Business Finland's definition for an associated company
Companies are considered each other’s associated companies if at least 20% of one company's share capital or corresponding equity is directly or indirectly owned or controlled by the other company.
This rule also applies when the association arises through personal ownership.
Business Finland may also consider companies to be associated if one company has a controlling interest in the other company or can otherwise influence where the other company makes its purchases.
Such a situation may arise for instance in connection with
- Board membership,
- position of responsibility,
- family member involvement,
- employee involvement, or
- position as a funding provider
Business Finland inspects the shareholders, holdings, shareholders of associations, responsible persons and employees of the beneficiary. In addition, connections with other companies will be checked.
During project monitoring or auditing, data from parallel and previous projects and possibly information from funding granted by other authorities are also checked.
- An employee of Company A owns 100% of Company B, but has no ownership in Company A. Acquisitions from Company B are acquisitions of interest. The interest connection is formed through the employment relationship.
- A shareholder in company A owns 20% of company B and 30% of company C. Acquisitions from companies B and C are acquisitions of interest. The interest connection is formed through the holdings of company A's shareholder.
- A deputy board member of Company A owns 100% of Company B, but has no ownership in Company A. Acquisitions from Company B are interest acquisitions. The interest connection is formed through acting as a responsible person.
- A member of the Board of Directors of Company A owns 20% of Company B and 30% of Company C. Acquisitions from companies B and C are acquisitions of interest. The interest connection is formed through the holdings of a member of the Board of Directors of Company A.
What is a Group company?
Group companies are associated companies but for Business Finland’s funding purposes they are treated differently from other associated companies. For example, in connection with de minimis funding and Young Innovative Companies funding, intra-Group service purchases are acceptable, but purchases from other associated companies are not.
A Group is formed when an accountable entity has a controlling interest, as specified in the law, in another company. In this situation, the controlling company is the parent and the other company is a subsidiary. The parent and its subsidiaries are also referred to as Group companies.
A Group relationship referred to in the Accounting Act is also formed if an accountable entity, together with one or more subsidiaries, or the accountable entity’s subsidiary, together with one or more subsidiaries, has a controlling interest in another company.
Costs accepted as purchases from group or associated companies
When planning a project with R&D funding, consider the following when preparing a cost estimate:
- The cost estimate has a separate row for purchases from Group and associated companies.
- A value for the purchased service exclusive of margin has been approved for the cost estimate.
- If the interest connection has not been taken into account in the cost estimate, the customer has to submit an application for a change in the cost estimate.
The following costs may be accepted in purchases from associated company:
- Direct project costs
- Indirect personnel costs; 50% of the salaries allocated to the project
- Overheads are calculated from the total of salaries and indirect personnel costs, using a multiplier based on the number of employees in the Group or associated company
- 1–19 people: 20%
- 20–49 people: 30%
- 50 people or more: a maximum of 50%
- Business Finland may also accept purchases from foreign Group and associated companies
- only direct project costs
- indirect personnel costs and overheads are not accepted
- for invoices submitted in a foreign currency, the rate applicable on the payment date is used
- an independent auditor’s report in Finnish, Swedish or English must be submitted for these costs.
Purchased services within the same group are accepted according to invoicing. There is no need to make a separate cost statement. The auditor's report on these purchased services is also not required.
Purchased services are described in the report.
Purchases from other interested companies are not acceptable.
Read more on funding terms and conditions
How are interest purchases declared?
Business Finland approves the purchased service from a Group or associated company without margin. In order to demonstrate the non-profit nature of the services, the Group or associated company must declare Business Finland the costs arising from the project with separate templates.
In connection with the final report, an auditor’s report prepared by an independent auditor must be supplied of the costs recorded by a Group or associated company.
If there are several Group or associated companies, each company will supply its own cost statement and auditor’s report.
- provides the funding terms and conditions to the Group and associated companies;
- makes sure that the Group and associated company organizes project accounting and working hours recording practices in accordance with the funding terms and conditions; and
- pays the invoice supplied by the Group and associated company.
- complies with the terms and conditions of funding;
- organizes project accounting and working hours recording practices in accordance with the terms; and
- provides the beneficiary with an invoice of the services purchased.
- The service sold may not include any intra-Group administrative costs or governance fees.
- prepares and sends a cost statement to the beneficiary:
- salary specification Y4
- cost statement Y3 and
- the accountable project leader's statement Y5
- The templates Y3 and Y5 are on two different tabs on the same worksheet.
- The accountable project leader’s statement is signed by an authorized signatory of the Group or associated company.
- The Group or associated company submits an auditor’s report prepared by an independent auditor as part of the final report. The auditor 's instructions and auditor’s report can be found on the website For Auditors.
- For more information, see Reporting.
How is the information delivered to Business Finland?
- The beneficiary prepares its own cost statement in the Online service and records non-profit services purchased and paid for under “Services purchased within the Group and from associated companies”.
- With its cost statement, the beneficiary attaches cost statements (e.g. in PDF) prepared using the Group and associated companies’ templates, and, in connection with final reporting, the auditor’s report of the Group and associated companies’ auditor.