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Foreign leasing corporations in Finland
If a foreign enterprise acts as a leasing corporation i.e. arranges for leased employees to do work for Finnish service recipients, it must take care of a number of employer obligations in Finland. There are some differences between the employer obligations of foreign companies with a permanent establishment and the employer obligations of other foreign companies.
Employee leasing defined
The arrangement by which one enterprise provides workers to another under a leasing contract is what is known as "employee leasing". The enterprise where the people work is known as the service recipient company.
This way, the workers have an employer-employee relationship with the foreign leasing corporation, which also pays their wages. However, the place where they work is usually the premises of the Finnish service recipient. They use the tools and materials belonging to the service recipient, and are under the service recipient's direction and supervision.
It is important to be aware that in subcontracting, direction and supervision of workers is the responsibility of the (foreign) subcontractor company. The same concerns the tools and the materials, because normally, the subcontractor provides them for the workers.
Leased employees must have themselves registered within one month at the Finnish Digital Agency or at a tax office
Leased employees must pay Finnish income tax on their wages starting on their first day of work, if the country where they come from is a country with no tax treaty with Finland, or if it is one of the following:
Albania, Belarus, Bermuda, Cayman Islands, Cyprus, Denmark, Estonia, Georgia, Germany, Guernsey, Iceland, Isle of Man, Jersey, Kazakhstan, Latvia, Lithuania, Moldova, Norway, Poland, Sweden, Spain, Tajikistan, Turkey or Turkmenistan.
Leased employees from such countries must register to get Finnish personal identity codes within one month after they start working. They must contact the Finnish Digital Agency or tax office. In any case, the workers must contact the tax office in order to obtain their tax card or a set of bank slips for regular tax prepayments.
It is in the best interests of Finnish service recipients that foreign leasing corporations are prepayment-registered
We recommend registration in the Prepayment Register to foreign leasing corporations. It is a good policy to have a valid registration before the stage is reached when the Finnish service recipient settles your first invoice. If your foreign leasing corporation has a registration in Finland for tax prepayments, your service recipient is no longer under the obligation to withhold tax-at-source (13%) when paying you for the leased workers you have arranged.
Read more about registration for prepayments Starting up business in Finland - foreign company
Foreign leasing corporations must be registered as employers
If your leasing corporation is treated as having a permanent establishment in Finland, you must have it registered as an employer in Finland before the first payday. Foreign leasing corporations are also entitled to ask for voluntary entry in the Register of Employers even if no permanent establishment exists. When your leasing corporation is registered as an employer, its workers are relieved from their obligation to pay the prepayments.
Businesses that have been entered into the Employer Register must withhold tax from the wages they pay to workers, and pay on the amounts to the Tax Administration. You must apply the withholding rates that are printed on each individual worker's tax cards. For foreign workers who stay for a shorter time than six months, the tax office will issue a tax-at-source card (lähdeverokortti; källskattekort) instead of the usual tax card. Those staying longer get tax cards, and their withholding follows the usual, progressive income-tax scheme.
You must inform the Incomes Register when you start providing leased workers to your customers
All leasing corporations must submit a report on the workers who work in Finland by the fifth calendar day after first payday. You must report each individual worker separately. Send the report to the Incomes Register. Your reporting should cover all your leased workers from countries that have not signed a tax treaty with Finland, or from one of the following countries:
Albania, Belarus, Bermuda, Cayman Islands, Cyprus, Denmark, Estonia, Georgia, Germany, Guernsey, Iceland, Isle of Man, Jersey, Kazakhstan, Latvia, Lithuania, Moldova, Norway, Poland, Sweden, Spain, Tajikistan, Turkey or Turkmenistan.
Registration in the Finnish Register of Employers does not relieve you from the obligation to submit the report to the Incomes Register.
You must provide social security to your employees
If a worker of yours is held to be covered by the Finnish social insurance scheme, pension insurance, unemployment insurance, and health insurance contributions must be withheld from his or her wages. However, the health insurance contribution is withheld only if the wages paid are less than €800,02 a month 1.1. – 31.12.2024. However, those workers will not be covered by the Finnish social security system who have an A1 or E101 Certificate, proving that have a 'posted employee' status. They continue to have social insurance in their home countries.
But if the worker is covered by the Finnish social insurance scheme, you are responsible for buying insurance and for paying the employer's share of their pension insurance, employment insurance and accident insurance contributions. Foreign leasing corporations may also have to pay Finnish health insurance contributions (previously: social security contributions), the amounts of which depend on the wages paid.
For more information on mandatory pension insurance, contact the Finnish Centre for Pensions or any insurance company. For more information on accident and unemployment insurance policies, contact any insurance company.
Foreign leasing corporations must file reports on paid wages and contributions
If you paid your employees on 1 January 2016 or later: File an earnings payment report to the Incomes Register, detailing the amounts paid and withheld, no later than five days after payday. You must file the earnings payment report regardless of whether you are on the register of employers or not.
You are required to submit an employer's separate report to the Incomes Register to give details on the employer's health insurance contributions you have paid during the month. Submit the separate reports by the 5th of the calendar month following the payment month.
Further information
- read more about how to submit payroll information to the Incomes Register
- paying employer's contributions
Consequences of non-reporting
If you represent a foreign leasing corporation that fails to file the report on leased workers or fails to file it on time, the Tax Administration may require you to pay a fine for negligence.
If you are late when filing an earnings payment report or an employer's separate report, you will usually have to pay a late-filing penalty.
If we do not receive any reports from you, we must assess your tax period's taxes by estimation. If you neglect your reporting obligation, we may impose surtax. Additionally, we may have to cancel your prepayment registration.
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