At a glance
- A share deal transfers ownership of the target company. The company remains the same legal entity, with its existing contracts, employees and liabilities.
- An asset deal specifies which assets, contracts and liabilities the buyer takes over, subject to required consents and mandatory law. It is not a universal clean slate.
- Employees transfer automatically if the transaction qualifies as a transfer of an undertaking under Finnish law. The parties cannot contract out of that result.
- The buyer’s and seller’s interests often differ: buyers may favour an asset deal, while sellers may prefer to sell their shares. The right structure depends on the business, risks and tax position.
- Transfer tax is generally 1.5% on securities and 3% on real property. A qualifying transfer of a business or part of one is not treated as a sale for VAT purposes.
What is the difference between an asset deal and a share deal?
In a share deal, the buyer acquires shares in a Finnish limited liability company. The company itself does not change: it remains the employer and party to its contracts, and it continues to hold its assets and liabilities. The buyer gains economic exposure to the company through ownership, but does not become personally liable for all of its debts merely by buying its shares.
In an asset deal, the buyer acquires specified business assets, such as machinery, stock, intellectual property, goodwill or selected contracts. The seller is usually the company that owns those assets, so the purchase price is paid to that company. It remains in existence after the sale, whether or not it continues other activities.
An asset deal requires the parties to identify what transfers and how the business can continue. Neither label answers every legal question: the agreement, contracts and mandatory rules all matter.
How to choose a structure
An asset deal may suit a buyer acquiring a defined operation while leaving unrelated assets or activities with the seller. The trade-off is that key contracts, permits and registrations may need to be transferred, replaced or obtained again.
A share deal may suit a business that depends on contracts, licences, premises or other arrangements tied to the existing company. It avoids transferring each asset separately, but the company retains its history and obligations. The buyer should investigate that history and negotiate protection for identified risks.
The seller’s position matters too. In an asset deal, the selling company receives the proceeds; transferring them to its owners later has separate tax and company-law consequences. In a share deal, the selling shareholders receive the price. The tax treatment depends on the seller and the transaction. Each side should compare the after-tax outcome with a tax adviser rather than assume that every seller prefers a share sale or that a corporate share gain is automatically exempt.
The form is a commercial negotiation as well as a legal choice. A buyer may accept a share deal if continuity is valuable and the seller gives appropriate protection. A seller may consider an asset deal if the price accounts for proceeds left in the company and its remaining obligations.
Liabilities, contracts and permits
In a share deal, the target remains responsible for its existing liabilities, including obligations discovered after completion. This does not make the buyer personally responsible for company debts, but can reduce the value of the company acquired. Due diligence should cover tax, accounting, disputes, employment, data protection and regulatory compliance. Warranties, indemnities and liability limits can allocate risk between buyer and seller, but do not change the company’s obligations to third parties.
In an asset deal, the parties should list the assets and liabilities transferring, and the contracts needed to operate the business. An agreement between buyer and seller cannot, by itself, deprive a creditor or employee of rights granted by mandatory law. Replacing a debtor generally requires the creditor’s consent. Contract transfers depend on the contract terms and applicable law: advance consent may be effective, so fresh consent is not invariably required. Check change-of-control provisions in a share deal too; a change in ownership can trigger notice, consent or termination rights even though the contracting company is unchanged.
Check permits and registrations separately. Some may remain with the company in a share deal, subject to their terms and regulatory requirements. An asset deal may require new applications or approvals in the buyer’s name. Identify required steps and make approvals conditions to completion where appropriate.
Employees and transfer of an undertaking
Under chapter 1, section 10 of the Finnish Employment Contracts Act (55/2001), a transfer of an undertaking occurs when a business or functional part moves to another employer while retaining its identity and continuing the same or similar operations. Rights, duties and benefits arising from employment relationships in force at the time transfer to the new employer. The buyer cannot select only preferred employees from the transferring operation.
In a normal transaction outside bankruptcy, the transferor and transferee are jointly liable for employment claims that fell due before the transfer. Between them, the transferor is liable unless they agree otherwise. That allocation may support recovery from the seller but does not remove employees’ statutory rights. Separate rules apply to purchases from a bankruptcy estate. Address known claims and practical transfer arrangements in the agreement.
The acquirer may not dismiss an employee solely because of the transfer. Employees also have a special right to end their employment in connection with the transfer, subject to statutory timing rules. A share sale alone does not change the employer. Whether an asset deal qualifies as a transfer of an undertaking depends on the facts, not its title.
Tax points to model
Transfer tax depends on what is transferred. Under the Finnish Transfer Tax Act (931/1996), the general rate for securities, including shares, is 1.5% of the consideration. This rate also applies to shares in a real estate or housing company. A transfer of real property itself is generally subject to transfer tax at 3%. Machinery, inventory and goodwill are not normally subject to transfer tax simply because they are sold as part of a business.
For an asset deal involving real property or securities, document the price allocation. The tax base and any exemptions depend on the transaction, so use an allocation supported by the deal documents and valuation.
VAT treatment also needs checking. Under section 19c of the Finnish VAT Act (1501/1993), a qualifying transfer of a business or part of one to a buyer who continues the business and uses the transferred assets for purposes that entitle it to deduct VAT is not treated as a sale for VAT purposes. This rule does not cover every asset sale. If the buyer’s use is only partly eligible for deduction, the rule applies only to the corresponding extent. Confirm the conditions and the parties’ VAT treatment before completion.
Check whether tax losses and other tax attributes remain available after a change in ownership. Sellers should model their tax position based on who is selling, what is sold and whether statutory conditions are met.
Checklist before signing
Before signing a letter of intent or sale agreement, work through the points that could change the structure, price or timetable:
- Define the business, shares or assets being acquired, and identify any excluded assets and assumed liabilities.
- Review the target’s financial, tax, contractual, employment and regulatory position. A practical starting point is this guide to due diligence.
- List the material contracts, change-of-control clauses, permits and registrations, then establish which notices, consents or new approvals are needed and when.
- Assess whether the transfer-of-undertaking rules apply, which employees are in scope and how pre-transfer employment claims will be addressed.
- Model the tax position for both sides, including transfer tax, VAT, the seller’s treatment of proceeds and any tax attributes the buyer hopes to use.
- Check the target’s articles of association and any shareholders’ agreement for consent or redemption restrictions on share transfers. The Finnish Companies Act (624/2006), chapter 3, section 7, permits redemption clauses in the articles.
- Make the agreement’s warranties, indemnities, liability limits, price allocation and completion conditions reflect the risks actually found.
- Confirm the necessary corporate decisions and signing authority on both sides. The required approvals depend on the transaction and the companies involved.
The correct structure depends on what gives the business value and which risks can be identified, transferred or managed. Agreeing the structure before the main terms are fixed gives both sides a clearer basis for pricing and documentation.
Frequently asked questions
Which is safer for a buyer: an asset deal or a share deal?
An asset deal can limit the purchase to specified assets and agreed liabilities, but it is not a universal clean slate. Employment rules and other mandatory or asset-specific obligations may still apply, and important contracts or permits may not transfer as expected. A share deal preserves continuity but leaves the target company responsible for its existing liabilities. The safer choice depends on the due diligence findings and what the business needs to operate.
Do employees transfer automatically in an asset deal?
Yes, if the transaction is a transfer of an undertaking under chapter 1, section 10 of the Finnish Employment Contracts Act: the business or functional part must retain its identity and continue the same or similar operations. Employees and their existing employment rights transfer by law. The parties cannot choose to exclude employees covered by the rule.
How much transfer tax applies to a share deal?
The general rate for securities is 1.5% of the consideration under the Finnish Transfer Tax Act. The same rate applies to shares in a real estate or housing company under current rules. A transfer of real property itself is generally taxed at 3%. The tax base and any exemptions require a transaction-specific review.
Can a redemption clause prevent a share sale?
A redemption clause may give another shareholder, the company or a named party the right to acquire shares after a transfer. It can therefore affect who ultimately acquires the shares and the timetable, even if it does not make a sale impossible in every case. Check the articles of association and shareholders’ agreement before agreeing completion dates.
Is VAT charged on an asset deal?
Not necessarily. Section 19c of the Finnish VAT Act provides that a qualifying transfer of a business or part of one to a continuing operator is not treated as a sale for VAT purposes where the assets are used for VAT-deductible purposes. The rule has conditions and may apply only to the extent of eligible use. It does not automatically cover every asset sale.
Sources
- Employment Contracts Act 55/2001 (in Finnish), chapter 1, section 10, and chapter 7, section 5.
- Companies Act 624/2006 (in Finnish), chapter 3, section 7.
- Transfer Tax Act 931/1996 (in Finnish), sections 6 and 20.
- VAT Act 1501/1993 (in Finnish), section 19c.
- Finnish Tax Administration: Transfer tax.
- Finnish Tax Administration: VAT invoice requirements, guidance on transfers of a business or part of a business.
Information checked: 20 October 2026. This guide provides general information and is not a substitute for advice on your specific situation.
