New incentives in company legislation - how you can benefit from them
The year 2023 brought several amendments to company legislation in Finland. Country Manager Petteri Heikinheimo from Accountor brings up two of them, which affect the business of many companies.
The purpose of legislation concerning companies is to encourage growth and create a framework for efficient business operations. However, many advantages set as an incentive for business growth may remain unused, especially in small and medium-sized companies, because there are so many laws and they change rapidly. On the other hand, the lack of awareness of up-to-date legislation and taxation is also a risk that can cost both money and reputation.
"With the help of our digital tools and our multi-professional expertise, we can inform our customers about relevant amendments in a targeted manner."
“The amount of expertise required to utilize company legislation is increasing all the time, as the changes become more and more common. If your company does not have own lawyers and tax experts, it is challenging to keep up with the rapid changes in legal and tax regulations without an expert partner or wasting the entrepreneur’s time from their core competence. The bare minimum can be managed, but many opportunities that are significant from the point of view of one’s business operations may go untapped”, Heikinheimo states.
Additional incentive for research and development activities
During the past couple of years, significant amendments that affect many companies’ business have concerned, for example, the tax incentives assigned to companies’ research and development activities.
First, the law was amended as of 1.1.2022 so that the additional deductions for research and development activities from the beginning of the tax year 2022 were 150 percent instead of 50 percent. At the same time, the validity period of the law was extended until the end of the tax year 2027. Now, from the beginning of 2023, a new combined incentive came into effect, which consists of a general additional deduction based on the amount of research and development expenditures and an additional supplementary deduction as the expenditures increase.
“The benefits are company-specific, so for example in a corporation like ours that consists of several legal entities and where considerable sums are invested in operational development, the business benefit is significant”, Heikinheimo says and continues:
“This is one example of a benefit that may go unnoticed by many who could benefit from it. You may also have deductible expenses comparable to research and development activities, which have not been noticed. With the help of our digital tools and the multi-professional expertise of our HR, financial and legal experts, we can prevent such situations and inform our customers about relevant amendments in a targeted manner based on the previous year’s financial statements. So you can avoid lost benefits by, for example, calling us”, Heikinheimo chats with a twinkle in his eye.
For companies, ignorance is not bliss. When you have a reliable and knowledgeable partner by your side, knowledge of company legislation increases security.
“Accountor's expertise and the utilization of existing data with state of the art tools enable us to respond to customer needs. Our financial management customers get the latest information about the new trends in personnel management as well, and vice versa”, Heikinheimo describes.
Non-competition compensation obligation concerns all
Another change in the law affecting several companies is aimed at non-competition agreements. The law change came into effect already in 2022, but only now it is a reality in the day-to-day life of companies because of the transition period of one year. According to the new law, the employer must compensate either 40 or 60 percent of the employee’s salary for the entire period of non-competition period, depending on the length of the non-competition agreement.
“The non-competition agreement limits the employee’s chances of employment, so it is reasonable that compensation is paid for this restriction. It is noteworthy in the amendment that the non-competition clause makes the employer liable for compensation regardless of whether the employee is employed by a competitor or not”, Heikinheimo advises.
As a result of the amendment, the non-competition agreements were reviewed also at Accountor.
“The change in the law made us consider in which context a non-competition clause is really necessary and justified. In those cases where the condition remains, I consider the non-competition period as my opportunity to talk the employee into staying with us”, Heikinheimo concludes with a smile.