As we enter 2025, businesses in Finland, especially listed companies and small enterprises, must prepare for significant changes in company law. These updates, driven by both national amendments and EU directives, will have a direct impact on governance structures, tax obligations, and legal compliance. Below is an overview of the key changes that businesses should be aware of.
1. Gender Balance in Governance: A Push for Equality
A major change involves amendments to the Public Limited Liability Companies Act and the Chamber of Commerce Act, designed to improve gender balance in the governance of listed companies. These amendments implement an EU Directive requiring at least 40% representation of the under-represented sex on the boards of listed companies.
What this means for businesses: By June 30, 2026, all listed companies in Finland must comply with this directive. This will be a significant step towards achieving gender equality at the highest levels of corporate governance. Consequently, companies must review their current board compositions and, if necessary, adjust their recruitment strategies to meet the new requirements.
2. VAT Rate Changes: What’s Affected?
Starting in 2025, Finland will increase the VAT rate for goods and services that are currently subject to a 10% reduced VAT rate. The new rate will increase to 14% for several key sectors, including:
- Books
- Medicines
- Sports services
What this means for businesses: Companies in these sectors must prepare for the impact of higher VAT on their pricing structures and financial planning. This change could also influence consumer spending patterns, as increased VAT may lead to higher costs for end-users.
3. VAT Reduction for Small Enterprises: A Thing of the Past
As of January 1, 2025, small businesses in Finland will no longer benefit from VAT reductions. The VAT reduction, which exempted small enterprises from VAT on income below the VAT threshold, will be completely abolished.
What this means for businesses: Small enterprises will need to adjust their pricing strategies, accounting processes, and overall tax planning. The removal of this VAT reduction could lead to an increased tax burden, requiring businesses to reassess their financials and potentially raise prices to cover additional tax expenses.
4. Amendments to the Business Ban Act: Implications for Corporate Governance
In line with the implementation of the Company Law Directive, Finland is introducing changes to the Business Ban Act, scheduled to take effect by January 1, 2025. These amendments could have significant implications for corporate governance and liability issues.
What this means for businesses: Companies must carefully review the amendments and assess their potential effects on business operations, especially concerning the personal liabilities of executives and board members. Ensuring compliance with the updated Business Ban Act is crucial to avoid legal complications.
What Should Businesses Do Next?
These legislative changes are pivotal for Finnish businesses. Here are the key actions businesses should take:
- For Listed Companies: Review governance structures to ensure compliance with gender balance regulations by June 2026. Develop recruitment and diversity strategies that align with the new legal requirements.
- For Small Enterprises: Reassess your business model and pricing strategy regarding of the VAT changes. Prepare for a higher tax burden and consider the long-term financial impact.
- For All Businesses: Stay informed about amendments to the Business Ban Act and ensure your governance practices align with the upcoming changes.
These changes reflect Finland’s commitment to enhancing corporate governance, improving tax policies, and ensuring fair and efficient business practices. By staying proactive and adjusting to these updates, businesses can navigate the evolving legal landscape and remain compliant with the new regulations.
How 360 Business Law Can Help
As Finland navigates these significant changes in company law, businesses may need expert legal guidance to ensure compliance and manage the impact on their operations. 360 Business Law offers tailored legal services to businesses of all sizes, helping them stay ahead of regulatory updates. With expertise in corporate governance and legal compliance, 360 Business Law can support companies through these transitions. Whether you are a listed company needing to adjust board compositions or a small enterprise grappling with VAT changes, our team is equipped to offer comprehensive advice and solutions. Trust us to help your business thrive in an evolving legal landscape.