Information on employer’s contributions
Employer's contributions include taxes withheld from employees' wages or other payments as well as the employer's health insurance contribution.
This instruction applies to all companies and corporate entities that act as employers. There are separate instructions for households as employers.
Employers must withhold taxes in advance through a withholding system. Tax is withheld on an individual taxpayer's wages or trade income in accordance with their tax card. If a person does not present a tax card or is not registered in the prepayment register, the withholding rate is 60%.The recipient of trade income can also be a corporate entity (e.g. a limited liability company, co-operative, association or foundation) or a partnership (e.g. a general partnership, limited partnership or shipping company).
If a corporate entity or a partnership has been entered into the prepayment register, withholding is not necessary.
If a corporate entity or partnership has not been entered into the prepayment register, tax must be withheld on the trade income at the rate of 13%. If the recipient of trade income has a tax card with a tax rate of under 13%, tax should be withheld at the percentage rate printed on the tax card.
If the work is done by a self-employed individual (Finnish "toiminimi"), tax must be withheld according to the individual's tax card. For any self-employed people who fail to present a card, tax must be withheld at the rate of 60%. 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 Health Insurance Act. 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 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 were earned 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 trade income.
Reporting and payment of withholding and health insurance contributions
Data on wages paid on or after 1 January 2019 are reported to the Incomes Register after every payment of wages. Employer's health insurance contributions are reported monthly at employer level on the employer's separate report. Withholding and the employer's health insurance contribution can be paid to the Tax Administration in MyTax.
Wages paid in 2018 and earlier are reported to the Tax Administration on the tax return for employer's contributions and the annual information return. Withholding and the employer's health insurance contribution can be paid to the Tax Administration in MyTax.
You should still submit an annual information return on wages paid in 2018
Employers must still submit an annual information return for payments made, amounts withheld and fees paid in 2018. You should submit the annual information return by the end of January 2019.
However, you will no longer need to submit an annual information return for wages and earned income paid from 1 January 2019 onwards that you report to the Incomes Register.