Finland has a reputation as one of the most expensive countries in the world.
A closer examination shows, however, that the country compares rather favourably not only to the rest of the Nordics but also to many other countries in Western Europe – especially in terms of the cost of doing business.
It has become a cost-effective business environment due to both direct factors, such as low taxation and labour costs, and indirect factors, such as the reliability of the national energy system.
Corporate income is currently taxed at a flat rate of 20 per cent in Finland. The tax rate is below not only that of Denmark (22%), Sweden (22%) and Norway (24%), but also that of Italy (28%), Germany (30%), France (34%) and the United States (39%), according to the Organization for Economic Cooperation and Development (OECD).
Eurostat, in turn, has reported that average labour costs decreased only in three countries in the European Union between January and March, by 2.7 per cent in Finland and by 0.1 per cent in both Luxembourg and the Netherlands.
Finland’s labour costs are expected to remain competitive also going forward. FDI Intelligence, a special division of the Financial Times, has forecast that labour costs in the country will only grow by 1.8 per cent in 2017.
The low corporate tax rate has already propelled the country into becoming one of the most attractive destinations for foreign direct investment in Europe.
Cheap electricity, reliably
Businesses in Finland also have access to one of the most reliable supplies of affordable electricity in the world.
The European Commission has published a chart indicating that industrial electricity costs in the country were the second lowest in the EU-28 in the second half of 2015, standing at roughly €0.07 per kilowatt-hour.
The national power grid achieved a transmission reliability of 99.99985 per cent in 2016, according to Fingrid, the operator of the state-owned transmission grid. The system minute, a widely used measure of the reliability of transmission systems, had a value of 0.41.
The reliability extends also to other aspects of the national infrastructure, creating new opportunities for businesses and citizens alike.
Finland, regardless, is not about to rest on its laurels but is committed to developing its already impressive infrastructure even further, as evidenced by the recent launch of the most advanced test environment for fifth-generation wireless services in the world, the 5G Test Network Finland (5GTNF).