Household purchases services from a company

Payroll reporting has changed

Wages and contributions paid on 1 January 2019 or later must be reported to the Incomes Register. Read more about how to submit payroll information in the future.

When you hire a company or a self-employed individual for services such as cleaning work, you must check whether they are registered in the prepayment register. If the service provider is not registered, you must take care of certain obligations. The household employer’s obligations concern both private individuals and estates.

If the service provider is registered

When you buy a service (e.g. cleaning) from a company or self-employed individual registered in the prepayment register, the only obligation you have is to pay the invoice for the work done. You can check the service provider’s registration status from two places:

  • BIS company search (www.ytj.fi). You can search for information either by the service provider’s name or by the Business ID. The service is free of charge.
  • The Tax Administration’s service number 029 497 051 (General service number for businesses; standard call rates).

If the service provider is a prepayment-registered company or self-employed individual, you are entitled to a tax credit for household expenses, provided that all the other conditions for the credit are also met.

Read more about the tax credit for domestic expenses

If the service provider is not registered

If the company or self-employed individual is not registered in the prepayment register, you must always report trade income and other work-related payments to the Incomes Register. All payments must be reported – there is no minimum euro threshold.

Please note that trade income cannot be paid in the Palkka.fi service, so the service cannot transmit information on such income to the Incomes Register.

If the company or self-employed individual is not registered in the prepayment register, the household’s employer obligations depend on the amount of trade income paid. The euro amounts below are payer specific and apply to both private individuals and estates.

If the service provider has not registered for prepayment and if the work-related portion of the amount you pay does not exceed €1,500 a year:

  • you must report all the trade income and other potential payments you have made, such as expense allowances, to the Incomes Register on an earnings payment report without a minimum euro threshold;
  • you do not need to withhold tax;
  • you do not need to pay the employer’s health insurance contribution and statutory insurance contributions, as the work is carried out by a company.

If you have withheld tax at the request of a self-employed individual, for example, you must report it to the Incomes Register no later than on the 5th day of the month following the payment of the trade income. You can pay the withholding in MyTax (tax.fi/mytax). The payments will be available in MyTax in the usual manner, as the Tax Administration receives the information from the Incomes Register.

If the service provider has not registered for prepayment and if the work-related portion of the amount you pay exceeds €1,500 a year:

  • you must report the trade income, tax withheld and other potential payments you have made, such as expense allowances, to the Incomes Register on an earnings payment report without a minimum euro threshold;
  • you can pay the withholding in MyTax (tax.fi/mytax). The payments will be available in MyTax in the usual manner, as the Tax Administration receives the information from the Incomes Register;
  • you do not need to pay the employer’s health insurance contribution and statutory insurance contributions, as the work is carried out by a company.

Remember to file a payroll report for 2018. File the employer's payroll report electronically by 4 February 2019 (on paper by 31 January 2019). Report to the Tax Administration any corrections regarding wages paid before 1 January 2019, as well.

Withhold tax as indicated by the tax card

If the service provider has not registered for prepayment, the household must withhold tax according to the rate indicated on the service provider's tax card (usually tax card for secondary income).

  • If the service provider does not present a tax card, the withholding rate is 60%.
  • If the job is done by a company or a corporation (e.g. limited liability company, cooperative society, general partnership or limited partnership), the withholding rate is 13%.

Before the withholding is calculated, the value-added tax is subtracted from the invoice total. However, travel expenses, supplies, etc. are not subtracted, but the withholding is calculated from an amount in which they are included.

Note: A household will not qualify for the tax credit for domestic expenses if the service provider has not registered for prepayment. Some caregiving services are an exception from this rule (read more in Finnish or Swedish).

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