Employees arriving in Finland/bulletin for foreign taxpayers

Date of issue
1/13/2015
Validity
In force until further notice

This article is for employees arriving in Finland. Leased employees, please read article Leased employees - taxation in Finland - prepayment of tax, especially if you come from Estonia, Latvia, Lithuania, Sweden, Norway, Denmark, Iceland or Poland.

1. If you stay in Finland max. 6 months, read this:

(a) If your employer is a Finnish company, your final tax at source will be 35%

Finnish employers collect a 35-percent tax at source on the pay of a foreign employee who only stays in the country for six months or less. Before collecting the tax your employer may exempt €17 per day. This deduction is applicable only if the local tax office has recorded it in your tax-at-source card.

Besides tax, your employer will also withhold social security payments from your pay (amounting to approximately 7% all payments combined), unless you have the E 101 Certificate of a posted employee. If you are regarded as a posted employee, your social security insurance has been taken care of in the country where you come from. Because the 35-percent tax is a final tax, you are normally not expected to submit an income tax return in Finland.

What you should do:
You need a Finnish personal identity code. You may receive it when you visit the local tax office in Finland.

You must fill out the following registration form:

Bring the following documentation with you:

  • If you are an EU/EEA citizen: your currently valid passport or your Schengen area identity card and a document confirming that your right of residence has been registered (if more than 3 months have passed since you arrived in Finland).
  • If you are not an EU/EEA citizen: your currently valid passport and residence permit of an employed person.

You must also have your employment contract or another written explanation of the main terms and conditions of your employment in respect of the work being done in Finland.

The tax office will issue you a tax-at-source card (fill out the application form no ). Give it to your employer. After your work with your Finnish employer is completed, your employer will issue you a certificate covering the full period of your employment during the relevant calendar year(s), showing your income and the tax withheld. We recommend that you keep the certificate. You may have to present it to the tax authorities of your country of residence.

Application form for the tax card:

If you work in the field of building and construction you must additionally have an individual Tax Number. For more information, click www.tax.fi/taxnumber.

(b) If your employer is a non-Finnish company, Finland will not tax your income unless you are a leased employee

If you stay in Finland for six months of for a shorter period and a company from another country than Finland is paying you wages*, you will not have to pay tax on your wages in Finland. You will only have to submit an income tax return in your home country, and pay the appropriate taxes in your home country.

If you are a leased employee from countries including Estonia, Latvia, Lithuania, Sweden, Norway, Denmark, Iceland or Poland— Finland can levy tax on your wages even if your employer is not Finnish. For more information, see article Leased employees - taxation in Finland - prepayment of tax.

*) Please note that a foreign company with a permanent establishment in Finland will be considered a Finnish employer for tax purposes. The business of a foreign company may constitute a 'permanent establishment' because a long-term construction and building, installation or assembly project is undertaken. The tax authorities of Finland will examine each case separately to determine whether the business operation constitutes a permanent establishment. If your foreign employer's operations give rise to the existence of a permanent establishment, the wages you receive will be taxed in Finland.

(c) Are you a performing artist or a sportsman?

If you are a foreign performing artist or an athlete, a final tax at source of 15 percent is imposed on the income earned in Finland based on your personal activity. This rule will be applied to whoever receives the fee. With the 15-percent final tax there is no option to deduct costs. However, if you are a resident of EU/ETA-country, you may claim for a deduction of direct costs related to your activity in Finland and to be taxed with a progressive tax at source instead of the flat 15%. Run the Tax-at-source Calculator to see whether it is more beneficial for you to claim a deduction of direct costs linked to performance in Finland or to pay the 15% at source with no option to deduct costs. The request of deducting the direct costs can be made when applying for tax at source card in Finland, or later by requesting a refund of tax at source (Application for refund of Finnish withholding tax).

You can also request progressive taxation

You can request that your income be taxed under the progressive scale (similarly as person staying in Finland longer than 6 months) instead of the 35% flat tax at source. To facilitate progressive taxation you must visit a tax office to ask for a nonresident's tax card, which you must then give to your employer. When you fill out the application form, you must report all your Finnish-sourced earned income, your taxable earned income in your country of tax residence, and all deductions from them. Finland only taxes your income from Finnish sources, but your taxable income from your country of tax residence has an increasing effect on your taxation in Finland.

If your taxation is progressive, you will receive a pre-completed tax return during the following year on which you will find a specification of your income and deductions, and the result of your assessment. You must check the contents of that tax return and send it back to us with corrections if necessary.

More information, click

2. If you stay in Finland longer than 6 months, read this:

If you stay in Finland for longer than six months, you will be paying tax on your wages in Finland. It does not make a difference if your employer is Finnish or foreign or if you receive a part of your wages from a Finnish employer and another part from a foreign employer**.

Besides tax, your employer will also withhold social security payments from your pay (amounting to approximately 7 % all payments combined), unless you have the certificate E 101 of a posted employee. If you are regarded as a posted employee, your social security insurance has been taken care of in the country where you come from. In addition, you must file a Finnish income tax return.

**) If your employer is not from Finland, Finland will not tax the wages from this particular employer during the calendar year when all the following requirements are fulfilled:

  • Your stay in Finland is no more than 183 days during the calendar year.
  • This particular employer does not have a permanent establishment in Finland with your wages in its bookkeeping and accounting.
  • Your spouse and children have remained to live in the family home in your country of residence – which is one the following countries: Belgium, Bosnia-Herzegovina, Croatia, Egypt, France, Germany, Greece, Hungary, Italy, Japan, Republic of Korea, Kosovo, Luxemburg, Malaysia, Montenegro, New Zealand, Philippines, Portugal, Serbia, Spain, Switzerland, Tanzania or Zambia.

What you should do:
You need a Finnish personal identity code. Workers arriving in Finland can receive their Finnish personal identity codes from the local tax office. Starting 1 March 2013, the Tax Administration has issued identity codes to all foreigners regardless of how long they stay in the country.You must fill out a registration form to give the tax office the details needed for the Population Register System (for more information, see the beginning of this article).

However, if you stay longer than a year, your case is handled by the Local Register Office and a Finnish municipality may be entered in the Population Register System as your Finnish domicile. For more information, see the www.maistraatti.fi website.

When you visit the local tax office they will give you instructions for filing an application for a tax card. The application form is Form 5042a. Give the tax card to your employer. The employer will then use the rate printed on the tax card for withholding the tax on your pay.

If your employer company is not Finnish and does not have a permanent establishment it may not have the obligation to withhold tax for the Finnish Tax Administration. Then it will be important that you ask for the tax office to officially compute prepayments (ennakkovero; förskottskatt) for you. You will then make the prepayments yourself. If you neglect your prepayments and have no withholding, you will end up paying surtax and interest.

Taxes and deductions

The Finnish income taxes on your wages are the progressively calculated state tax, the municipal (local) tax, and the church tax.

You will be entitled to claim tax deductions for work-related costs and for payments of interest on any loan that you have taken to finance your permanent owner-occupied home. If your spouse and children have remained to live in your usual country of residence, deductible travel expenses will in that case also include your trips to see your family (calculations must be made assuming the cost of the cheapest means of transportation). Your work-related travel expenses in Finland will be deductible up to €7,000 per year, but there is a nondeductible minimum amount.

Deductions merely based on family circumstances are not possible. However, the maximum of €80 per year and per child can be credited on income tax in Finland, if a legal ruling has obliged you to pay maintenance.

Premiums for mandatory pension and unemployment insurance are deductible. Subject to certain restrictions, you will also be able to deduct voluntary pension insurance contributions paid to an insurance company established in the European Union.

Do not forget to file an income tax return

After every calendar year you have worked in Finland you have to file an income tax return to the Tax Administration. (For the 2016 income year, the filing deadline will be May 2017.)

You will receive a Pre-Completed Tax Return form in your home address. You do not have to declare the income you have received before moving to Finland nor income that you will receive after moving away.

Forms and instructions are available in English. The tax office will assess your taxes and send you a statement (verotuspäätös; beskattningsbeslut) showing the final amounts of taxes imposed. This statement will show if you will be receiving a refund or alternatively, if you will have to pay more tax because of insufficient withholding. Instructions for appeal will also be included.

Income from sources outside Finland

When you submit your tax return to the Finnish Tax Administration you must also declare the income received from sources in other countries than Finland during your stay in Finland.

Nevertheless, to declare these facts in the tax return will not necessarily mean that this income will be taxed in Finland. The bilateral tax treaty between Finland and your country of residence may prevent the taxation. This is the situation in cases where your spouse and children remain in your usual country of residence, at your family home, while you work in Finland. In this case you are considered to have stronger ties with your usual country of residence than with Finland. However, if you have a personal and family situation that gives Finland the power to tax your foreign-sourced income, Finland will eliminate any double taxation usually by subtracting the foreign tax amounts from the tax amounts payable in Finland on the same income.

For versions of this article in Russian, German and French, click: