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Statutory Audit
Our highly professional audit will help you make the best possible business decisions, giving you reliable information about the state of your business.
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IT audit and other certification services
Our IT audit services help you evaluate and develop IT management that is relevant to your business.
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IFRS
Grant Thornton International member firms combine broad international experience with technical know-how in audits of IFRS based financial statements
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Transaction advisory services
Planning an acquisition or a sale of a business? Our dedicated transaction advisory team helps you through the process, focusing on transaction-critical factors.
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Valuation services
Do you know the value of your business?
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Corporate finance
Our M&A advisory team will assist you, whether you need strategic advice, you are buying or selling a business, planning an MBO/MBI or you need to raise funds.
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International Tax
Our global network supports you and your company
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VAT
Minimise your risks and lower your company’s costs with the right advisory
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Bookkeeping and financial accounting
Whether you need support in preparing your financial accounting or are looking for us to handle the entire process on your behalf, we have the skills and experience to help you.
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Payroll
Payroll and, in addition, personnel administration are the biggest and most time-consuming challenges facing expanding organisations.
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Internal audit services
Internal audit helps you not only in risk management but in streamlining processes and in the successful implementation of business strategies as well.
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Forensic and Dispute services
Our forensic and dispute services team will help you with investigations and dispute resolution. Grant Thornton’s experts provide insightful analyses and reports which help to resolve disputes. We also conduct fraud investigations.
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Sustainability advisory
To achieve sustainable development goals, a plan is required. We offer guidance in sustainability management, assisting your company in setting clear objectives and identifying environmental and stakeholder risks.
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Sustainability assurance
The requirements for sustainability reporting have increased, and more and more companies are communicating their sustainability efforts in their annual reporting. We can assist you in meeting the latest legislative requirements.
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Project Management Services
In the digital age, project management takes center stage in driving the success of digital initiatives.
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Cyber security
When have a clear view of the processes together we can design a security framework that aligns with your company´s goals.
Establishment
A subsidiary is established as a limited liability company in Finland. A limited liability company is an independent legal entity that is established by registration to the Finnish trade register for which an article of association, memorandum of association and an establishment notification is required. The establishment of a private limited liability company does not require any share capital. Simultaneously a notification of the ultimate beneficial owners of a limited liability company must be filed with the authorities.
A branch is also established by a trade register notification to the Patent and Registration Office. Yet unlike a limited liability company, a branch is not an independent legal entity as, from the legal point of view, it is a part of a foreign company that has decided to have a place of business in Finland through the branch. Therefore, a branch cannot make independent decisions as it operates in the name of the foreign company. For registration, specific documents of the foreign trader are required as well as the establishment notification. Additionally, a permit for establishment is needed if the foreign company has been established outside the EEA area.
Administrative responsibilities
Regarding the management of a limited liability company, a board of directors must be formed. There can be one to five ordinary members unless otherwise stated in the Articles of Association. If the board consists of fewer than three members, a deputy member must always be appointed. In terms of shareholders, a limited liability company can be owned by other companies or natural persons who also form shareholder meetings. The meetings, operations and administration of a limited liability company are regulated by the limited liability companies act.
A branch does not commonly have a board, yet it is mandatory to have a representative whose place of residence is determined by whether the principal company has been established outside or in the EEA and has its domicile in the EEA. When a principal company has been established in the EEA and has its domicile there, the representative must have a place of residence in the EEA. Otherwise, the place of residence of the representative must be in Finland. It is important to notice that the representative holds tax liability on the taxes imposed on legal or natural persons residing outside the EEA. The law of the country in which a principal company is established applies to the branch.
Financial statements and audit
A limited liability company has always the obligation to prepare the financial statements in accordance with the Finnish GAAP or IFRS. A branch does not have to prepare separate financial statements if the financial statements of the principal company are prepared in accordance with EU regulations or in an equivalent manner. Otherwise, a branch is liable to prepare separate financial statements in accordance with the Finnish GAAP.
The audit must be completed if at least two of the following thresholds are met in the two latest financial period:
- the balance sheet total exceeds 100 000 euros;
- revenue or an equivalent income exceeds 200 000 euros;
- there are more than three employees on average.
This applies to both limited liability companies as well as branches when the branch is liable to prepare separate financial statements in accordance with the Finnish GAAP.
A limited liability company and a branch are always obliged to register financial statements to the trade register. A limited liability company must register its financial statements within eight months from the end of the financial period. If the obligation to register the financial statements is neglected, late filing fees and possibly other sanctions will be imposed by the authorities. If a branch is not obliged to prepare separate financial statements, the financial statements of the principal company must be registered. As a main rule, a branch must register its financial statements within six months after the end of the financial year. The financial statements may be registered after more than six months if the principal company’s domicile is in the EEA and its legislation allows a longer deadline.
Tax obligations
A Finnish limited liability company is considered as a resident taxpayer from the point of view of taxation and thus, is liable to pay taxes on worldwide income. A foreign company is treated as a nonresident taxpayer with limited tax liability from the point of view of taxation and a branch. When a registered branch of the foreign company forms a permanent establishment in Finland, it is liable to pay taxes to Finland on the income that belongs to a permanent establishment even if the income is accrued from another country. The allocation of income between a branch and its principal company can be complex and become subject to authority scrutiny. A corporate income tax return must be filed within four months after the end of the financial period. In addition, VAT-liable limited liability companies and branches usually file their VAT returns monthly.
Dissolution
When the time comes to dissolve a limited liability company, the voluntary options are a merger and a liquidation process which take approximately four months to complete. In addition to the voluntary dissolutions, there are also other involuntary processes to dissolve a limited liability company. The dissolution of a branch is a simpler and faster process than that of a limited liability company. In fact, the branch is dissolved solely by filing the deregistration notification to the Patent and Registration Office.
In conclusion, there are differences which impact the decision on which of the two options is the most appropriate and functional for an individual situation when considering expanding business into Finland. The administrative and other obligations of the branch are lighter than those of limited liability companies. However, a limited liability company is an independent legal entity that can manage its own administration and decision-making as well as financing methods independently whereas a branch is dependent on the principal company from an administrative point of view.
If you are considering expanding your business into Finland and you need a reliable partner, don’t hesitate to get in touch – we at Grant Thornton are happy to assist you and to provide you with our experience and knowledge in choosing the best alternative for your business operations!
