Self-employment is becoming increasingly popular in Finland and is strongly encouraged by the government through various start-up grants. To become self-employed in Finland, you have two options: you can either set up your own business or use an umbrella company.
If you want to become self-employed by setting up a business/legal entity, the first thing you need to do is choose a business type. There are a number of different business/company types in Finland, ranging from simply being able to invoice clients to establishing a limited company and employing workers.
If you are part of the Finnish social security system and you are unemployed, you can apply for a startup grant from TE-Palvelut. Read our how to set up a business in Finland article for a detailed, step by step guide on the whole process.
If you do not want to set-up your own business, you can use an umbrella company, also known as light entrepreneurship (kevytyrittäjyys). This means you use a third party company (the umbrella company) to invoice your clients. Your clients pay the umbrella company and the umbrella company then pays you a wage after deducting your social security. In this way, you do not need to worry about sorting out your social security contributions, but you still have the same flexibility as if you are self-employed e.g. you choose your clients, your fees and your working hours.
Umbrella companies can be a great option to start with, especially to test your business idea, but setting up your own business can be more financially rewarding in the long-term as you can benefit from tax deductions and government funding.
If you are from an EU/EEA member country or Switzerland, you don’t need any special permits to become self-employed. You just need to register your right to stay in Finland and get a Finnish personal identity code.
If you are not from an EU/EEA member country and you have a residency permit, you do not need to apply for any extra permits. If you do not have a residence permit, you can apply for a startup permit. This allows you to reside in Finland and set up a company. Contact Business Finland for more information.
If you chose to use an umbrella company, they will often sort out all the paperwork for you. If you decide to set up your own company, you need to report your new business to the Finnish Patent and Registration Office (PRH), and the Tax Administration.
The Finnish social security system is funded by employee and employer contributions. When you are employed, you (as the employee) pay social security contributions and your employer also pays social security contributions on your behalf. If you are self-employed, you need to pay all your social security contributions yourself.
To benefit from the social security system, you need to arrange pension insurance under the Self-Employed Persons’ Pensions Act (YEL).