Branch Office vs Finnish Subsidiary (Oy): Which to Choose in 2026

A foreign company expanding into Finland has two main routes: register a branch office of the existing company (sivuliike in Finnish), or incorporate a Finnish subsidiary, a private limited company called an osakeyhtiö, or Oy for short. Both end up paying the same 20 percent Finnish corporate tax on the profit they make here, so the decision rarely turns on the tax rate. It turns on liability, how you move profit back home, what you have to file every year, and how much corporate structure you want to maintain. This guide compares the two on registration, tax, liability, accounting, VAT and employer duties, and ends with a decision table you can use to pick.

What a branch office is

A branch is not a separate company. It is a part of your existing foreign company that carries on business in Finland from a fixed place of business here, in the name of and for the benefit of the foreign company. Legally, the Finnish branch and the head office are the same legal person. The contracts the branch signs are your company's contracts, the debts it takes on are your company's debts, and the profit it earns is your company's profit, taxed partly in Finland.

The branch is registered in the Finnish Trade Register kept by the Finnish Patent and Registration Office (PRH) and gets its own Finnish Business ID (Y-tunnus). That Business ID is what it uses for invoicing, tax filings and dealings with Finnish authorities. But behind the Business ID there is no new company, only your existing one wearing a Finnish name tag.

What a Finnish subsidiary (Oy) is

A subsidiary is a new Finnish private limited company, an Oy, that your foreign company owns. The Oy is a separate legal person under Finnish law. It has its own board, its own shares, its own assets and debts, and its own financial statements. Your foreign company is simply the shareholder.

Two features make the Oy an easy vehicle for foreign owners. First, Finland removed the minimum share capital requirement for private limited companies in 2019, so you can incorporate an Oy with zero share capital. Second, the Oy can be fully foreign owned. There is no requirement that shareholders be Finnish. The board does need at least one member resident in the European Economic Area, and if that is not possible, PRH can grant an exemption on application.

Registration at PRH: how the two routes differ

Both routes go through the Finnish Trade Register at PRH, but the paperwork is different.

Branch: the foreign company files a start-up notification with the Trade Register, together with documents about the foreign company itself, such as an extract from its home register and its constitutive documents, translated where required. If the foreign company is from outside the European Economic Area, it needs a permit from PRH before the branch can be registered. EEA companies do not need the permit. The branch must also name a representative in Finland who is authorised to receive summonses and other official notices on behalf of the company.

Oy: the founders sign a memorandum of association and articles of association and file them with the Trade Register. Finnish residents with local bank credentials can usually register online, but foreign founders without Finnish e-identification typically use the paper process, which takes longer and involves notarised or otherwise verified documents. The company exists as a legal person once PRH registers it.

In both cases you should budget a few weeks for processing rather than a few days, especially when documents come from abroad and need translations. Neither route requires you to be physically present in Finland, and both can be handled remotely with the right paperwork.

Taxation: same rate, different profit repatriation

On corporate income tax the two structures land in the same place. Finland taxes corporate profit at a flat 20 percent. A Finnish Oy pays that on its worldwide profit, because a company registered in Finland is a Finnish tax resident. A branch pays it on the profit attributable to its Finnish operations, because a registered branch with a fixed place of business here normally constitutes a permanent establishment. If all the business happens in Finland, the corporate tax bill comes out much the same either way.

The real difference appears when the profit goes home.

A branch has the simpler road. After Finnish tax, the branch's profit already belongs to the foreign company, because they are one legal entity. Moving the money from the Finnish bank account to the head office account is an internal transfer, and Finland does not levy a withholding tax on it. No dividend decision, no distribution formalities.

An Oy pays its profit out as dividends, and that adds a second layer to think about. When a Finnish company pays a dividend to a foreign parent, Finnish withholding tax can apply. Whether it actually does, and at what rate, depends on the tax treaty between Finland and the parent company's country. Inside the EU, a qualifying parent company can often receive the dividend free of Finnish withholding under the parent-subsidiary directive. Outside those cases the treaty rate governs, and the rates vary by country and ownership share, so check the specific treaty between Finland and your home country before you plan distributions. We go through the dividend and withholding mechanics in more detail in our guide on taxes for a foreign-owned company in Finland.

In short: the branch wins on repatriation simplicity, while the Oy's dividend position ranges from zero withholding to a real cost depending on where the parent sits. Do not decide this point on a blog post, ours included. Read the treaty or have someone read it for you.

Liability: the biggest structural difference

This is where the two structures genuinely diverge. Because a branch is the same legal person as the head office, everything the branch does in Finland is done on the foreign company's full balance sheet. If the Finnish operation is sued, runs up debt or hits a warranty claim, the claim reaches the parent directly. There is no wall.

An Oy builds that wall. The subsidiary's creditors can normally reach only the subsidiary's assets. The parent's risk is, as a rule, limited to what it has invested in the Oy. For a foreign group testing a new market, that ring-fencing is often the single strongest argument for the subsidiary, especially in businesses with real contract or product liability exposure.

Accounting and financial statement obligations

Neither route lets you skip Finnish bookkeeping. Both a branch and an Oy must keep books for the Finnish operations under the Finnish Accounting Act, file Finnish corporate tax returns, and handle Finnish VAT and payroll reporting if those apply.

The differences are in the annual statements. An Oy prepares its own financial statements under Finnish rules and files them with the Trade Register, where they become public. Depending on its size, an Oy may also need a statutory audit; small companies below the thresholds in the Auditing Act are exempt, and many new subsidiaries start below them.

A branch does not prepare separate statutory financial statements of its own in the same way. Instead, the foreign company files a copy of its own financial statements with the Finnish Trade Register, prepared under its home rules. The branch still needs proper bookkeeping in Finland, because the Finnish tax return has to show the profit attributable to the Finnish operations, and that number has to come from somewhere defensible.

One practical note from the bookkeeping side: allocating profit to a branch is often more judgement-heavy than accounting for a standalone Oy. When the same legal entity buys, sells and manages across two countries, someone has to decide which income and costs belong to Finland. An Oy's numbers are its own by construction, which tends to make the accounting cleaner and the tax return less arguable.

VAT registration

VAT does not care much which structure you picked. If the branch or the Oy sells goods or services in Finland that are subject to VAT, it registers for VAT and charges Finnish VAT on its sales. The standard rate is 25.5 percent, with reduced rates for specific goods and services. One point worth knowing: a foreign business with no fixed establishment in Finland has no registration threshold, so VAT liability can start from the first sale. A registered branch with a fixed place of business in Finland is normally treated as established here, and an Oy always is. The full picture, rates, thresholds and filing periods, is in our VAT in Finland guide.

Employer obligations

If you hire people in Finland, the employer obligations are the same whichever structure signs the employment contracts. The employer registers with the Tax Administration's employer register when it pays wages regularly, withholds tax on salaries, takes out statutory pension insurance for employees, arranges the other mandatory employment insurances, and reports every salary payment to the national Incomes Register. Finnish payroll runs on tight monthly reporting deadlines, so this is usually the first thing a new market entrant outsources.

The choice of structure does not create or remove any of these duties. A branch employing staff in Finland has the same payroll obligations as an Oy employing the same staff.

Which should you choose?

Here is the decision in one table. It is a starting point, not legal advice, and the withholding tax line in particular depends on your country's treaty with Finland.

If the table leaves you between the two, a rough rule of thumb: companies that stay in Finland pick the Oy far more often than the branch, because limited liability and local credibility outweigh the dividend paperwork in most long-term setups. The branch earns its keep in shorter engagements and in groups whose treaty position makes dividends expensive.

And if you are still choosing between entering Finland at all versus selling in from abroad, note that a foreign company can become taxable in Finland without registering anything, by creating a permanent establishment through staff, premises or a long project. That question is worth checking before the structure question.