2013 Investment Climate Statement - Finland

2013 Investment Climate Statement
Bureau of Economic and Business Affairs
April 2013

Openness to, and Restrictions Upon, Foreign Investment

The Finnish government is open to direct foreign investment. There are no general regulatory limitations relating to acquisitions. Legislative control of mergers and acquisitions is mainly governed by domestic and EU competition rules. Certain acquisitions of large Finnish companies may require follow-up clearance from the Ministry of Employment and the Economy in accordance with the Act on the Control of Foreign Acquisitions of Finnish Companies. The purpose of the clearance is to protect essential national interests.

However, in November 2010, the government of Finland submitted to Parliament a proposal for a new act on the monitoring of foreigners’ corporate acquisitions (HE 272/2010), the ratified act (172/2012) entered into force on June 1, 2012. Monitoring is targeted at Finnish enterprises considered critical to securing vital functions within society, for example those that are key in terms of securing national emergency supplies and national security. Only corporate acquisitions in the defense and dual-use goods sector are subject, without exception, to advance confirmation by the public authorities, based on an application. In the civil sector, monitoring is targeted at Finnish enterprises considered critical to securing vital functions within society. Within the civil sector, corporate acquisitions are subject to declaration.

Corporate acquisition refers to a transaction in which a foreign owner gains control of a minimum of 10 percent of the total number of votes accompanying shares in a limited liability company, or, in the case of another type of corporation or business undertaking, gains corresponding, dominant control over the acquired enterprise. As regards the defense material industry, monitoring covers all foreign owners. In other respects, monitoring only applies to foreign owners domiciled outside the EU and European Free Trade Association (EFTA) states. For more information see: http://www.tem.fi/files/33479/Monitoring_of_foreign_corporate_acquisitions_by_the_Ministry_of_Employment_and_the_Economy_041012.pdf

Unlike many other countries, Finland does not “positively” discriminate in favor of foreign-owned firms by giving them tax holidays or other subsidies not available to other firms in the economy. Instead, Finland relies on “condition-providing policies” that offer all firms in the economy appropriate conditions and sufficient pools of advanced factors of production, including an educated labor force and well-functioning infrastructure.

There are some legal requirements for non-European Economic Area (EEA) residents (persons or companies) to conduct business in Finland. In certain areas involving specific safety or health hazards or financial risks, specific conditions must be met to conduct trade. A non-EEA resident operating in Finland must obtain a license or a notification when starting a business in the “regulated” forms of trade. Licensed trades are governed by acts and decrees. A list of licensed trades can be found at Enterprise Finland: http://www.yrityssuomi.fi/web/enterprise-finland/licenced-trades

The Aland Islands are an exception to common Finnish practice. Based on international agreements dating from 1921, property ownership and the right to conduct business are limited to only those individuals with the right of domicile in the Aland Islands. It does not prevent people from settling in or trading with the Aland Islands. Immigrants who have lived in Aland for five years and have an adequate knowledge of Swedish may apply for domicile status. However, the Aland Government can, occasionally, grant exemptions from the requirement of right of domicile for those wishing to acquire real property or conduct a business in Aland.

In 2006, the United States and Finland signed a protocol amending the existing double taxation treaty, which significantly reduced tax-related barriers to trade and investment flows between the countries. The tax convention entered into force December 30, 1990.

The salary and fringe benefits paid to qualifying foreign key employees, such as employees with special knowledge or competence, are taxed at the flat rate of 35 percent during a maximum of 48 months of assignment in Finland provided that the employee has a special tax card (which must be applied for separately).

For detailed tax guidance see the Finnish Tax Administration’s website: http://www.vero.fi/en-US/Companies_and_organisations

The Finnish Foundation for Share Promotion’s Tax Guide for Investors: http://www.porssisaatio.fi/en/f/files/2012/05/tax_guide_2011_ver2.pdf

Economic indicators for the year 2013/2012/2011 include:




TI Corruption Index


90 / 1

Heritage Economic Freedom


72.3/ 17 (world), 8 (Europe)

World Bank Doing Business



MCC Gov’t Effectiveness



MCC Rule of Law



MCC Control of Corruption



Fiscal Freedom



Trade Freedom



MCC Regulatory Quality



MCC Business Start Up



Natural Resource Mgmt NRMI



DB Access to Credit



IMF Inflation (average)



In 2012, the Grant Thornton Global Dynamism Index (GDI) ranked Finland as having the most dynamic business environment in the world. The GDI index also ranked Finland as having the second most dynamic environment for science and technology. According to the index, Finland is among the most open economies in the world with robust and transparent regulatory systems. Investment in R&D remains high whilst open trade policies and strong institutions provide a low risk environment for investment. (The GDI model was developed by the Economist Intelligence Unit (EIU), which analyzed 50 economies on 22 indicators of dynamism across five categories: business operating environment, economics and growth, science and technology, labor and human capital, and the financing environment).

Conversion and Transfer Policies

Except for those relating to money laundering, there are practically no legal obstacles to direct foreign investment in Finnish securities nor are there exchange controls regarding payments into and out of Finland. Funds from Finland or to Finland are freely transferable. Specific legal provisions prevent money laundering and the financing of terrorism. Therefore, in order to verify the legal origin of funds, credit institutions and banks must identify their regular customers and report on any suspected cases of money laundering. Banks and credit institutions must also report single payment transfers or payments of EUR 15,000 or more. If payments differ from customers’ normal banking business, banks will usually require written explanations about the origin of funds, even in connection with small payments. If banks have reason to suspect the origin of the funds, they must immediately inform the National Bureau of Investigation.

There are no restrictions on current transfers or repatriation of profits. Residents and non-residents may hold foreign exchange accounts. There is no limit on dividend distributions, as long as they correspond to a company’s official earnings records. Payments to or from Finland must, however, be made through authorized banks in Finland.

Finland has been a pioneering country in electronic payments. Ninety-seven percent of Finnish credit transfers are automated and Finnish banks have had a significant role in the development and automation of corporate payment transmissions and financial management processes.

In June 2007, Finland implemented an EU regulation on the transport of currency over EU borders. According to the regulation, persons carrying USD 14,500 (EUR 10,000) or more will be required to declare cash upon entering or leaving EU territory. The regulation only imposes an obligation to declare the currency and does not restrict or prohibit the import or export of the currency.

Finland adopted the single currency (the Euro) on January 1, 1999. The Euro replaced the Finnish Markka at the end of a three-year transition period on January 1, 2002.

While Finland does not preclude foreign investment, certain tax policies may make it unattractive to some investors. Finnish tax authorities treat a “flip” (moving ownership of a foreign company into a U.S. company) to a U.S. entity as a sale, and therefore a taxable event. Finland complies with EU directives that require it to allow such “flips” based in other EU member states without treating them as taxable events. However, Finnish authorities continue to tax “flips” to non-EU jurisdictions, like the United States.

Expropriation and Compensation

Private property rights are well protected in Finland. Private property is only expropriated for public purposes (eminent domain), in a non-discriminatory manner, with reasonable compensation, and in accordance with established principles of international law.

Dispute Settlement

There is no record of any significant investment dispute in Finland in recent years. Finland has a civil law system. Swedish law and Nordic tradition have influenced statutory law and jurisprudence. European Community (EC) law is directly applicable in Finland and takes precedence over national legislation. Finland has written and consistently applied commercial and bankruptcy laws. Secured interest in property are recognized and enforced. A Bankruptcy Act, which entered into force on September 1, 2004, contains provisions about bankruptcy procedures. http://www.oikeus.fi/17302.htm

Finland signed the Convention on the Settlement of Investment Disputes between States and Nationals of other States (also known as the ICSID Convention or the Washington Convention) on July 14, 1967 and deposited its instrument of ratification on January 9, 1969. Finland attained the status of a Contracting State to the ICSID Convention on February 8, 1969. Finland signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in December, 1958. The convention entered into force in Finland in April 1962.

The impartial Arbitration Institute of the Finland Chamber of Commerce, established in 1911, promotes the settlement of business disputes through arbitration. The Institute appoints arbitrators both to domestic and international arbitration proceedings. For more information see: http://www.arbitration.fi/en/indexen.html

Arbitration statistics can be found at: http://arbitration.fi/en/statistics/

The Market Court was established in 2002 as a special court for rulings in market law, competition, and public procurement cases. The Market Court may issue injunctions against the illegal restriction of competition and order monetary penalties. It also has duties in the supervision of mergers and acquisitions. In addition, the Market Court may overturn public procurement decisions, adjust the procurement process, and order compensatory payments. The Market Court has jurisdiction in disputes between the Consumer Ombudsman and businesses as to whether goods or services have been marketed in an unfair manner.

Major revisions to Finnish competition legislation took effect in May 2004. The Act on Competition Restrictions was harmonized with EU competition rules. A new Competition Act entered into force in Finland on November 1, 2011. It brought Finland’s competition regime closer to that of the EU’s. The most important changes relate to merger control, certain procedural rules, leniency, and damages. For more information see the Competition Act (No 948/2011): http://www.kilpailuvirasto.fi/cgi-in/english.cgi?luku=legislation&sivu=competition-act

The Finnish Competition Authority merged with the Consumer Agency to form the Finnish Competition and Consumer Authority (FCCA) on January 1, 2013. The purpose of the new agency is to ensure a healthy and functioning market where enterprises and other players act responsibly and in the interest of consumers.

Finland brought the EU Mediation Directive (2008/52/EC) into force by implementing the Act on Mediation in Civil Disputes and Certification of Settlements by Courts (394/2011) in May 2011. This replaced the Act on Court-Annexed Mediation (663/2005). Both the directive and the new act aim to facilitate access to alternative dispute resolution, and promote the amicable settlement of disputes by encouraging the use of mediation and by ensuring a balanced relationship between mediation and judicial proceedings. The new act also applies to settlements concluded in other EU member states.

Finland ranked ninth on the ease of enforcing contracts among 185 economies covered by World Bank’s and International Finance Corporation’s Doing Business 2013 - Measuring Business Regulation report. The rankings factor court procedures and the time and cost to resolve commercial disputes.

Performance Requirements/Incentives

There are no performance requirements or commitments imposed on foreign investment in Finland. However, to conduct business in Finland, some residency requirements must be met in order to ensure that persons liable for the company’s acts can be brought to court if necessary.

Amendments to the Finnish Limited Liability Companies Act were entered into force in August 2009 to allow the participation of shareholders (particularly non-Finnish shareholders) in the general meetings of listed companies.

For more information see: Limited Liability Companies Act of Finland: http://www.finlex.fi/fi/laki/kaannokset/2006/en20060624.pdf

Foreign-owned companies are eligible for government incentives on an equal footing with Finnish-owned companies. Support is given in the form of grants, loans, tax benefits, equity participation, guarantees, and employee training.

Business aid and EU support: Business aid to companies is coordinated by 15 Centers for Economic Development, Transport, and the Environment (ELY), which provide advisory, financing, and development services for enterprises; employment-based aid and labor market training; and advice on immigration matters and EU structural projects. Foreign investors can benefit from several different types of aid. For more information see: http://www.ely-keskus.fi/en/frontpage/business/Sivut/default.aspx

Loans and guarantees by Finnvera: State-owned financing company Finnvera offers services to businesses of all sizes and in all sectors, except basic agriculture. Its services range from loans and guarantees to start-ups and micro-enterprises, to export credit guarantees to large exporters and their financiers. Finnvera serves its clients through 15 regional offices, through the Representative Office (The Finland House) in St. Petersburg, and through the Finland Trade Center/Finpro office in Moscow. Finnvera is also Finland’s official Export Credit Agency (ECA). For more information see: http://www.finnvera.fi/eng

R&D incentives by Finnish Funding Agency for Technology and Innovation (Tekes): Tekes provides low-interest loans and grants to challenging and innovative projects. Foreign-owned companies with R&D activities in Finland are not required to have a Finnish partner to be eligible for funding. The financed project should, however, contribute to the Finnish economy. For more information see: http://www.tekes.fi/en/community/Funding_and_services/346/Funding_and_services/1238

Support for innovative business ventures can also be obtained from the Foundation for Finnish Inventions. For more information see: www.keksintosaatio.fi

The Invest in Finland Bureau, a government agency promoting foreign investments into Finland, assists international companies in finding business opportunities in Finland and provides all the relevant information and guidance required to establish a business in Finland. Finpro is a Finnish trade, internationalization and investment development organization established by Finnish companies in 1919. The operations of Invest in Finland were merged with Finpro and its international network in June 2012, to simplify Finland’s business and innovation system and to boost Finland’s competitive investment environment. For more information see: http://www.investinfinland.fi/ and http://www.finpro.fi/web/english-pages/frontpage

Right to Private Ownership and Establishment

Private ownership and entrepreneurship are normal in Finland. In most fields of business activity, participation by foreign companies or individuals is unrestricted. As the government pursues privatization of state-owned companies, both private and foreign participation is welcome except in some enterprises operating in sectors related to national security.

Competitive equality is the official standard applied to private enterprises in competition with public enterprises. Private companies do not face discrimination. With the end of the Restriction Act in January 1993, Finland removed most restrictions on foreign ownership of property in Finland. Restrictions, such as requirements to obtain permission of the local government in order to purchase a vacation home in Finland were abolished January 1, 2000, bringing Finland fully in line with EU norms.

Protection of Property Rights

Secured interest in property, both movable and real, are recognized and enforced. The Finnish legal system protects property rights, including intellectual property, and Finland adheres to numerous international agreements concerning intellectual property rights (IPR). Patent rights are consistent with international standards. In Finland a granted patent applies for 20 years. The time of validity of patents concerning medicinal products and plant protection products can under certain conditions be prolonged by a maximum of five years through a Supplementary Protection Certificate. In 1996, Finland joined the European Patent Convention (EPC) and the European Patent Organization (EPO). Finland is a member of World International Property Organization (WIPO), and participates primarily through its membership in the EU. The idea of protecting intellectual property is well developed. In March 2009, the government of Finland published a national IPR strategy. For more information see: http://www.tem.fi/files/26944/TEM_27_2010_netti.pdf

Finland Joined WIPO’s Patent Law Treaty (PLT) in March 2006.

In 2008, the Finnish Parliament passed legislation that (as of April 2009) amended a pharmaceutical reference pricing system. The pharmaceutical industry complained that a provision of that system undermines the patent protection of medicines created and manufactured by non-Finnish pharmaceutical companies. Specifically, the industry asserts that the pricing scheme, as amended, subjects products protected by process patents to the reference pricing restrictions applicable to generic products and deprives pharmaceutical process patent holders in Finland of appropriate compensation for the value of the intellectual property they created in the original products. Given the significant and continued U.S. governmental and private industry concerns over pharmaceutical patent protections, Finland was placed on the 2009 Watch List in the Office of the U.S. Trade Representative’s Special 301 report, and has been included every year since.

Information on copying and copyright infringement is provided by the following copyright holder interest organizations: Copyright Society of Performing Artists and Phonogram Producers in Finland (Gramex), Finnish Composers’ Copyright Society (Teosto), Copyright organization for authors and publishers (Kopiosto), The Visual Artists Copyright Society (Kuvasto), Finnish Audiovisual Producers’ Copyright Society (Tuotos) and Finnish copyright society managing the rights of literary copyright holders (Sanasto), the Copyright Information and Anti-Piracy Center (CIAPC), The Finnish Copyright Society, The Finnish Copyright Institute, the Copyright Information Centre, and The IPR University Centre. The Business Software Alliance (BSA), a worldwide software anti-piracy organization, began operations in Finland in January 1994.

Finland has been a member of the Paris Convention for the Protection of Industrial Property since 1921; the Berne Convention for the Protection of Literary and Artistic works since 1928; the Rome International Convention for the Protection of Performers, Producers of Phonograms, and Broadcasting Organizations since 1983; and the Hague Agreement Concerning the International Deposit of Industrial Designs (Geneva Act 1999) since May 2011.

Finnish copyright legislation was amended in 2005 to meet the demands of the digital environment and the internet. The amendments to the Copyright Act and the amended section 49 of the Criminal Code came into force from the beginning of 2006. This reform implemented the Copyright Directive adopted by the EU in 2001. The amendments also addressed a number of national issues, such as the prohibition of the importation of pirated recordings for personal use.

Finland signed the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) in May 1997, ratified the treaties in December 2009, and the treaties entered into force in March 2010.

The Finnish Copyright Act, which also grants protection to authors, performing artists, record producers, broadcasting organizations and catalog producers, has been adjusted to comply with EU directives. As part of this harmonization, the period of copyright protection was extended from 50 years to 70 years from the death of the author. Database protection is covered by the Copyright Act. Databases, including catalogues, are protected for 15 years. The Finnish Copyright Act provides for sanctions ranging from fines to imprisonment for up to two years. Search and seizure is authorized in the case of criminal piracy, as is the forfeiture of financial gains. The Copyright Act has covered computer software since 1991.

Finland acceded to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS, 1994), which is an annex to the WTO Agreement. The TRIPS treaty, which took force in 1995, contains regulations governing the enforcement of intellectual property rights, i.e. industrial property rights and copyrights.

Amendments to the Finnish Penal Code made in 2009 have enhanced the position of employers in regards to the protection of their business secrets, with employees required to keep a former employer’s business secrets confidential for two years after termination of employment.

The Trademarks Act, which came into force in March 2000, brought Finnish Trade Mark Law into line with the Trade Mark Treaty. Amendments to the Trademarks Act which entered into force on January 1, 2011 require, among other things, that a trademark applicant or proprietor, not domiciled in Finland, must have a representative resident in the European Economic Area. Finland signed the Singapore Treaty on the Law of Trademarks in October 2006.

The significance of mortgage banks has remained minor as deposit banks have traditionally handled housing loans in Finland. The Mortgage Society of Finland is operating in accordance with designated special legislation.

Transparency of the Regulatory System

The legal and enforcement framework for competition is in line with European Union laws. Finnish competition laws were reformed to bring them in line with EU regulations in May 2004 and November 2011.

The Securities Market Act (SMA) contains regulations on corporate disclosure procedures and requirements, responsibility for flagging share ownership, insider regulations and offenses, the issuing and marketing of securities, and trading. The law defines and takes into account new instruments, which have become common in financial markets, such as repurchase agreements. Finnish legislation recognizes the internationally accepted contractual arrangements as does legislation elsewhere in the EU. Regulations concerning the clearing of securities trades have been incorporated into the law since 1998. Clearing has become subject to licensing, and is supervised by the Financial Supervision Authority, which oversees the financial markets.

New securities market legislation took effect on January 1, 2013. The goal of the new legislation is to improve the competitiveness and reliability of the Finnish securities market by dividing the old Securities Market Act into several separate acts. The former Securities Market Act has been broken into the Securities Market Act, the Act on Trading in Financial Instruments, the Act on the Book-Entry System and Clearing Operations, and the Investment Services Act. These acts constitute the new securities market framework with the already separate existing acts on Book-Entry Accounts and on the Financial Supervisory Authority. The new Securities Market Act’s general principles are (i) prohibition of actions against good conduct on the securities markets and of improper business practices, (ii) prohibition to give false or misleading information on the securities market, and (iii) the duty to provide investors with equal access to sufficient information on matters that may have a material effect on the value of the relevant security.

For more information see the Financial Supervisory Authority’s overview of regulations for listed companies: http://www.fin-fsa.fi/en/Listed_companies/Regulation/Pages/Default.aspx

Finnish tax, labor, health and safety, and related laws and policies are largely neutral towards the efficient mobilization and allocation of investment. Finnish legislation does not normally influence regional distribution of investment except when specifically designed to do so, such as through regional incentive programs.

In Finland, the Act on the Openness of Public Documents of 1951 established the openness of all records and documents in the possession of officials of the state, municipalities, and registered religious communities. Exceptions to the basic principle could only be made by law, or by an executive order for specific enumerated reasons such as national security. The openness of unsigned draft documents was not mandated, but up to the consideration of the public official. This weakness of the law was removed when the law was revised in the 1990s and again in 2002. The revised law, the Act on the Openness of Government Activities of 1999, also extended the principle of openness to corporations that perform legally mandated public duties, such as pension funds and public utilities, and to computer documents. For more information see Ministry of Justice, Openness of Government Activities: http://www.om.fi/23963.htm

The Finnish state administration discussion forum at http://www.otakantaa.fi/fi-FI provides an opportunity for all citizens to comment on planned or on-going projects, legislative reforms, or other current issues being drafted within the public administration. The objective is to improve project management openness and interaction between the public administration and citizens.

A new law on Citizens’ Initiatives entered into force March 1, 2012. The new law introduced a new form of public participation in Finland. Citizens may bring forward to Parliament proposals for legal acts (excluding state budget proposals). The proposals need to be supported by at least 50,000 voters. The Ministry of Justice has set up an online system to collect statements of support. The organizer of an initiative has six months to collect the necessary statements of support.

Efficient Capital Markets and Portfolio Investment

Credit is allocated on market terms and is made available to foreign investors in a non-discriminatory manner. The private sector has access to a variety of credit instruments. Legal, regulatory, and accounting systems are transparent and consistent with international norms.

The Helsinki Stock Exchange has since September 2003 been part of OMX, referred to as OMX Helsinki (OMXH). Since NASDAQ’s acquisition of OMX in February 2008, the official name of the Helsinki exchange has been NASDAQ OMX Helsinki. OMX Helsinki is part of the NASDAQ OMX Nordic division, together with the stock exchanges in Stockholm, Copenhagen, Iceland, Tallinn, Riga, and Vilnius.

Banking is open to foreign competition. Compared to the international average, the number of banks in Finland is high. The reason for this is the high number of banks in the OP-Pohjola Group (211), a cooperative of independent, local deposit banks that are engaged in retail banking. Outside the OP-Pohjola Group there were 14 commercial banks, 36 local cooperative banks, 33 savings banks, and 16 branches of foreign deposit taking banks. At the end of 2011, there were 310 deposit banks operating in Finland, 294 of them were domestic. The total assets of the domestic banking groups and branches of foreign banks operating in Finland amounted to EUR 552.3billion in 2011. For more info see the Federation of Finnish Financial Services “Finnish banking in 2011” report: http://www.fkl.fi/en/material/publications/Publications/Finnish_Banking_in_2011.pdf

Increased mergers and alliances have been shaping the Finnish banking sector in recent years. The banking and finance market has become increasingly international, with Scandinavian banks particularly active in cross-border mergers and acquisitions.

All authorized deposit-taking banks are members of the Deposit Guarantee Fund. If an individual bank becomes insolvent, the Fund will compensate its customers’ deposits to a maximum of EUR 100,000 per depositor.

Finland’s banking system is the strongest in the EU in terms of its financial position, according to credit rating company Moody’s “Banking System Outlook: Baltics” report released in November 2012. Finland’s banking system is also ranked as the strongest in the Eurozone, according to a Moody’s global comparison of national banking systems. Moody’s ranked the financial strength of Finland’s banking system as 11th internationally.

Hostile takeovers have not in the past been part of the Finnish business culture and Finnish law does not distinguish between friendly and hostile takeovers. Finnish legislation does not expressly address takeover defenses. In Finnish law, the legality of takeover defenses is evaluated primarily in light of the leading principles of the Security Markets Act (SMA), the principle of equal treatment of all shareholders, and general principles of company law. If challenged, the legality of the defensive measures is subject to review by the courts.

The Finnish Panel on Takeovers and Mergers issues recommendations that provide direction for mergers and acquisitions. One can contact the panel for a statement regarding interpretation of the recommendations, good securities markets practices, as well as an individual company’s legal issues.

For more see: http://www.yrityskauppalautakunta.fi/yritys_eng/

Finland changed over to the Single Euro Payments Area (SEPA) in January 2008. The system began with credit transfers and cards, and starting from July 2010, International Bank Account Numbers (IBAN) and Bank Identification Code (BIC) data have been compulsory on invoices and credit transfer forms, along with Finnish account numbers. Since November 2010 Finnish banks offering domestic direct debit services have offered SEPA Core Direct Debit to payer customers requiring such services, and the transition period for SEPA Credit Transfers ended on December 31, 2010 (when the four national standards became obsolete.) SEPA replaces 32 national payment systems in Europe with one single European system working with uniform standards and regulations.

Competition from State Owned Enterprises

The statute regulating the administration of state majority-owned companies is the Ownership Steering Act (1368/2007). The act applies to decision making concerning Finnish government shareholdings and government ownership steering in state-majority owned companies and associated companies.

For more information see: http://valtionomistus.fi/english/files/2011/12/VALTIONYHTIOeLAKI_en.pdf

Duties relating to state ownership steering are handled in the Ownership Steering Department in the Prime Minister’s Office. The department is responsible for state ownership policy, the ownership steering of state-owned companies under the Prime Minister’s Office, expansion of the ownership base, branch re-organizations, share investments, coordination of ministries’ ownership steering procedures and inter-ministerial cooperation. The Minister responsible for Ownership Steering in the Prime Minister’s Office is Minister Heidi Hautala.

The State as of December 2012 has direct ownership of shares in three listed companies (Finnair, Fortum, and Neste Oil). In addition, the wholly state-owned company Solidium Oy has shares of 11 listed companies in its share portfolio. The State is also an owner in 46 non-listed companies. A list of state owned companies can be found here: http://valtionomistus.fi/english/companies/state-majority-owned-companies/

The State’s objective as a shareholder is to provide consistent and predictable solutions and act as openly as possible. The most important ownership policy tools include Government resolutions, statements of the Cabinet Committee on Economic Policy and recommendations and statements by the responsible Ministries. All of the aforementioned documents are public and available to all market actors.

The guidelines “Handling of Corporate Governance Issues in State-owned Companies and Associated Companies,” dated November 13, 2000, is an important instrument in the government’s corporate governance policy. The guidelines stress the independence of the state-owned companies’ boards and their goal to increase shareholder value. The Finnish government has since spring 2006 published (in Finnish), on the internet, the salaries and remunerations of the management and boards of state-owned and associated companies.

In November 2011, the Government adopted a government resolution outlining the objectives and principles for its state ownership policy, replacing the previous government resolution on ownership steering adopted in 2007. The adopted resolution places greater emphasis on responsibility, openness and long-term goal setting. The resolution calls for responsibility and openness as it regards reporting, remuneration, and the overall transparency of business activities. According to the resolution, non-listed state-owned and state majority-owned companies must, in the future, report their responsibilities in an accurate manner. This will allow comparison between companies. The Finnish government expects companies to ensure that their subcontractors also follow the same principles of responsibility. The resolution also focuses on the composition of companies’ boards of directors and emphasizes the need to promote equal opportunities. This includes gender equality.

The government resolution, based on the Government Program, provides guidelines for ownership steering within ministries. It also provides companies, stakeholders and markets with information about the main practices of the Finnish government as an owner. The resolution builds on the continuation of the government’s active, market-based ownership policy. The underlying principle is that corporate assets held by the Finnish government constitute an important part of its national wealth.

In August 2012, the Cabinet Committee on Economic Policy adopted a statement on remuneration of management in state-owned companies (the previous statement dated from autumn 2009). Openness and moderation are the statement’s fundamental premises. Remuneration must be predictable and transparent, so that everyone involved can assess its efficiency. According to the statement, the threshold for remuneration must be sufficiently challenging to reach and it is particularly important to ensure that remuneration does not lead to excesses jeopardizing the targets set for remuneration schemes.

Finland does not have a sovereign wealth fund.

Solidium, a limited liability company fully owned by the government of Finland, invests in companies that are considered to be of national importance and that will increase the value of Solidium’s holdings in the long term. Solidium may invest in Finnish listed companies, foreign listed companies with extensive operations in Finland, and also in companies that are preparing for a listing.

Corporate Social Responsibility

Finland is committed to compliance with and the promotion of corporate social responsibility by supporting the implementation of international codes of conduct guiding the operations of multinational enterprises. Such international codes of conduct include the OECD Guidelines for Multinational Enterprises, the ILO Declaration on Fundamental Principles and Rights at Work, and the tripartite declaration of principles concerning multinational enterprises and social policy by the ILO. These include instructions and rules of conduct concerning the financial, ecological, and social responsibility of enterprises, such as human rights, rights at work, the abolition of child labor, the environment, anti-corruption measures, consumer protection, and science and technology issues.

Having committed to these guidelines, Finland strives to influence Finnish companies so that they operate sustainably and responsibly in all countries. Compliance with the guidelines is voluntary for enterprises. Furthermore, business and non-governmental organizations have compiled corresponding recommendations for enterprises.

The Committee on Corporate Social Responsibility, operating in connection with the Ministry of Employment and the Economy, is the National Contact Point that monitors the application of the OECD Guidelines for Multinational Enterprises in Finnish multinationals.

The Government Decree on the Committee on Corporate Social Responsibility can be found at: http://www.tem.fi/files/23532/Government_Decree_on_the_Committee_on_Social_and_Corporate_Responsibility_(.pdf

Finland supports the efforts of the United Nations’ Global Compact (ten principles in the areas of human rights, labor, the environment and anti-corruption) through development cooperation funds. Enterprises and other organizations can, if they wish, commit themselves directly to compliance with the Global Compact principles.

In Finland, the Securities Market Association established by the Central Chamber of Commerce, the Confederation of Finnish Industries (EK) and NASDAQ OMX Helsinki Ltd has developed and updated the Finnish Corporate Governance Code for companies listed on the Helsinki Stock Exchange.

The Corporate Governance Code for Finnish Companies published in June 2010 can be found at: http://www.nasdaqomx.com/digitalAssets/71/71589_finnish_cg_code_2010.pdf

The Code harmonizes the practices of listed companies as well as the information given to shareholders and other investors. It also improves the transparency of administrative bodies, management remuneration, and remuneration policies. The aim of the Code is that Finnish listed companies apply corporate governance practices that are of a high international standard.

The Corporate Responsibility Network (FiBS), established in 2000, is the leading corporate responsibility network in Finland. It has the mission of promoting financially, socially, and ecologically sustainable business in Finland. FiBS currently has around 200 members.

Political Violence

There are no instances of political violence.


Corruption in Finland is covered by the Criminal Code and provides for sanctions ranging from fines to imprisonment for up to four years, depending on the seriousness of the crime. Both giving and accepting a bribe is considered a criminal act under the Criminal Code. Finland has statutory tax rules concerning non-deductibility of bribes.

Finland does not have an authority specifically charged with the prevention of corruption. Coordination of horizontal and international cooperation anti-corruption matters is the responsibility of the Ministry of Justice. However, Finland’s anti-corruption contact point for EU purposes is in the Ministry of the Interior and the National Bureau of Investigation has an officer whose full-time duty is to follow matters related to corruption in Finland.

For more, see the Ministry of Justice’s “Corruption and the Prevention of Corruption in Finland” publication summarizing the available data on corruption in Finland and describing the law and the role of the authorities in the prevention of and response to corruption. The publication also provides an overview of social factors as well as factors related to the administrative system, law enforcement, and the court system: http://www.om.fi/en/Etusivu/Julkaisut/Esitteet/CorruptionandthePreventionofCorruptioninFinland

Over the past decade, Finland repeatedly has placed first or second on Transparency International’s Corruption Perceptions Index (CPI), indicating extraordinarily low perceived levels of corruption, as determined by expert assessments and opinion surveys. In 2012, Transparency International ranked Finland as the least corrupt country in the world. Finland’s top ranking was based in part on “strong access to information systems and rules governing the behavior of those in public positions.” Transparency International’s office in Finland says that Finland still faces some corruption issues related to “old-boys’ networks” where a small group of elites, sometimes with political connections, make deals and decisions in a non-transparent manner. While not a pervasive trend, Finnish authorities have investigated at least three cases involving this kind of deal-making.

The Act on a Candidate’s Election Funding (273/2009) entered into force on May 1, 2009. The act lays down provisions on candidates’ election funding and disclosure rules in parliamentary, presidential, municipal, and European Parliamentary elections. The act was amended in 2010 and the amendments entered into force on September 1, 2010. The Act on a Candidate’s Election Funding obliges presidential candidates, Members of Parliament and Deputy Members to declare their total campaign financing and the financial value of each contribution as well as the name of the donor for donations exceeding the value of EUR 1,500. The amendments to the Act on Political Parties (10/1969) concerning the funding of political parties entered into force on September 1, 2010, implementing stricter provisions concerning bribery of members of the Finnish Parliament and increasing the transparency of party funding in Finland. The National Audit Office of Finland keeps a register containing the information in the election funding disclosures and advance disclosures. The register is available at http://www.vaalirahoitusvalvonta.fi (only in Finnish and Swedish).

Transparency International’s national chapter Transparency Finland was founded in late 2003. Transparency Finland’s prime objectives are informing and educating the public about international treaties, corruption, and the consequences of corruption. In addition, Transparency Finland strives to spread awareness of the problems and threats facing good governance. More information can be found at: http://www.transparency.fi/

Finland is a signatory to the OECD Convention on Anti-Bribery. The instruments of ratification of the convention were deposited in December 1998. The amended penal code entered into force in January 1999. The convention entered into force in February 1999.

A Transparency International progress report on enforcement of the OECD Convention, released in September 2012, rated Finland’s enforcement as moderate. Inadequacies were found in adequate training for prosecutors, and the lack of awareness about foreign bribery offences and relevant laws within the public and private sectors, especially in high-risk sectors.

Finland ratified the UN Convention against Corruption in July, 2006.

Finland ratified the Council of Europe Civil Law Convention on Corruption in October 2001 (which entered into force in November 2003) and then signed the UN Convention against Corruption in December 2003. The Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime entered into force in Finland in July 1994. The UN Convention against Transnational Organized Crime was ratified in February 2003.

Finland ratified the Criminal Law Convention on Corruption (EST 173) in October 2002, and the Convention entered into force in February 2003. In 2008 and again in 2011 Finland renewed the reservations in respect to Article 12 (trading in influence) and Article 17 (jurisdiction). This renewal will come into effect on February 1, 2012 and will be valid for three years from that date.

Finland is a member of the European Partners against Corruption (EPAC), which cooperates with national police oversight bodies and anti-corruption authorities of the European Union. Finland has joined the Extractive Industries Transparency Initiative (EITI), which supports improved governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas, and mining.

Finland is a party to the 1957 European Convention on Extradition. Finland has ratified the 1959 European Convention on Mutual Legal Assistance in Criminal Matters and its 1978 Additional Protocol. Finland is a party to the 1996 Convention on Extradition between EU member States as well the 1995 Convention on Simplified Extradition Procedure within the EU.

The U.S and Finland have an extradition treaty, signed in June 1976; that entered into force in May 1980. The U.S. and Finland signed a bilateral extradition and mutual legal assistance treaty (MLAT) in December 2004. The U.S. and the EU signed a bilateral extradition and mutual legal assistance treaty (MLAT) in December 2003. The Finnish Parliament ratified the agreements (HE 85/2005) and approved the necessary implementing bilateral instruments in December 2007.

Bilateral Investment Agreements

Finland has concluded bilateral investment agreements with the following 64 countries: Azerbaijan, Albania, Algeria, Argentina, Armenia, Belarus, Bosnia-Herzegovina, Bulgaria, Chile, China, Croatia , the Czech Republic, the Dominican Republic, Egypt, El Salvador, Estonia, Ecuador, Ethiopia, Georgia, Guatemala, Hungary, India, Indonesia, Iran, Jordan, Kazakhstan, Kirghizia, , Kuwait, Latvia, Lithuania, Macedonia, Malaysia, Mauritius, Mongolia, Morocco, Mozambique, Mexico, Namibia, Nepal, Nigeria, Oman, Oriental Republic of Uruguay, Panama, Peru, Philippines, Poland, Qatar, Republic of Korea, Republic of Lebanon, Republic of Moldova, Republic of Slovenia, Romania, Russia, Slovakia, South Africa, Sri Lanka, Tanzania, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates, Uzbekistan, and Vietnam.

In September 1989, Finland and the U.S. signed a convention (TIAS 12101) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital. The convention entered into force December 30, 1990. The tax convention was amended on May 31, 2006 under a protocol signed in Helsinki.

Among other things, the protocol eliminates the source-country withholding tax on many intercompany dividends and on dividends paid to pension funds, updates the dividend article to incorporate policies reflected in the U.S. Model provision, such as those regarding real estate investment trusts (REITs), and eliminates source-country withholding royalties payment regardless of the type of intellectual property, bringing the convention in line with the U.S. Model treaty. For more see: http://www.treas.gov/press/releases/reports/js4298_attachment_finnishprotocol06.pdf

The protocol was passed by the Finnish Parliament, and the United States signed the instruments of ratification in December 2007.

OPIC and Other Investment Insurance Programs

In January 1996, OPIC and Finnvera (the former Finnish Guarantee Board) signed an agreement to encourage joint U.S.-Finnish private investments in Russia and the Baltic States. The 1996 agreement was preceded, in 1992, by a Principles of Cooperation Agreement between OPIC and the Finnish Fund for Industrial Cooperation (Finnfund).

Finland has been a member of the Multilateral Investment Guarantee Agency (MIGA) since 1988.


The Finnish labor force is highly skilled and well educated. Of the 2.46 million persons employed, 4.7 percent are employed in the primary sector, 23 percent in industry and construction and 72.3 percent in services.

Finland has a unionization rate of around 67.8 percent, and a long tradition of social dialogue. Wage formation and labor market institutions are based on legislation and agreements. The working life legislation has been prepared on a tripartite basis by government and social partners. Collective bargaining and collective labor agreements are generally binding in nature. Finland adheres to most ILO conventions; enforcement of worker rights is effective.

Regulation of the labor market - minimum wages, working hours, working conditions, etc. - to a large extent takes place through collective agreements instead of parliamentary legislation. In recent years, labor market partners at the local level have been given more flexibility in enforcing the stipulations of the collective agreements.

Any trade union and employers’ association may make collective agreements. Nearly all collective agreements are branch-specific. The Ministry of Labor and the Economy decides on the universal validity of the agreement. The parties to collective agreements are trade unions and the central organizations of employers’ associations. The role of the government has been, when needed, to support the conclusion of collective agreements by making the appropriate economic policy decisions, such as in cases involving taxes. Extensive tripartite cooperation between the government, employers groups, and trade unions characterize the country’s labor market system.

The Act on Employment Contracts is the main regulating act applied to employment relationships. It includes the minimum conditions regarding working hours, annual leave, safety conditions, etc.

The unemployment rate in November 2012 was 7.3 percent, against 6.2 percent a year earlier. The unemployed are granted compensation (a labor market subsidy) which, if linked to earnings, as has been the case for about 60 percent of the unemployed, guarantees moderate income for a period up to 500 working days. Since January 2006, the labor market subsidy has had restrictions placed upon it. People without jobs after 500 days need to demonstrate that they are actively pursuing employment in order to continue receiving the benefit.

For more info see Kela – The Social Insurance Institution of Finland: http://www.kela.fi/in/internet/english.nsf/NET/081101150015EH?OpenDocument

The temporary limits on the free movement of workers from eight EU member states were not renewed, and the restrictions applied to work permits ended in Finland in May 2006. Parliament adopted the amendments to the Aliens Act fully incorporating the directive on free movement of EU citizens into national law. The act came into force in April 2007.

Due to the aging population in Finland, all sectors of the economy are estimated to face labor shortages in the future. It is estimated between 2013–2014 the number of working-age people (15-64 yrs) will fall by an average of (17,000 people a year), causing the labor force to shrink, according to the Finnish Ministry of Finance. The labor shortage issue is likely to be amplified by low levels of immigration and difficulties getting young Finns into the work force earlier. Some Finns do not start their careers until their late 20s because of the free education system in Finland. The rapidly aging population will be a long-term problem for Finland’s economic sustainability.

Foreign Free Zones / Free Warehouse Areas

Finland has two free warehouse areas, Hanko and Oulu, and four free zones, Hamina Lappeenranta, Turku and Kemi. The duty free storage areas, which are usually run by municipal corporations, are available to domestic and foreign-owned companies. Warehousing, assembly and manufacturing are allowed in these areas, with permission from the Board of Customs. The free zone area regulations have been harmonized in the EU by the Community Customs Code.

All shipments from the United States, Canada, China and Japan containing non-manufactured wood packing materials (NWPM) of coniferous wood, must be treated and marked as such.

See the Finnish Board of Customs for more information at: http://www.tulli.fi/en/index.jsp

Foreign Direct Investment and Foreign Portfolio Investment Statistics

Finland’s outward FDI totaled EUR 3.5 billion in 2011, which is EUR 4.2 billion less than in 2010. Excluding pass-through capital, outward FDI was only EUR 0.9 billion lower than in the previous year. The financial crisis of 2008 did not affect FDI outflows to the same extent as inflows. Finnish companies have expanded business activities abroad. Finnish investors are increasingly providing direct funding to foreign investment enterprises, and these no longer raise independent funding from financial markets to the same extent as before. Consequently, growth in pass-through capital partly reflects increased funding of foreign investment enterprises via Finnish investors. In the first half of 2012, FDI flows from Finland amounted to only EUR 0.6 billion.

Direct investment inflows in 2011 totaled EUR 1.9 billion, which is EUR 3 billion less than a year earlier. Excluding pass-through capital, inward FDI was EUR 300 million higher than in the previous year. In the first half of 2012, FDI inflows amounted to just EUR 30 million.

The financial crisis that started in 2008 had an exceptionally strong impact on FDI flows to Finland by international standards. In 2002-2007, inward FDI was about EUR 5.5 billion annually, whereas in 2008-2011 average annual FDI inflows were only EUR 1.6 billion and, excluding pass-through capital, only EUR 500 million.

In 2011, the stock of outward direct investment was EUR 103.3 billion and the stock of inward direct investment was EUR 65.4 billion.

In January-June 2012, the bulk of inward portfolio investment, amounting to over EUR 17 billion, was made in long-term debt securities. This was in line with the overall trend in capital inflows in the years following the 2008 financial crisis.

Outward portfolio investment consisted mainly of shares of investment funds registered abroad, the net purchases of which totaled EUR 3.3 billion. Investment in foreign shares amounted to EUR 1.2 billion. In contrast, investment in foreign long-term debt securities decreased by nearly EUR 1.6 billion, due to re-sales abroad and redemptions. These debt securities were issued mainly by monetary financial institutions and the Finnish central government. The net sales abroad of Finnish-company shares totaled EUR 3.4 billion and that of shares in Finnish-registered investment funds totaled EUR 2.1 billion.

Looking at investor sectors, the bulk of capital outflows was accounted for by employment pension funds and other social security funds, which increased their foreign portfolio investments by EUR 3.8 billion. Finnish-registered investment funds increased their foreign investments by EUR 1.9 billion. In contrast, banks repatriated their foreign portfolio investment assets in the worth of over EUR 3 billion.

No policies exist that govern the export of capital and outward direct investment. Holders of capital, Finnish and foreign, can move funds at will.

For more FDI statistical info See Bank of Finland’s “Finland's balance of payments, annual review 2011 - 2012/I-II” http://www.suomenpankki.fi/en/tilastot/maksutase/Documents/Finland%27s_balance_of_payments_2011_2012_en.pdf

In 2011, the stock of foreign investments in Finland totaled slightly over EUR 60 billion euros, about 32 percent of GDP, while the European Union average was 42 percent.

Major U.S. investors in Finland (in terms of turnover) in 2011 included: Valtra (EUR 616 million), OMG Finland (*EUR 507 million), Hewlett-Packard (EUR 477 million), IBM (*EUR 367 million), John Deere Forestry (* EUR 360 million), Tellabs (*EUR 326 million), Accenture (* EUR 283 million), AGCO Sisu Power (EUR 281 million), Ford (EUR 264 million) Tech Data Finland (* EUR 254 million). * = consolidated turnover

For 2011 the major foreign investors in terms of turnover included: Nordea Bank and Life Assurance (*EUR 6.16 billion), Tamro (*EUR 4.22 billion), RTF Auto (EUR 2.57 billion), ABB (*EUR 2.35 billion ), Teboil (*EUR 2.27 billion), Luvata (*EUR 1.71 billion), TeliaSonera (*EUR 1.62 billion), Sampo Bank (*EUR 1.09 billion), Norilsk Nickel Harjavalta (*EUR 1.07 billion), and Finland’s Local Store (*EUR 1.03 billion).