Leased employees from abroad to Finland – Information for a foreign leased employee

This information is intended for foreign employees of foreign leasing companies working in Finland. Please note that there are somewhat different rules related to situations where the foreign employee works for a subcontractor, for a Finnish company, or as self-employed.

Employee leasing means that a company assigns its employees to work for another company (the service recipient corporation) for certain period of time. The employee continues to have an employment contract only with the foreign leasing corporation, but the work is performed under the direction and management of the service recipient company in Finland.

Within the first few days of starting the work in Finland – Registration for finnish id

According to the Finnish legislation, a foreigner is required to register just like Finnish citizens if she/he resides in Finland for at least one year. For that you should visit the local Register Office, for example Helsinki Magistrate Office and as a result you receive a Finnish identification (ID) number.A foreigner residing only temporarily in Finland can also receive a Finnish ID if s/he needs one for example in order to work. If the stay in Finland lasts less than a year, the application for the ID number may also be filed at the Tax Office, which will forward the ID request to Magistrate Office.

Within the first weeks of starting the work in Finland – Prepayment of the income tax

A leased employee who comes from Denmark, Estonia, Iceland, Latvia, Lithuania, Belarus, Georgia, Moldova, Bermuda, Guernsey, Jersey, Norway or Sweden (from 2011 also Poland and Kazakhstan) is liable to pay income tax on her/his salary earned in Finland from the first day the work here starts. 

The level of tax depends on how long you stay in Finland. If the stay in Finland continues for maximum six months you are considered as non-resident in Finland. The tax rate is flat 35 % - after a deduction of 17 € a day or 510 € a month you pay 35 % tax regardless how much you earn. If the stay in Finland is longer than 6 months or your home is in Finland, you are considered as resident in Finland and the tax rate is progressive as for all the other Finnish residents. 

When you have received the Finnish ID number, the Tax Office will be able to calculate the tax payment needed. To take care of the tax prepayment in Finland, you should contact the Tax Office in the town where you work or stay in Finland as soon as the work starts in Finland, by the end of the month following the starting of work in Finland. The correct tax rate is calculated on the basis of your estimation for salary and the taxes should be paid during the year you work in Finland. If you fail to apply for a flat 35 % tax prepayment in due time, you may be charged a fine of up to 2,000 €.

Often a foreign employer is not registered in Finland and has no obligation to withhold the Finnishtax. In that situation, you have the responsibility of making timely tax prepayments by yourself.

If your employer, the foreign leasing company, has registered as an employer in Finland, it should withhold the Finnish tax from your salary and pay it forward to the Finnish tax authorities. However, you have to give your employer a document of the tax rate you receive from Tax Office.

Information about the employer registration is public and can be found by the company’s name a the website www.ytj.fi > BIS search.

After the first 3–4 months of starting the work in Finland – Residence / social security

EU citizens and citizens of Liechtenstein and Switzerland must register their residence after staying three months in Finland. The local police handle the registration, except for Nordic citizens, who register at a Register Office and present the Inter-Nordic Migration Form. Nordic citizens must register their residence if they stay in Finland longer than six months.

The employer should insure in Finland an employee working in Finland for more than 4 months. As long as you have a valid A1- or E 101-certificate or other certificate of posting from home country social security authorities, no social security payments need to be paid in Finland. You should show the certificate at the Tax Office. An insured employee in Finland has to pay employment pension premium, unemployment insurance and health insurance premiums.

After the end of a calendar year – Tax return and final tax assessment in Finland

After every calendar year you have worked in Finland you have to submit an income tax return to
the Tax Administration (to be filed usually in May in the succeeding year). You will receive a precompleted or blank tax return form in your home address. If there is nothing to correct or add, it does not need to be returned to the Tax Office. If there is something to correct, you file the tax return at due date in the Tax Office. Later in autumn you will be sent a statemen (“verotuspäätös” / “beskattningsbeslut”) showing the final amounts of taxes imposed. This statement will show if you will be receiving a tax refund or alternatively, if you will have to pay more tax because of insufficient withholding. Instructions for appeal will also be included in the statement. 

You do not have to declare income you received before moving to Finland nor income you receive after moving away from Finland. Forms and instructions are available in English.

When moving out of Finland – Checking the last income year tax balance

You should all times inform the Magistrate Office about your move within a week since a move from previous address (mandatory). When you move from Finland a notification for a change of address also to the local Tax Office is recommended. At the same time you can check at the Tax Office if your tax prepayment notes should be corrected and if you could file your last Finnish tax return already in advance. You may also want to notify the tax authorities about your foreign bank account number, if you expect to get some tax refund, refund of excess advance taxes etc. after your move.

More information Leased employees - taxation in Finland - prepayment of tax