Being an employer

Payroll reporting will change

Wages and contributions paid on 1 January 2019 or later must be reported to the Incomes Register. Read more about how to submit payroll information in the future.

If you employ someone, your key obligations include that you must withhold tax on the pay and calculate a health insurance contribution (previously called the social security contribution) that varies according to the total pay.  You must pay the withholding and the contribution to the Tax Administration. In addition, as an employer you must arrange for the mandatory insurance contracts for the employees including a pension insurance contract as defined by law.

The guidance below is intended for all business enterprises, organisations and other bodies that are employers.

Compensation paid in exchange for the performance of work

When you pay someone for the work they do for you, it can be treated as wage income or, if the beneficiary is self-employed, as trade income.  Distinction between employment and business activities is important because your obligations as the payer depend on how the compensation is defined.

Wages are paid for the performance of work within an employer/employee relationship.   Additionally, the following fees listed in the Prepayment Act are to be treated as wages even if no employer/employee relationship is formed:

  • fees paid in compensation for attending a meeting/conference
  • fees paid for giving a lecture or speech
  • fees relating to Board membership or membership in a similar administrative organ of a corporation
  • fees of a Managing Director
  • compensation agreed to be paid to the shareholders of a partnership or limited partnership
  • fees paid to an individual who holds a position of trust.

Employers typically may provide fringe benefits (such as company car, free meals and company telephone) to their employees in addition to cash wages. These benefits are treated in the same way as wage income in taxation.

Nonwage compensation i.e. trade income is the compensation paid for the performance of work, an assignment, or for the rendering of a service.

It is important to differentiate between an employer/employee relationship from an "independent contractor" arrangement

With regard to employer’s obligations, it is crucial to define whether the work is being carried out in either an employer/employee or an “independent contractor” arrangement.

The parties involved may make an employment contract or a specific one-off contract with each other. It is advisable to make sure that the right type of contract is used so the desired purpose can be achieved and that the contract is appropriate from the employer's (buyer of work/services) and the employee's (the contractor) perspective. In the event of any conflict, the practice has been to look into the entire set of circumstances in order to decide whether the paid compensation should be treated as wages or as nonwage payments (= trade income).

Payor obligations

Paying wage income (payments to an employee or payments listed in the Prepayment Act that are always treated as wage income)

  • You must withhold tax and pay it on to the tax office
  • You must usually pay the employer’s health insurance contribution
  • You must sign an insurance contract for providing pension coverage for your employee
  • in addition, if certain prerequisites are fulfilled, also accident and unemployment coverage and group life insurance
  • You must submit a report of employer’s contributions (previously called Periodic i.e. kausiveroilmoitus; periodskattedeklaration)
  • You must file an Employer Payroll Report once a year
  • If you are an employer who pays wages on a regular basis, you must become registered in the Employer Register maintained by the Tax Administration.

Payer of nonwage compensation (to an independent contractor; no employer/employee relationship) unless the beneficiary is on the Prepayment Register  

  • You must withhold tax and pay it on to the tax office
  • You must submit a report of employer’s contributions (previously called Periodic i.e. kausiveroilmoitus; periodskattedeklaration)
  • You must file an Employer Payroll Report once a year.

Tax Administration's employer registration 

For tax purposes, an employer can be considered as either casual or regular. If an employer pays wages on a regular basis, they are expected to seek registration as a regular employer in the Tax Administration's Employer Register. You can ask for entry in the register of employers either on, the website of the Business Information System or by filling out a 'Y' form on paper. Checks can be made on the registrations and details of business companies via Company Search ( It is free of charge. Either type the company name or Business ID in the Search field.

  • A business enterprise is treated as having the regular employer status if wages or salaries are paid to at least 2 employees on a regular basis or
  • wages or salaries are paid to at least 6 employees at the same time on a temporary basis, i.e. under temporary employment contracts with short durations.

Unless they wish to, an employer paying wages on a casual basis will not be entered into the Register of Employers.

A company is a casual employer if

  • it only has 1 regular employee or
  • has 1 to 5 employees with contracts lasting less than a calendar year.