, for instance.
From the perspective of value-added taxes, a permanent place of business can be a production facility or room used in your company’s business activities. The establishment also includes your company’s staff who manage business activities at the site. If your company’s establishment in Finland is not used for the sales of your company’s products, it is not considered a permanent place of business.
If your company has a permanent place of business from the perspective of income taxes, your company must pay income taxes in Finland for its business income. In turn, if your company has a fixed establishment from the perspective of value-added taxes, you must register it in the VAT register and pay VAT for its sales to Finland.
As a foreign trader, you must submit a start-up notification of a branch of your organisation to the trade register. Submit the notification before you start your operations. If the trader is from a country outside the European Economic Area (EEA), it will also need a permit from the Finnish Patent and Registration Office for the establishment of the branch.
A branch of a foreign trader refers to a part of a foreign organization or foundation that runs a continuous business or trade in Finland, from a permanent place of business located in this country, in the name and for the benefit of the foreign organization or foundation.