58489 Finland © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. 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ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Finland. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Finland is ranked 13 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Finland - Compared to global good practice economy as well as selected economies: Finland's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 13 Starting a Business 32 Dealing with Construction Permits 55 Registering Property 26 Getting Credit 32 Protecting Investors 59 Paying Taxes 65 Trading Across Borders 6 Enforcing Contracts 11 Closing a Business 6 2 Summary of Indicators - Finland Starting a Business Procedures (number) 3 Time (days) 14 Cost (% of income per capita) 1.1 Min. capital (% of income per capita) 7.9 Dealing with Construction Permits Procedures (number) 18 Time (days) 66 Cost (% of income per capita) 134.2 Registering Property Procedures (number) 3 Time (days) 14 Cost (% of property value) 4.0 Getting Credit Strength of legal rights index (0-10) 7 Depth of credit information index (0-6) 5 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 14.9 Protecting Investors Extent of disclosure index (0-10) 6 Extent of director liability index (0-10) 4 Ease of shareholder suits index (0-10) 7 Strength of investor protection index (0-10) 5.7 Paying Taxes Payments (number per year) 8 Time (hours per year) 243 Profit tax (%) 15.9 Labor tax and contributions (%) 27.7 Other taxes (%) 1.0 Total tax rate (% profit) 44.6 Trading Across Borders Documents to export (number) 4 Time to export (days) 8 Cost to export (US$ per container) 540 Documents to import (number) 5 Time to import (days) 8 Cost to import (US$ per container) 620 3 Enforcing Contracts Procedures (number) 32 Time (days) 375 Cost (% of claim) 13.3 Closing a Business Recovery rate (cents on the dollar) 89.4 Time (years) 0.9 Cost (% of estate) 4 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.14 0.12 0.10 Doing business has 0.08 become easier (DB 0.06 change score) 0.04 0.02 0.00 Doing business has -0.02 become more difficult or more -0.04 France Denmark Germany Finland Norway Iceland costly 6 1. Benchmarking Starting a Business Regulations: Finland is ranked 32 overall for Starting a Business. Ranking of Finland in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Finland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Finland 3 14 1.1 7.9 Comparator Economies Denmark 4 6 0.0 26.0 France 5 7 0.9 0.0 Germany 9 15 4.8 0.0 Iceland 5 5 2.3 12.0 Norway 5 7 1.8 20.0 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Finland Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 29 32 Procedures (number) 3 3 3 3 Time (days) 14 14 14 14 Cost (% of income per capita) 1.0 1.0 0.9 1.1 Min. capital (% of income per capita) 7.7 7.4 7.2 7.9 3. The following graphs illustrate the Starting a Business sub indicators in Finland over the past 4 years: 9 Starting a Business Summary - Finland This table summarizes the procedures and costs associated with setting up a business in Finland. STANDARDIZED COMPANY Legal Form: Private Limited Company (Oy) City: Helsinki Registration Requirements: No: Procedure Time to complete Cost to complete 1 Deposit the paid-in share capital in a bank; pay the registration fee and 1 no charge get a receipt 2 Submit a single start-up notification form to the NBPR (National 13 EUR 350 Board of Patents and Registration) and the Tax Administration. 3 * File at a private insurer for pension insurance, accident insurance, and 1 no charge medical insurance of employees * Takes place simultaneously with another procedure. 10 Starting a Business Details - Finland Procedure 1 Deposit the paid-in share capital in a bank; pay the registration fee and get a receipt Time to complete: 1 Cost to complete: no charge Comment: The paid-in share capital must be paid in full into the company's bank account. According to the new Companies Act, the subscription price may be paid to a bank account abroad. However, the bank account should correspond to a bank account of a Finnish depository bank or a branch of a foreign credit company in Finland. There is no legal maximum for the company's share capital. However, the company's articles of association may limit the maximum capital. To open a bank account, the company must produce at least the following documentation: - The memorandum of association (a copy). - The minutes of the meeting of the board of directors containing a resolution to open a bank account and the persons authorized to make withdrawals from the account. - A description of the nature of future banking transactions. - A detailed description of the company's field of business. No withdrawals may be made from the account until the company has been registered and has provided the bank with proof of registration. The company's auditors shall issue a written statement confirming the payment of the share capital. Procedure 2 Submit a single start-up notification form to the NBPR (National Board of Patents and Registration) and the Tax Administration. Time to complete: 13 Cost to complete: EUR 350 Comment: A basic declaration to the Trade Register must be filed (in either Finnish or Swedish) as specified on forms issued by the National Board of Patents and Registration. For each type of business, a separate basic declaration form must be used. The forms are available from the National Board of Patents and Registration, regional tax offices, local tax offices, Centers for Economic Development, Transport and the Environment ("ELY" Centers), local register offices, and Chamber of Commerce and Enterprise Agencies. All registrations to the Trade Register and to the Tax Administration are performed with the same basic declaration. Copies of any licenses for licensed trades are required, where applicable. If the company has employees, the company must be entered into the Employer Register, according to Section 31 of the Preliminary Taxation Act. When the basic declaration is submitted, a certificate of the company's business identification number may be obtained at a fee of EUR 5. This certificate allows companies to use their bank accounts before registration has been completed. Procedure 3 File at a private insurer for pension insurance, accident insurance, and medical insurance of employees Time to complete: 1 Cost to complete: no charge 11 Comment: Under the statutory pension insurance scheme, an employer must subscribe its employees for pension insurance with a pension provider handling earnings-related pensions. Supplemental pension insurance is optional. The employer also pays the pension institution statutory employee earnings-related contributions: accident insurance, unemployment insurance, and group life assurance premium. A social security contribution is also payable to the Regional Tax Office. The employer must insure its employees against accidents and occupational diseases, according to Section 8 of the Employment Accidents Act. In addition, certain collective labor agreements require that employers provide their employees with group life insurance. No proof of insurance is needed to start operations. 12 13 1. Benchmarking Dealing with Construction Permits Regulations: Finland is ranked 55 overall for Dealing with Construction Permits. Ranking of Finland in Dealing with Construction Permits - Compared to good practice and selected economies: 14 The following table shows Dealing with Construction Permits data for Finland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Finland 18 66 134.2 Comparator Economies Denmark 6 69 61.7 France 13 137 23.6 Germany 12 100 61.8 Iceland 18 75 19.6 Norway 14 252 43.8 15 2. Historical data: Dealing with Construction Permits in Finland Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 49 55 Procedures (number) 18 18 18 18 Time (days) 66 66 66 66 Cost (% of income per capita) 122.3 118.3 119.7 134.2 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Finland over the past 4 years: 16 Dealing with Construction Permits in Finland The table below summarizes the procedures, time, and costs to build a warehouse in Finland. BUILDING A WAREHOUSE City: Helsinki Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain extract from the trade register 1 day EUR 21 2 * Obtain building permit maps and extract from the real estate registry 12 days EUR 170 3 * Obtain report on the height of the intended construction 7 days no charge 4 * Obtain official opinion on the connection of the wastewater drain and 7 days no charge water pipeline 5 * Schedule start-up meeting 7 days no charge 6 Obtain building permit 38 days EUR 6,919 7 Receive foundation work inspection 1 day no charge 8 Receive location inspection from the real estate office 1 day EUR 1,520 17 9 Submit electric wiring designs to Helsinki Energy and receive inspection 1 day no charge 10 Receive structure inspection 1 day no charge 11 Receive ventilation inspection 1 day no charge 12 Receive sewer and water pipeline inspection 1 day no charge 13 * Request and obtain electricity connection 3 days EUR 20,000 14 * Request and obtain water connection 3 days EUR 13,700 15 * Request and obtain phone connection 3 days EUR 389 16 Receive fire inspection from the Public Rescue Service 1 day no charge 17 Receive final inspection 1 day no charge 18 Obtain occupancy permit 4 days no charge * Takes place simultaneously with another procedure. 18 Dealing with Construction Permits Details - Finland Procedure 1 Obtain extract from the trade register Time to complete: 1 day Cost to complete: EUR 21 Agency: Trade Register Comment: This procedure is usually required when the building permit applicant is a company. It takes about 7 days if ordered by mail. The extract from the trade register costs 13 + delivery and invoicing cost 8. Procedure 2 Obtain building permit maps and extract from the real estate registry Time to complete: 12 days Cost to complete: EUR 170 Agency: Real Estate Registry Comment: The Real Estate Office issues the building permits maps, which must be attached as originals to the application. The applicant cannot use a map that is older than 3 months. The fee includes also the extract from the real estate register and the report of the build-site height. Procedure 3 Obtain report on the height of the intended construction Time to complete: 7 days Cost to complete: no charge Agency: Real Estate Office Comment: Obtained from the Real Estate Office, the report is required to ensure that the height of the new building is in proportion with other buildings in the same neighborhood. Procedure 4 Obtain official opinion on the connection of the wastewater drain and water pipeline Time to complete: 7 days Cost to complete: no charge Agency: HSY Helsinki Region Environmental Services Authority, HSY Water Comment: The official opinion on the connection of the wastewater drain and the water pipeline must be attached to the building permit application if the building will be connected to the public water distribution system and to the public sewerage system. The opinion is issued by the municipal organization in charge of the water supply (in the greater Helsinki area, Helsinki Water). The cost is included in the connection charge. Procedure 5 Schedule start-up meeting Time to complete: 7 days 19 Cost to complete: no charge Comment: BuildCo must set a date for a startup meeting with the building supervision authority and convene all necessary persons to the meeting. The meeting must be held before the beginning of construction (some excavation work can be done, but the foundation may not be laid before the meeting). At a minimum, the following persons should attend the meeting: the person starting the building project, the head designer, and the site manager. The meeting attendees must be agreed with the building supervision authority. Procedure 6 Obtain building permit Time to complete: 38 days Cost to complete: EUR 6,919 Agency: Municipal Building Inspection Comment: The building permit is issued by the Municipal Building Inspection. The applicant is required to provide the needed information to the local building supervision authority to decide on the building permit application. The quality and the extent of the required information depend on the project features. The following documentation is usually required for warehouse projects: - The completed application form issued by the building supervision authority. The owner or the holder of the building site in question must sign the form. If there are several owners or holders, all must sign the application form. - A power of attorney is required only if a representative files the building permit application. (This is not applicable to the warehouse project considered here.) - The establishment of the ownership title is required because the building permit can be granted only based on the application made by the owner or the holder of the building site. Usually one of the following documents is presented to the building supervision authority: -- The deed of sale of the real estate. -- The lease contract. -- The deed of title. - The extract from the trade register. - The building permit map and the extract from the real estate registry. - The decision to deviate from the provisions, regulations, prohibitions, and other restrictions on building and other action must be attached to the application, in original, if the project requires such a decision. - The certificate of the decision's legal validity must be presented before the actual launching of the building project. (This is not applicable to the warehouse project.) - The environmental permit is required if the use of the building poses a threat of environmental pollution. The decision on the building permit can be postponed until the environmental permit is attached to the application. (This is not applicable to the warehouse project.) - Three master drawings must be attached to the application. One document will be archived with the building supervision authority, and the other will be returned to the applicant with the final decision. The master drawings to be followed in construction master drawings are approved in connection with the grant of the building permit. - Report of the height of the building site. - The ground investigation report of the building site. If needed, also enclosed with the building permit application will be an account of the site's health effects and ground levels, and the type of foundation and any other measures required as a result. This report may be produced by BuildCo. - The official opinion on the connection of the wastewater drain and the water pipeline. - Notification to the neighbors. When the building permit application is filed with the building supervision authority, the neighbors must also be notified. The applicant may do this personally by using the official form, obtained from the building supervision 20 authority. Otherwise, subject to a fee, the applicant may request the building supervision authority to conduct the notification. - Forms for official statistics. The building supervision authority must deliver information on building projects to the Population Register Center. Thus, the forms in question must be attached to the application. These forms are available at the building supervision authority or at the public printing center. - The official form on the building designer. Every building project must have a qualified head designer in charge of the construction design and the quality of the design as a whole. - Other documents are required, as follows: -- Working designs. -- Calculation of permitted building volume. -- Report on fire load, parking spaces, handling construction waste; on environmental issues, with photographs (can be produced by BuildCo). -- Constructional drawings and strength calculations and drawings on ventilation and heating devices, on water and sewage devices, and on bomb shelters and the notification of the bomb shelter. The price is determined by the building size: EUR 5 per sq. m. plus EUR 419 for each building. The total the cost for the warehouse would be EUR 6419. Procedure 7 Receive foundation work inspection Time to complete: 1 day Cost to complete: no charge Agency: Municipality Comment: The ground inspection and the setting out of the building's location and level are conducted after the foundation work is completed. Procedure 8 Receive location inspection from the real estate office Time to complete: 1 day Cost to complete: EUR 1,520 Agency: Real Estate Office Comment: The location inspection must be requested from the Real Estate Office after the foundation work is completed. This inspection is held to determine that the building height and location are in accordance with the master drawings. Procedure 9 Submit electric wiring designs to Helsinki Energy and receive inspection Time to complete: 1 day Cost to complete: no charge Agency: Helsinki Energy Comment: The electricity designer must deliver, for inspection and approval, the electrical wiring design for the connection and metering to Helsinki Energy's connection service. BuildCo must enter into a connection agreement about a month before the actual construction of the connection cable. The electricity contractor conducts the commissioning inspection of the metering center 21 and delivers the request for metering to Helsinki Energy at least 4 working days before the requested date. The electricity contract must be signed before the metering. The electricity contractor conducts the commissioning inspection of the electrical installation before handing over the entity. BuildCo must deliver the final drawings to Helsinki Energy for completing the drawings archives to ensure that the drawings are available if needed. The filing does not have a cost Procedure 10 Receive structure inspection Time to complete: 1 day Cost to complete: no charge Agency: Municipality Comment: The inspection of the building structure is conducted after the load-bearing structure and connected insulation works are completed. Procedure 11 Receive ventilation inspection Time to complete: 1 day Cost to complete: no charge Agency: Municipality Comment: The ventilation inspection is conducted after the completion of the exit flue and the ventilation installation. Procedure 12 Receive sewer and water pipeline inspection Time to complete: 1 day Cost to complete: no charge Comment: The inspection of the sewer and water pipeline fittings is conducted after the completion of these fittings. Procedure 13 Request and obtain electricity connection Time to complete: 3 days Cost to complete: EUR 20,000 Agency: Helsinki Energy Comment: The electricity connection charges are determined by the fuse size of building. Up-to-date fees can be found at the Helsingin Energia Web site (www.helsinginenergia.fi). Procedure 14 Request and obtain water connection Time to complete: 3 days Cost to complete: EUR 13,700 22 Agency: HSY Helsinki Region Environmental Services Authority Comment: HSY Helsinki Region Environmental Services Authority, is responsible for all matters of connections to the water distribution and sewerage systems. The procedure for ordering a connection is as follows: - Helsinki Water customer service staff provide the new customer with a statement on the connection. The street address of the plot or property is required, as is the owner's name, address, and phone number. - Helsinki Water provides the customer with a preliminary estimate of the recently introduced connection charge. - The customer should acquire a building permit for the plot. - After the customer has obtained the building permit, Helsinki Water will send the customer the connection charge notice. The property owner can file a complaint within 14 days of receiving the notice. Unless a complaint is made, the proposed charge will be considered as having been accepted by the customer. - Water service connection and meter installation will be conducted after the connection charge is paid. The customer is responsible for the construction and maintenance of the connection pipes and conduits and their financing. Before the start of on-site construction work, a supervisor responsible for the construction of the water facility and sewerage system--approved by the municipal building control officials--should be assigned. Helsinki Water always takes care of installation of water meters with seals, water main connection with water-sealed joints, and connections to the sewerage system on the customer's properties. Service charges will be invoiced at rates valid at the time of the order. - A connection agreement is concluded. - The invoicing procedure is settled. The fee is now EUR 4761.66 based on the building area (1300.6 sq. m.) and the nature of the building ( a warehouse). The fee which includes a water pipe and a sewer connection is EUR 1850.74. Thus, the total cost is EUR 6612.40. Procedure 15 Request and obtain phone connection Time to complete: 3 days Cost to complete: EUR 389 Agency: Helsinki Telephone Comment: The telephone subscription can be ordered, for example, from Elisa Oyj, which is a publicly listed company. The charge for setting up the subscription is EUR 99 (basic connection). Usually, the installation requires that a mechanic come to the building to finish the installation. The hourly charge of the mechanic is EUR 84. The hours required depend on the features of the building. It is assumed here that the mechanic must work for 4.2 hours to finalize the connection. Procedure 16 Receive fire inspection from the Public Rescue Service Time to complete: 1 day Cost to complete: no charge Agency: Public Rescue Service Comment: Procedure 17 Receive final inspection 23 Time to complete: 1 day Cost to complete: no charge Agency: BuildCo Comment: A building, or a part thereof, shall not be commissioned before it has been finally inspected and approved for use. The minutes of the commissioning inspection of the electrical installation (drafted by the electricity contractor) are necessary for obtaining a use or occupancy permit. This inspection can be performed by BuildCo, provided that the company has qualified employees. Procedure 18 Obtain occupancy permit Time to complete: 4 days Cost to complete: no charge Agency: Municipality Comment: 24 25 1. Benchmarking Registering Property Regulations: Finland is ranked 26 overall for Registering Property. Ranking of Finland in Registering Property - Compared to good practice and selected economies: 26 The following table shows Registering Property data for Finland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Finland 3 14 4.0 Comparator Economies Denmark 3 42 0.6 France 8 59 6.1 Germany 5 40 5.1 Iceland 3 4 2.4 Norway 1 3 2.5 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 27 2. Historical data: Registering Property in Finland Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 27 26 Procedures (number) 3 3 3 3 Time (days) 14 14 14 14 Cost (% of property value) 4.0 4.0 4.1 4.0 3. The following graphs illustrate the Registering Property sub indicators in Finland over the past 4 years: 28 Registering Property in Finland This topic examines the steps, time, and cost involved in registering property in Finland. STANDARDIZED PROPERTY Property Value: 1,591,319.24 City: Helsinki Registration Requirements: No: Procedure Time to complete Cost to complete 1 The seller and buyer notarize the deed of sale in the 1 day EUR 77 presence of an attesting notary 2 The buyer pays the transfer tax 1 day 4% of the property value 3 The buyer applies for a land title at the District Court 7-20 days EUR 65 (registration fee) 29 Registering Property Details - Finland Procedure 1 The seller and buyer notarize the deed of sale in the presence of an attesting notary Time to complete: 1 day Cost to complete: EUR 77 Comment: The agreement can be prepared by the seller or the buyer, no involvement of a lawyer or real estate agent is required. In general the seller shall present an extract from the land register and an abstract of title confirming the title of the property, but this is not formally required. The agreement should be in writing and contain at a minimum the following (according to the Code of Real Estate): name of the seller and buyer, the object of purchase, the purchase price or equivalent compensation and possible subsequent conditions. The sale agreement shall be signed both by the seller and buyer, in the presence of the attesting notary. The attesting notary checks the ID of the seller and buyer and verifies the formal validity of the sales agreement. Failure to follow these requirements will result in the transaction being automatically null and void. Note that an attesting notary is required only when ownership (full freehold title) of the property is assigned. When the right of tenancy or other right to possess the property is assigned, the presence of the attesting notary is not required. The attesting notary will inform the land registry of the transaction (and the municipality for properties over 5,000m2). Procedure 2 The buyer pays the transfer tax Time to complete: 1 day Cost to complete: 4% of the property value Agency: Local Bank, Tax Authority or online Comment: The transfer tax can be paid at a local bank, directly at the Tax Authorities or online. The attesting notary gives the buyer instructions on the transfer tax payment. The payment is done using a printed tax form for the Transfer Tax. The receipt of the payment of the taxes must be included in the application for the registration of title to the property (see procedure 3). Procedure 3 The buyer applies for a land title at the District Court Time to complete: 7-20 days Cost to complete: EUR 65 (registration fee) Agency: District Survey Office of National Land Survey of Finland Comment: The buyer is under obligation to register the property title at the Land Registry within 6 months from the purchase. The application shall be submitted to the District Survey Office of the region where the property is situated. The Land Register enjoys public credibility and thus the validity of the registration of title and the information of the register can be trusted. The District Land Survey Office examines the preconditions of title and when those are met, grants the title that is registration of the ownership in the Land Registry (Register of Titles and Mortgages). 30 The documentation shall include: Original sales agreement. The receipt of the paid transfer tax (Paid in Procedure 2). Extract from the Register of Companies, articles of Association, minutes from the General Meeting of the companies (seller and buyer) where the sale and purchase was resolved (this is verified through company's trade register extract which can be obtained online from the Register of Companies). Copy of the sales agreement. Registration fee is paid at bank, local court (registry authority) or online, based on invoice sent by the registration authority after registration. Registration of ownership and mortgage affairs has been moved from local courts to District offices of the National Land Survey as of January 1st, 2010 based on change of Land Code by law 572/2009 (http://www.finlex.fi/fi/laki/alkup/2009/20090572) and Law 584/2009 (implementation of removal of Land registration issues from District courts to National Land Survey). Only if the area of the sold property is 5000 m2 or more, according to the pre-emption Act, Oct 1, 1977 (amended several times since), the municipality has a right to buy a real estate or an un-separated area or a share thereof that has been sold. In those cases, the Municipality will get the information about real estate conveyances from the attesting notaries. If the municipality decides to use its pre-emption right it has to notify the buyer, seller, and the Land Registry about the decision within three months from the conveyance. The real estate owner could also get an advance notice from the municipality that it will not use its pre-emption right (the fee is less than 100 euros). A title can be granted only after the three-month dead-line if the municipality has not announced it will use the pre-emption right or if the municipality has given the advance notice of not using the right. Cities of Helsinki, Espoo, Vantaa and Kauniainen have pre-emption in all sales covering more than 3000 m2 accordingly. The attesting notary will notify National Land Survey within two days from the sale. 31 32 1. Benchmarking Getting Credit Regulations: Finland is ranked 32 overall for Getting Credit. Ranking of Finland in Getting Credit - Compared to good practice and selected economies: 33 The following table shows Getting Credit data for Finland compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Finland 7 5 0.0 14.9 Comparator Economies Denmark 9 4 0.0 5.4 France 7 4 33.3 0.0 Germany 7 6 1.0 98.4 Iceland 7 5 0.0 100.0 Norway 7 4 0.0 100.0 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 34 2. Historical data: Getting Credit in Finland Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 30 32 Strength of legal rights index (0-10) 7 7 7 7 Depth of credit information index (0-6) 5 5 5 5 Private bureau coverage (% of adults) 14.9 14.8 14.7 14.9 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Finland over the past 4 years: 35 Getting Credit in Finland The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Finland. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 5 bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative data distributed? Yes No 1 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? Yes No 1 Is data on all loans below 1% of income per capita distributed? Yes No 1 Is it guaranteed by law that borrowers can inspect their data in the Yes No 1 largest credit registry? Coverage 14.9 0.0 Number of individuals 350,000 0 Number of firms 310,000 0 36 Strength of legal rights index (0-10) 7 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, No without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without Yes requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, Yes proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the Yes grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes Do secured creditors have absolute priority to their collateral in bankruptcy procedures? Yes During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? No 37 38 1. Benchmarking Protecting Investors Regulations: Finland is ranked 59 overall for Protecting Investors. Ranking of Finland in Protecting Investors - Compared to good practice and selected economies: 39 The following table shows Protecting Investors data for Finland compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Finland 5.7 Comparator Economies Denmark 6.3 France 5.3 Germany 5.0 Iceland 5.3 Norway 6.7 40 2. Historical data: Protecting Investors in Finland Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 57 59 Strength of investor protection index (0-10) 5.7 5.7 5.7 5.7 3. The following graph illustrates the Protecting Investors index in Finland compared to best practice and selected Economies: 9.7 6.7 6.3 5.7 5.3 5.3 5.0 k d ay ar y nd ce d an an an m w an a nl or en m al el Fi Fr N Ic Ze er D G ew N Note: The higher the score, the greater the investor protection. 41 Protecting Investors in Finland The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Finland. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 6 2 What corporate body provides legally sufficient approval for the transaction? 1 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 2 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 1 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 4 1 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 42 0 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 7 3 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 2 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 1 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 5.7 43 44 1. Benchmarking Paying Taxes Regulations: Finland is ranked 65 overall for Paying Taxes. Ranking of Finland in Paying Taxes - Compared to good practice and selected economies: 45 The following table shows Paying Taxes data for Finland compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Finland 8 243 44.6 Comparator Economies Denmark 9 135 29.2 France 7 132 65.8 Germany 16 215 48.2 Iceland 31 140 26.8 Norway 4 87 41.6 * The following economies are also good practice economies for : Payments (number per year): Qatar 46 2. Historical data: Paying Taxes in Finland Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 71 65 Total tax rate (% profit) 47.8 47.8 47.7 44.6 Payments (number per year) 20 20 8 8 Time (hours per year) 269 269 243 243 3. The following graphs illustrate the Paying Taxes sub indicators in Finland over the past 4 years: 47 Paying Taxes in Finland The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Finland, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Vehicle tax 1 fixed fee depending on vehicle Value added tax (VAT) 1 online 22 22.0% value added filing Group-life insurance 0 paid jointly 0.08% gross salaries 0.10 contributions Real estate tax 2 0.5%-1% property 1.00 value Accident insurance 0 paid jointly 1.1% gross salaries 1.20 contributions Unemployment insurance 1 online 0.65% gross salaries 2.20 contributions filing -2.70% Social security 1 online 2.0%-5.1% gross salaries 6.50 contributions filing (2. Corporate income tax 1 21 26.0% taxable 15.90 profits Pension insurance 1 online 200 16.8% gross salaries 17.80 contributions filing 48 Totals 8 243 44.6 49 50 1. Benchmarking Trading Across Borders Regulations: Finland is ranked 6 overall for Trading Across Borders. Ranking of Finland in Trading Across Borders - Compared to good practice and selected economies: 51 The following table shows Trading Across Borders data for Finland compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Finland 4 8 540 5 8 620 Comparator Economies Denmark 4 5 744 3 5 744 France 2 9 1078 2 11 1248 Germany 4 7 872 5 7 937 Iceland 5 19 1532 5 14 1674 Norway 4 7 830 4 7 729 * The following economies are also good practice economies for : Time to export (days): Estonia 52 2. Historical data: Trading Across Borders in Finland Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 5 6 Cost to export (US$ per container) 420 495 540 540 Cost to import (US$ per container) 420 575 620 620 Documents to export (number) 4 4 4 4 Documents to import (number) 5 5 5 5 Time to export (days) 8 8 8 8 Time to import (days) 8 8 8 8 3. The following graphs illustrate the Trading Across Borders sub indicators in Finland over the past 4 years: 53 54 Trading Across Borders in Finland These tables list the procedures necessary to import and export a standardized cargo of goods in Finland. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 3 100 Customs clearance and technical control 1 85 Ports and terminal handling 2 155 Inland transportation and handling 2 200 Totals 8 540 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 3 180 Customs clearance and technical control 2 85 Ports and terminal handling 2 155 Inland transportation and handling 1 200 Totals 8 620 55 Documents for Export and Import Export Bill of lading Commercial invoice Customs export declaration Packing list Import Bill of lading Cargo release order Commercial Invoice Customs import declaration Packing list 56 57 1. Benchmarking Enforcing Contracts Regulations: Finland is ranked 11 overall for Enforcing Contracts. Ranking of Finland in Enforcing Contracts - Compared to good practice and selected economies: 58 The following table shows Enforcing Contracts data for Finland compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Finland 32 375 13.3 Comparator Economies Denmark 35 410 23.3 France 29 331 17.4 Germany 30 394 14.4 Iceland 27 417 8.2 Norway 33 280 9.9 59 2. Historical data: Enforcing Contracts in Finland Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 10 11 Procedures (number) 32 32 32 32 Time (days) 235 235 375 375 Cost (% of claim) 13.3 13.3 13.3 13.3 3. The following graphs illustrate the Enforcing Contracts sub indicators in Finland over the past 4 years: 60 Enforcing Contracts in Finland This topic looks at the efficiency of contract enforcement in Finland. Nature of Procedure (2010) Indicator Procedures (number) 32 Time (days) 375 Filing and service 14.0 Trial and judgment 255.0 Enforcement of judgment 106.0 Cost (% of claim)* 13.30 Attorney cost (% of claim) 10.0 Court cost (% of claim) 3.1 Enforcement Cost (% of claim) 0.2 61 Court information: Helsinki District Court ("Helsingin kaeraerjaeoikeus") * Claim assumed to be equivalent to 200% of income per capita. 62 63 1. Benchmarking Closing Business Regulations: Finland is ranked 6 overall for Closing a Business. Ranking of Finland in Closing Business - Compared to good practice and selected economies: 64 The following table shows Closing Business data for Finland compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Finland 89.4 0.9 4 Comparator Economies Denmark 89.4 1.1 4 France 45.2 1.9 9 Germany 53.1 1.2 8 Iceland 78.5 1.0 4 Norway 90.9 0.9 1 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 65 2. Historical data: Closing Business in Finland Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 5 6 Time (years) 0.9 0.9 0.9 0.9 Cost (% of estate) 4 4 4 4 Recovery rate (cents on the dollar) 88.2 87.3 87.3 89.4 3. The following graphs illustrate the Closing Business sub indicators in Finland over the past 4 years: 66 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 67 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Denmark Denmark eased business start-up by reducing the minimum capital requirement for limited liability companies from 125,000 Danish kroner ($22,850) to 80,000 Danish kroner ($14,620). Computerization of Denmark's land registry cut the number of procedures required to register property by half. Germany Germany eased business start-up by increasing the efficiency of communications between the notary and the commercial registry and eliminating the need to publish an announcement in a newspaper. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Iceland Iceland made dealing with construction permits more costly by increasing the fees to obtain the design approval and receive inspections. Iceland increased the corporate income tax rate from 15% to 18% and raised social security and pension contribution rates. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. 68 Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 69 70