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Obligations of a foreign employer

If a foreign company pays wages to a worker who works in Finland, it must fulfil a number of obligations that not only are related to taxes but are associated with the Finnish social insurance system, as well.

These obligations depend on whether or not your company is considered to have a permanent establishment in Finland.

Having a “permanent establishment” for purposes of income tax

These instructions are for foreign companies that are non-resident taxpayers in Finland. A foreign organisation whose place of effective management is located in Finland is considered a resident taxpayer in Finland. Read more about the place of effective management and a tax resident foreign organisation’s employer obligations.

Companies with no permanent establishment in Finland

If your company has no permanent establishment in Finland for income tax purposes, it does not have to ask for registration in the Tax Administration’s register of employers. Even if you have no registration, you must submit earnings payment reports to the Incomes Register in the following circumstances:

  1. Your company pays wages to an employee who works in Finland, and at least one of the following statements is true:
    • The employee is covered by the social insurance scheme in Finland
    • The employee’s presence in Finland lasts longer than 6 months
    • He or she is a leased employee and a non-resident taxpayer, and Finland has the taxing rights with respect to the wages according to a tax treaty between the employee's country of residence and Finland
  2. Your company pays wages to an employee who works in another country but has Finnish social-insurance coverage

If you are a foreign company, and an employee of yours stays in Finland for more than 6 months, Finnish tax rules do not require you to withhold tax on his or her pay. He or she must make income-tax prepayments to the Finnish tax authorities independently.

As a foreign company, you can always submit an application for registration in the register of employers on a voluntary basis. If you are registered, your employer obligations are the same as the obligations of an enterprise that has a permanent establishment in Finland.

When must payors withhold tax on their wage payments and pay it on to the Finnish tax authority?

If you are an employer that carries out tax withholding on your worker’s pay, you are required to inform the tax authority of the amounts you withhold.

If an arrangement has been made with a Finnish “substitute payor” to handle the wage payments, the substitute payor must carry out tax withholding, as well. If these conditions are fulfilled, the Finnish Tax Administration will not require the employee to pay any prepayments.

How to report wages and employer's contributions

A permanent establishment in Finland exists

If your foreign company, for purposes of income taxation, is treated as having a permanent establishment in Finland, note the following:



You must submit an application for registration in the Tax Administration’s register of employers, if your company has a permanent establishment in Finland and it pays wages in Finland to:

  1. Two or more wage earners on a permanent basis, or
  2. to six people at the same time on a temporary basis, even if the six workers had only short-term and temporary employment contracts.

If no Finnish Business ID has yet been issued, fill in and submit the start-up notification Y1, Y2, or Y3 to have your company entered in the register of employers.

If your company has already received its Finnish Business ID, log in to MyTax to send the application, or fill in and submit notification Y4, or Y5, or Y6 to have your company entered in the register of employers.

Submit an application for registration in MyTax

Visit the BIS website to download a “Y” form



When you pay your employees, you must withhold taxes. The amount to be withheld is dependent on the percentage rates printed on each employee's tax card or tax-at-source card. When you apply the percentage rates, you must include the wages paid in cash and the wages paid in the form of fringe benefits.

Pay the amounts on to the Tax Administration once a month.

How to report wages and employer's contributions

Paying self-assessed taxes



You must pay the Finnish employer’s health insurance contributions if your workers do not hold documentation establishing that they are posted employees (i.e. an A1 or E 101 Certificate).

Pay the contributions on to the Tax Administration once a month.

How to report wages and employer's contributions

Paying self-assessed taxes

Complying with the obligations related to social security

Your obligations vary according to whether your employees have a document establishing a “posted employee” status.

The employees have A1 (E 101) Certificates or similar documents

Your employee may be a holder of an A1 (E 101) Certificate. As long as the certificate is valid, no social security contributions have to be paid in Finland. The existence of the certificate means that the employee is still covered by home-country social security.

The authorities in charge of social security in the country may have issued your employee an A1 (E 101) Certificate, if:

  • Your employee is a “posted employee” i.e. sent to Finland by a foreign company
  • The country of tax residence of the employer company is in the European Union or is Norway, Iceland, Liechtenstein or Switzerland.

Employees without a document establishing “posted employee” status

If the worker does not have a social insurance coverage (in his or her country), you must take out pension insurance for the worker with a Finnish pension insurance company.

You must pay the premiums, about 20% of wages. These include the worker’s own contribution, which you must withhold every time you pay wages. In general, foreign employers are subject to the same obligation as Finnish employers to arrange for pension insurance, as set out in the Act governing employment-related pensions (TyEL).

For more information, contact the Finnish Centre for Pensions

In addition to pension insurance, other insurance contracts to be covered by the employer may include:

  • Accident insurance,
  • Unemployment insurance and
  • Group life insurance.

For further information, contact:

How much are the insurance premiums?

Check the rates for premiums and contributions

Consequences of non-reporting

When you have paid your workers, report the pay and withholding to the Incomes Register. If you submit a report after the date when it is due, you must pay a late-filing penalty charge. If an employer has paid out wages and fails to submit the required payroll reports, punitive tax increase and charges for negligence will be imposed.

If an employer has not withheld money on the paid-out wages, the Tax Administration may recover the owed amounts from the employer later. Additionally, the Tax Administration may have to cancel the employer’s prepayment registration.


Page last updated 12/13/2023