International traffic – taxation of wages paid to employees from other countries
Are you a foreign empoloyee working on a ship or as a pilot or a cabin crew member on board a Finnish craft?
Usually, you pay tax on your wages to the domicile of the company using the vessel or aircraft or to the country where the company’s place of effective management is located. If you work for a Finnish company using a vessel or aircraft, you pay tax on your wages to Finland.
The amount of tax payable to Finland depends on the length of your stay in Finland. A stay period on board a vessel or aircraft is not regarded as such a stay in Finland on the basis of which you would be considered to reside in Finland.
Working on board a Finnish vessel
If you work on board a Finnish vessel, such as a ship, you usually pay tax on your wages to Finland. However, always check the tax treaty between Finland and your country of residence. The right to tax usually belongs to the country where the place of effective management of the company using the ship is located. Under some tax treaties, the country where the ship is registered (flag state) may have the right to collect tax.
According to the Nordic tax treaty, for example, wages paid for work done on board a ship is taxable in the flag state of the ship.
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Example: You live in Norway and work on board a vessel sailing under the Finnish flag. You pay tax on your wages to Finland. Also file your income in Norway in accordance with the instructions of the Norwegian tax authority. Double taxation will be eliminated in the tax assessment in Norway, i.e. the tax you have paid on the wages to Finland will be taken into account.
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However, the right to tax income earned from work carried out on board a fishing, sealing or whaling vessel belongs exclusively to the country of residence in the case of employees residing in the Nordic countries.
Working on board Finnish aircraft
If you work on board Finnish aircraft, such as an airplane, you usually pay tax on your wages to Finland. However, always check the tax treaty between Finland and your country of residence. The right to tax usually belongs to the country where the place of effective management of the company using the aircraft is located.
Exceptions include aircraft employees living in the Nordic countries. According to the Nordic tax treaty, their wages are taxed only in their country of residence.
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Example: You live in Denmark and work on board a Finnish airplane. You pay tax on your wages only to Denmark. File the income in Denmark in accordance with the instructions of the Danish tax authority.
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You work for a company using a Finnish vessel or aircraft
If you work on board a Finnish vessel or aircraft, you usually pay tax on your wages to Finland.The amount of tax depends on how long you stay in Finland. If you are employed by a Finnish company using a vessel or aircraft, the employer will withhold tax on your wages in Finland.
If you stay in Finland for 6 months or less, your Finnish employer will withhold 35% tax at source on your wage income. Even if you stay in Finland for 6 months or less, however, you can claim progressive tax treatment.
The Finnish employer will also withhold insurance premiums on your wages, unless you have an A1 certificate or some other posted employee’s certificate issued by your home country.
Read the applicable instructions and request a tax card: Finnish employer
If you work on board a Finnish vessel or aircraft, you usually pay tax on your wages to Finland.The amount of tax depends on how long you stay in Finland.
Your foreign employer is usually not obliged to withhold tax on your wages in Finland, so you must make tax prepayments in Finland. If you stay no more than 6 months in Finland, request tax prepayments no later than by the end of the calendar month following the month when you started working.
Read the instructions on how to request prepayments:
Even if you stay in Finland for 6 months or less, you can request progressive taxation.
The Finnish employer will also withhold insurance premiums on your wages, unless you have an A1 certificate or some other posted employee’s certificate issued by your home country.
File the income you receive from Finland for tax assessment in your country of residence
File for tax assessment in your country of residence:
- the income you have received from Finland
- the taxes you have paid to Finland.
If you also pay tax on your income to your country of residence, the country of residence will eliminate the resulting double taxation.
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