Investment and foreign direct investment facilitation and incentives

Finland encourages investment and welcomes foreign direct investment. Today 100% foreign ownership is recognized in most sectors and there is no discrimination against foreign companies in favour of domestic ones. All companies registered in Finland (regardless of domestic or foreign ownership) have access to government assistance under special business aid development programs as well as to the EU Structural Funds.

Finland encourages businesses through grants, tax reductions, loans, loan guarantees, reduced loan rates, regional incentives, support for exports (e.g. market research, brochures) and support (grants and loans) for research and development. In practical terms, the final investment funding/financing scheme of a investment may combine various instruments.


Grants for new investments


The Ministry of Employment and the Economy (TEM) provides subsidies for investments in the form of regional investment aid, aid for small businesses or development aid for small and medium size enterprises (SMEs) and aid for improvement of the operational environment of the undertaking. Up to 35% of the total costs of an investment may be covered by this grant. Grant percentages are differentiated according to type of business and development area:

• Highest funding support goes to SMEs (less than 250 employees and / or less than 40M€ annual turnover and / or total assetsÂ’ value less than 27M€). Small companies may receive a grant in the first year of their operation of up to 45% of the cost of their payroll.

• SMEs located in regions suffering from high unemployment are also eligible for the highest % of support. Finnish regions are distinguished into three types of development areas; 1, 2, and 3. The % of support varies from 35% in development area 1 (Kainuu) to 15% in development area 3.

This type of support is handled by the regional Labour and Enterprise Centres (ELY Keskus).

Incentives for technological research investments


Investments that include technological research and product development may benefit from additional sources of support. It is granted in the form of grants and low interest loans, to all types of companies, including large companies and academic institutions. The grant may reach 50% of the cost of the payroll, the cost of purchasing raw materials, machinery and the purchase and registration of patents and more.

This type of support is handled by TEKES (National Organisation for Research and Development).


Tax benefits


Tax benefits are granted only to SMEs in qualifying industries, operating in Development Areas. For example, Kainuu is a Development area 1 and tourism is prioritised. Tax benefits are planned to enable accelerated depreciation of fixed assets so as to allow full depreciation within 3 years, including the year of purchase.


Process


In Finland, establishing a company is not complicated, bureaucracy is very little. All public administrative work is done either in Finnish or in Swedish. Private financial agreements and transactions may also be in English. Once the company is established, and provided that there is a detailed business plan, the investor will need to visit and discuss with all the necessary local actors before the funding scheme is finalised and granted. Requesting investment support is very much a local, personalised process. The investorÂ’s team must be prepared to collaborate with local experts of both the private and the public sector.