Employer's contributions to be reported and paid to the Tax Administration

Employer's contributions are taxes that are withheld on the payments of wages (or other similar payments) to employees, and the employer's health insurance contribution (previously referred to as 'social security contribution'). If you employ someone, you must file returns and pay the contributions on to the Tax Administration.

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

Tax withholding

Employers must withhold taxes in advance through a withholding system. Amounts payable to an individual taxpayer as wages or as nonwage compensation are subject to withholding, and the tax card is designed to give you instructions as to what rate of withholding to apply.  If a person who works for you does not present a card or proof of registration in the Prepayment Register, you must withhold tax at the rate of 60 percent.

Amounts payable to a company/organization (limited-liability company (Oy), cooperative society, association, foundation) or to a consortium (partnership, limited partnership, shipping company) as nonwage compensation are subject to withholding at the rate of 13% unless the beneficiary is registered in the Prepayment Register.  If the work is carried out by a person who is self-employed, withholding must be applied as instructed on his or her tax card. For any self-employed people who fail to present a card, tax must be withheld at the rate of 60 percent.  VAT should not be included when calculating the amount of withholding.

More information in Finnish Ennakonpidätyksen toimittaminen.

Employers’ health insurance contribution

Employers must pay a health insurance contribution when their employee is covered by the Finnish social insurance system, as provided in the Act governing health insurance. However, if payments are made to someone younger than 16 or to someone who has turned 68, the contribution is not necessary.

If the pay is tax-exempt (under § 77, Income Tax Act) to an employee who is assigned to work in a foreign country, and no amount has been agreed that would serve as the basis of their insurance contributions when they work there, the basis of the employer's health insurance is the amount subject to withholding.  As for sportsmen/athletes, the paid wage serves as the basis of the health insurance contribution that the employer must pay.

The payroll sum total is normally the basis for the calculation of the contribution.  The percentage rate is the same for all employers.  It is officially confirmed for each calendar year, and applied to the wages paid during that year.  The time during which the wages was earned (= work was done) does not matter.

The health insurance contribution must be paid even in cases in which no withholding is made.  Examples of situations that involve no withholding are payment of fringe benefits instead of cash, and payment of wages to a worker whose tax card instructs the payer not to withhold tax.  You do not have to pay health insurance contributions on nonwage compensation.

Paying and reporting

If you are a regular employer, you must pay the amounts that you withheld on to the Tax Administration. You must also pay the health insurance this way. Log in to MyTax to file the Self-assessed tax return electronically in order to report the facts and information regarding the amounts you paid.  If you are a casual employer, you must file a Self-assessed tax return every time you pay out wages.  

More information on filing Self-assessed tax returns and on payments

Employer payroll report

Because you are an employer, one of your obligations is to give us details once a year on the wages and similar payments you made, including the taxes you withheld, on an Employer Payroll Report.  Submit it by the end of January after the calendar year of payment.

More information .

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