Instruction for purchases from Group and associated companies
When making purchases, pay special attention to situations where there is an interest relationship between the beneficiary and the company from which the services are purchased. When planning a project and preparing a cost estimate, check whether the project may include purchased services from group or interest companies. Project reporting is also different if there are interest purchases in the project. See the instructions on this page and read more in the funding terms and conditions.
Business Finland's definition for an associated company
Companies (here referring to all legal persons) are each other’s associated companies if another company or person exercises control over another company or can influence its choice of procurement sources.
Companies are considered each other’s associated companies if at least 20% of the other company’s share capital or corresponding equity is directly or indirectly owned or controlled by the other company. Companies are considered each other’s associated companies also if at least 20% of the other company’s share capital or corresponding equity is directly or indirectly owned or controlled by the same individual.
Business Finland also considers direct or indirect ownership to exist in the hands of the following parties and stakeholders:
- members or alternate members of a company’s Board of Directors
- responsible persons within the company
- employees of the company
- creditors of the company
- family members: an applicant’s spouse or a cohabiting partner, the applicant’s or their spouse’s/partner’s children
- close relatives, such as a grandchildren, siblings, parents, grandparents, or corresponding halfrelatives.
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.
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.
Parallel projects of group companies as an alternative to the interest purchase
When preparing an R&D project implemented as a collaboration between companies belonging to the same group, the group must choose whether its units will participate in the project each with their own projects, or whether one group unit will buy services from other units.
If the results of the R&D project are to be utilized primarily in one unit of the group, it may be appropriate to acquire the services of other units as interest purchases. In accounting, R&D expenses appear in the accounting of one group unit and that unit can process them as depreciation.
If the results of the R&D project are to be used in several units of the group, the parent company of the group can be a natural implementer of the R&D project. If the group’s foreign unit participates in the project, its costs can only be accepted as interest purchases.
If two or more units belonging to the same group will each utilize the results of the R&D project in their own business, it may be appropriate to implement the project as an intra-group Co-Innovation joint project. In this case, each unit applies for funding for its own sub-project and the whole is described in the joint part of the Co-Innovation application. Each unit records the costs of its sub-project in its own accounting and can write off them.
Transferring Business Finland's funding from one Co-Innovation sub-project to another within the group is not possible. Regarding interest purchases, the recipient of the financing can change the plan of what and where to buy during the project. However, some changes may require Business Finland's prior approval.
Costs accepted as purchases from group or associated companies
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:
Cost statement for associated company Y3 + Y5
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. Each company's statement should be packaged in a single pdf file.
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.
