Finland: Investing

FDI in Figures

Due to the outbreak of the Covid-19 pandemic, foreign direct investment (FDI) flows to Finland came to an abrupt halt in 2020. According to the 2022 World Investment Report published by UNCTAD, however, FDI inflows resumed in 2021, totalling almost USD 9.4 billion. Data from Statistics Finland shows that in the same year corporate acquisitions covered more than two-thirds of the total flow. Examined by country, net inward FDI flow was highest from Luxembourg (EUR 2.9 billion), Sweden (EUR 2.4 billion) and Switzerland (EUR 1.5 billion). Two-thirds of the country’s investment in 2021 went to the Uusimaa region in southern Finland, which includes the capital Helsinki and other major cities like Hyvinkää and Espoo. In the same year, the total FDI stock amounted to USD 98.5 billion (+8.8% on the previous year). According to recent data by OECD, the majority of the investment stock comes from Sweden (23.1%), the U.S. (18.4%), Germany (10.1%), Norway and Luxembourg (6.6% each). Examined by industry, inward FDIs to Finland are mainly directed towards enterprises engaged in manufacturing (28%), wholesale and retail trade, information and communication, electricity, gas, steam and air conditioning supply. According to GlobalData’s FDI Projects database, in 2021, 44% of Finland’s total inbound greenfield FDI came from communications, media, software, IT services and business and professional services.

The country’s strengths include a highly educated workforce, a knowledge-based and innovative economy, a reputation for stability and lack of corruption, competitiveness, a strategic position at the centre of a dynamic zone formed by Russia, Scandinavia and the Baltic countries and its orientation towards high technology, research and development. In 2022, the country's government announced several tax incentives for foreign investors to conduct research and development activities in Finland. Among the country’s weak points are the small size of its market, a high vulnerability to the international situation, substantial labour costs and a high degree of dependence of the country’s banking sector on the Swedish and Danish financial sectors. Furthermore, significant amendments to the Monitoring of Foreign Corporate Acquisitions Law (172/2012) entered into force, widening the scope of acquisitions that are subject to mandatory pre-approval. Overall, Finland has a very friendly business environment, as shown by the fact that the country ranks 12th out of 82 countries in the Economist Business Environment ranking; as well as 8th out of 63 countries in the World Competitiveness Index published by the International Institute for Management Development (IMD).

Foreign Direct Investment	2020	2021	2022
FDI Inward Flow (million USD)	-1,579	13,806	9,445
FDI Stock (million USD)	90,468	86,292	99,901
Number of Greenfield Investments*	143	119	86
Value of Greenfield Investments (million USD)	2,452	2,658	2,563

Source: UNCTAD, Latest data available.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries	2019, in %
Sweden	28.3
Luxembourg	14.7
Netherlands	14.7
Norway	6.4
China	4.8
Denmark	4.6
United Kingdom	3.5
Germany	3.5

Main Invested Sectors	2019, in %
Manufacturing	30.5
Financial and insurance activity	18.0
Information and communication	13.2
Real estate activities	9.4
Wholesale and retail trade; repair of motor vehicles and motorcycles	6.2
Human health and social work activities	4.6
Professional, scientific and technical activities	4.0

Source: OECD Statistics, Latest data available.

Form of Company Preferred By Foreign Investors: Limited Liability Company or public limited liability company
Form of Establishment Preferred By Foreign Investors: Limited Liability Company
Main Foreign Companies: Foreign firms active in Finland include H&M, Mango, Zara, Levi's, Lidl, Starbucks, McDonald's, etc.
Sources of Statistics: Statistics Finland

What to consider if you invest in Finland

Strong Points

The country's strong points:

Political stability
A strategic geographic location between Scandinavia, Russia and the Northern European expanding markets
A multilingual population
One of the least corrupt countries in the world
Expertise in green technology, manufacturing, health and the ICT industry
An extremely industrialised economy, based mainly on the free market and with a high work productivity
High spending in R&D
High-end industries

Weak Points

Finland's main weak points:

Geographic vulnerability
A decrease in industrial competitiveness
Fragility of the banking sector (regional exposure, especially to Russia)
A small internal market
Ageing population
Deterioration of the current account
Large household debt

Government Measures to Motivate or Restrict FDI

Finland does not discriminate between foreign and national companies. As such, support in the form grants, loans, tax benefits, equity participation, guarantees, and employee training can be available to all firms. Subsidies for start-up companies are available for establishing and expanding business operations during the first two years of activity. Investment aid can be granted to companies in the regional development areas, especially SMEs (but also bigger companies in case of significant job creation).
In order to promote foreign investment, the government has created a Team Finland network that serves as a one-stop shop for businesses.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Finland: Finland is a signatory to over 80 bilateral investment treaties. You can consult them on UNCTAD's International Investment Agreements Navigator.
International Controversies Registered By UNCTAD: Consult UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement: Arbitration Institute , Central Chamber of Commerce of Finland
ICCWBO , International Court of Arbitration, International Chamber of Commerce
ICSID , International Center for Settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency: Yes

Country Comparison For the Protection of Investors	Finland	OECD	United States	Germany
Index of Transaction Transparency*	6.0	6.5	7.0	5.0
Index of Manager’s Responsibility**	4.0	5.3	9.0	5.0
Index of Shareholders’ Power***	8.0	7.3	9.0	5.0

Source: The World Bank - Doing Business, Latest data available.

Procedures Relative to Foreign Investment

Freedom of Establishment: Foreigners can invest in Finland at the same conditions as citizens, except for sectors considered critical, such as energy, communications, defense or food supply.
Acquisition of Holdings: For defense acquisitions, all foreign investors must apply for prior approval. The same concept applies for investments in sensitive sectors of the economy (like energy, communications, food supply, etc.) from foreign investors domiciled outside the EU and European Free Trade Association area, with the Ministry of Economic Affairs and Employment having the power to stop the investment in case of conflict with “vital national interests”.
Obligation to Declare: The Ministry of Economic Affairs and Employment validates FDI and decides on the possibilities for a foreign investor to target a sector considered strategic by the Finnish state.
Competent Organisation For the Declaration: Ministry of Economic Affairs and Employment
Requests For Specific Authorisations: 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.

Office Real Estate and Land Ownership

Possible Temporary Solutions: InstantOffices, CoWorker, Match Office.
The Possibility of Buying Land and Industrial and Commercial Buildings: Non-EU/ETA investor can buy residential housing and condominiums without restrictions; however, law HE 253/2018 requires non-EU/ETA foreign individuals or entities to receive Defense Ministry permission before buying land in Finland (even in the case of companies registered in Finland, but whose decision-making bodies are for at least of one-tenth of non-EU/ETA origin).
Risk of Expropriation: 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.

Investment Aid

Forms of Aid: Foreign investors can benefit from financing aids such as long-term low-interest loans. See the Investment Promotion Agency website for more information.
Privileged Domains: Support is given in the form of grants, loans, tax benefits, equity participation, guarantees, and employee training (such measures are generally offered to both local and foreign-owned companies).
For information about the business funding measures, consult the dedicated pages on Business Finland website.
Privileged Geographical Zones: For information about the business support measures for specific sectors (including food, health, smart energies, etc.), consult the dedicated pages on Business Finland website.
Free-trade zones: The Finnish government does not provide area-specific incentives at the moment.
Public aid and funding organisations: Loans are guaranteed by the state-owned financing company Finnvera. Funding for challenging and innovative projects potentially leading to global success stories is provided by Finnish Funding Agency for Technology and Innovation (Tekes).
Finland’s Centers for Economic Development, Transport, and the Environment (ELY) may also grant funding for investment and development projects. Further information on business funding is available on Business Finland's website.

Investment Opportunities

The Key Sectors of the National Economy: Telecommunications, IT devices, information and communication technologies, renewable energies, software, environmental technologies, medical equipment, biotechnology, safety and security, travel and tourism services, development of Arctic natural resources, franchises.
High Potential Sectors: Best franchising opportunities lie in underdeveloped areas of B2B services (such as personnel, building repair/maintenance, training and IT) and consumer services (cleaning services, interior design, nursing, etc.).
Telecommunications is a highly competitive sector which is growing quickly; as well as e-commerce. Finland also serves as an excellent gateway to the emerging computer software markets of Russia and the Baltic countries. The overall high level of public and private investment in biotechnology, infrastructure and technical know-how offer opportunities for foreign firms.
Privatization Programmes: Finland has opened up electricity, gas, telecommunications postal and rail markets in recent years to meet EU requirements. Sales of direct holdings of the State totaled USD 1.72 billion from 2010 to 2019.
For constant updates on privatization programs, please refere to the official Government ownership steering portal.
Tenders, Projects and Public Procurement: Tenders Info, Tenders in Finland
Ted - Tenders Electronic Daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: The state-owned betting company Veikkaus has exclusive rights in the market for legal gambling services.
The state also has a monopoly on the retail sale of alcoholic beverages.
The State can approve FDI in areas of vital national (defense and security) or strategic interest (energy, food supply or communications).

Finding Assistance For Further Information

Investment Aid Agency: Invest in Finland (official investment promotion agency for Finland)
Findland Chamber of Commerce (international network of the Finnish chambers of commerce)
Finland’s Centers for Economic Development, Transport, and the Environment (ELY)
Other Useful Resources: Enterprise Finland
Finnavera (financing company owned by the State of Finland)
The Finnish Innovation Fund Sitra
Doing Business Guides: Doing Business in Finland (UHY)
Finland - Market Overview (The U.S. Department of Commerce)
Doing business in Finland (Thomson Reuters Practical Law)

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