The Finnish Tax Administration’s SisuID pilot - Identifying foreign entrepreneurs online

The Finnish Tax Administration, together with cybersecurity company Nixu and Digital Living International, piloted SisuID to identify foreign entrepreneurs online so that registering a new company in Finland could be made digital, easy, and fast. This user-friendly process would help Finland to attract more companies and more tax revenues to Finland. The pilot shows that Finland already has all the technologies needed to reach this vision.

By using a digital self-service supported by SisuID, the entrepreneur could set up a company in Finland easily online.

How to start a Finnish company digitally from abroad? 

Finnish Tax Administration, Vero, is facing these questions. Vero wanted to find out quickly how this process could be made fully digital and as smooth as possible for any foreign entrepreneur. Vero has demonstrated the power of an open and inclusive public-private ecosystem approach. The approach helped to explore the process bottlenecks together with all the right stakeholders. Participants from accounting companies, banks, governmental agencies, and authorities made it possible to form a joint vision on how Finland could offer a seamless service offering for foreign entrepreneurs. The SisuID team, including Nixu and Digital Living International, lead the project to map the current entrepreneur’s journey and gather the development requirements from all the parties involved in that journey. 

“We see that there is an urgent need for Finland to strengthen our capabilities to compete internationally for new companies, talent, and investments. Finnish Tax Administration wants to boost the competitiveness of the Finnish economy by helping to remove the identified obstacles,” says Client Director Miika Wires from The Finnish Tax Administration. 

The current path is for setting up a company is long

Currently, for example, Chinese entrepreneurs would need to have a local board member residing in the European Economic Area (EEA) to set up a Finnish non-listed company.

Additionally, the new company needs to meet specific requirements that the Finnish authorities and regulators have set before they can get their company registered to the Finnish Trade Register. 

The trust level of supplementary data required in different steps of the company registration process differs significantly from making the first contact with Tax to having a company finally registered in the Trade Register. The entrepreneurs also still need to sign official forms that include only Finnish text, which means that either they need to hire a translator or sign documents that they cannot understand.

After completing the registration, the new company also may need other local services such as accountants, Finnish corporate bank accounts, insurance, and legal services. The entrepreneur needs to fill in personal and company details many times over for all the stakeholders in the process.

Digitalizing the process

“We feel that open collaboration is the only way to create innovations for the whole society. This project with Nixu and Digital Living helped us to create better foundations to speed up this development in the Finnish economy.” Miika Wires explains. 

The project formed a vision of a single, easy process for the entrepreneur to get established in Finland. This user-friendly process would help Finland to attract more companies and more tax revenues to Finland. Both public and private sectors require capabilities to create a digital trust to be able to improve the process.

Establishing digital trust starts with identifying the person acting on behalf of the company. Based on the initial identification, personal digital identity is created. With that digital identity, you can transfer personal, company data reliably across service silos.

With digital trust in place, the company registration process can be significantly streamlined and automated. Digital trust also reduces the burden from the entrepreneurs since they only would need to give the information only once. Ideally, by using a digital self-service supported by SisuID, the entrepreneur could set up the company even without traveling to Finland.

Pilot shows that Finland has all ingredients for a fully digital path 

“The lack of reliable digital identities for foreigners is the first big obstacle for every stakeholder involved in the project. But luckily, we already have all the required technologies available to create a digital trust for the processes and automate this fast track to Finland and Europe,” says Pirkka Frosti, the CEO of Digital Living International and one of the leading figures behind SisuID. “Vero proved that with the right mindset and combining our efforts, we could start seeing great progress in just a few months of work,” Frosti continues.

The key finding was that after creating digital trust, there are no significant roadblocks to enable a fully digital path for the foreign entrepreneur to start a company in Finland. Even legislation changes of transferring data across the public and private sectors may be avoided if the user controls the data via the digital identity. 

Another finding was that the digital identification and authentication of the user could be separate from the Know-Your-Customer (KYC) process required by the bank to comply with legal Anti-Money Laundering (AML) requirements. By separating these two, the digital identification and authentication can provide the user the means to supply further AML information as digital self-service instead of the current, manual, and work-intensive processes.

How to make Finland the best country to start a company?

We are not serving the foreign companies digitally yet, but our economic growth and competitive advantage will depend upon it in the not-so-distant future. Estonia has been providing capabilities to start a company remotely through their eResidency program. Estonia has estimated that by 2025, a business established through the program has created Euro1.4 billion in direct and indirect economic benefits.

Vero is taking fast actions to start a continuation project under a new program called Digital Fast Track. “With the public and private sector organizations joining forces to create society-wide digital trust capabilities, Finland can soon appeal as a viable option for foreign entrepreneurs for doing business. This can become their gateway to the European market”, says Joonatan Henriksson, Head of Digital Business at Nixu.

You can read the full public project report at https://sisuid.com/cases

 

The SisuID is an open community from a technical and societal point of view. SisuID will open-source all the generated code, and it can be used for producing a national level identification solution. The findings presented by the pilot cases help to advance the digitalization of the identification and knowledge of public and private sector users.

The Sandbox of Trust is a Finland-based digital identity initiative, led by cybersecurity company Nixu, Digital Living International, Vastuu Group, the Technology Industry of Finland, and funded by the pilot members together with Sitra.