Foreign business in Finland: information about taxation
Welcome to Finland
This guidance is for foreign construction-sector companies planning to participate in a construction project in Finland.
Before you take part in competitive tendering or start working in a project, it is important that you find out how the assignment would affect your company’s taxation and finances. Also note that the Finnish Tax Administration may need several weeks to process the required reports and to enter your company or employees in its registers. If you make preparations well in advance, things will run more smoothly and you will not have to wait so long.
To help you get started, we have collected here the most important things that you should take into account.
Permanent establishment and registers
The location of the company’s permanent establishment affects the company’s tax liability and business costs in Finland. If the company has a permanent establishment in Finland, Finland has the right to collect tax on the company’s income. Find out whether your company is considered to have a permanent establishment in Finland. You can find help on the Tax Administration's online helper tool.
Register of employers, and reporting earnings payment data
Company with a permanent establishment and employees in Finland:
- Enter your company in the register of employers.
- Submit earnings payment reports and employer’s separate reports to the Incomes Register regularly.
- Withhold tax or tax at source on wages paid by the company and pay the employer's health insurance contribution.
Company with employees but no permanent establishment in Finland:
- If any of the company’s employees stays in Finland for more than six months or is insured in Finland, the company must submit earnings payment reports to the Incomes Register. In some cases, earnings payment reports must also be submitted on leased employees.
- A company can also voluntarily request entry in the register of employers. In this case, the company must withhold tax on the wages and also withhold the employee’s health insurance contribution. We recommend this option, because it makes it easier for the employees to take care of their tax matters.
- Note: In certain situations, a company must file an income tax return even if it does not have a permanent establishment in Finland.
The prepayment register is one of the most important registers maintained by the Tax Administration. When your company is entered in the prepayment register, your client does not need to withhold tax on income paid to the company. Being in the register is an indication that the company takes care of its tax obligations.
If the company has only one assignment in Finland, an alternative to the registration is a tax-at-source card. The company can apply for a tax-at-source card for the duration of the contract.
VAT is paid on the sale of goods and services. It is important that you find out in advance whether your company must register for VAT in Finland.
Will your employees pay tax to Finland?
Each employee’s tax liability depends on whether they stay in Finland for a maximum of six months or for longer. Other relevant factors are whether the wages are paid by a Finnish or foreign company and which country’s tax treaty is applied.
Special groups of employees
Taxation in Finland is subject to special provisions that concern certain employee groups, such as construction employees and leased employees.
- Construction employees cannot start working unless they have been entered in the register of tax numbers.
- Leased employees must in certain cases apply for prepayments from the Tax Administration.
- Foreign employers using leased employees have employer obligations and reporting obligations.
- A construction site’s project supervisor must report details on the employees working on the site once a month. According to law, even a foreign employer must provide the project supervisor with details on its employees before they start to work.
- When a foreign company acts as the buyer of construction services in Finland, it may have a separate obligation to provide the Tax Administration with contract details on the construction services carried out in Finland on a monthly basis.
- If a vehicle that is registered abroad is used in Finland, it can only be used for a limited period and it is also subject to other restrictions. Check the restrictions before you import a vehicle to Finland. The rules are different for company vehicles and for private vehicles.
- Some tax matters must be handled electronically. A foreign company needs a Katso ID to be able to identify itself in the Tax Administration’s e-services. A company registered abroad may have a foreign or Finnish representative. If the company’s representatives are not in Finland, the company must follow a special procedure when requesting the Katso ID.
Termination of business or changes to business
Foreign companies must always inform the Tax Administration if they terminate their business in Finland. Report any changes in your business operations by submitting a notification of changes and termination. Even after the termination, you will still have to file all the required tax returns.
Read the instructions on tax.fi
At Foreign business in Finland, you can find information about the taxation of foreign companies in different situations.
At Work in Finland, you can find information about the taxation of employees.
Tax Administration’s registers:
- Prepayment register
- VAT register
- Employer register
- Being an employer
- information about employer obligations, such as the reporting of wages and employer's contributions
- Application for a tax-at-source card for trade income received by a foreign corporation
- Reports on construction work
- Car taxation
- Information about how companies can identify themselves in e-services
- Reporting changes in the operation
- Going out of business
Do not hesitate to contact us
If you do not find the answers you are looking for in this guidance or on tax.fi, please contact our taxpayer services.