Household hires a worker

When you pay wages to a worker, you become liable for the obligations of an employer. You must

  • take care of withholding, the employer's health insurance contribution, mandatory pension insurance and occupational accident and disease insurance;
  • report wages and other earned income you have paid after 1 January 2019, including fringe benefits and reimbursements of travel expenses, to the Incomes Register;
  • submit an annual return on the wages you have paid during 2018 to the Tax Administration.
  • When a household employs someone, the employer obligations depend on the amount of pay. The euro amounts below are payer specific and apply to both private individuals and estates.

Always report wages and earned income to the Incomes Register

Households must report any wages and earned income they pay to the Incomes Register. All payments must be reported – there is no minimum euro threshold. In addition to the earnings payment report, the employer’s separate report on the employer’s health insurance contributions must also be filed.

The income earner’s age has no effect on the reporting obligation. However, the amount of pay and the worker’s age affect the household’s other employer obligations: for example, what payments associated with wage payment must be paid and what insurance policies must be taken out. The euro thresholds for employer obligations given below concern both private individuals and estates.

If the gross wages you pay to one or more workers do not exceed €1,300 a year, you are required to:

  • withhold the worker's share of the unemployment insurance contribution from the pay;
  • withhold the worker's share of the pension insurance contribution from the pay;
  • report the wages you have paid and the worker’s shares of the pension insurance contribution and unemployment insurance contribution you have withheld to the Incomes Register.
  • You do not need to withhold tax from the pay unless the worker asks you to.
  • You do not need to pay the employer's health insurance contribution.

However, if you have withheld taxes or paid health insurance contributions, you must report them to the Incomes Register. You can pay the withholding in MyTax (tax.fi/mytax). The payments will be available in MyTax. The Tax Administration receives the information from the Incomes Register.

If the total amount of wages you pay to one or more workers exceeds €1,300 but the gross wages of an individual worker do not exceed €1,500 a year, you are required to:

  • take out occupational accident and disease insurance for your workers;
  • pay the unemployment insurance contributions to the Unemployment Insurance Fund (please note that when you are an employer, you must always withhold the worker’s share of the unemployment insurance contribution from the pay, even when the pay is less than €1,300);
  • report the wages you have paid and the worker’s shares of the pension insurance contribution and unemployment insurance contribution you have withheld to the Incomes Register.
  • You do not need to withhold tax from the pay or pay the employer’s health insurance contribution, if you do not pay more than €1,500 a year to any individual worker.

However, if you have withheld taxes or paid health insurance contributions, you must report them to the Incomes Register. You can pay the withholding in MyTax (tax.fi/mytax). The payments will be available in MyTax. The Tax Administration receives the information from the Incomes Register.

If the gross wages you pay to an individual worker exceed €1,500 a year, you are required to:

  • withhold tax from the pay;
  • withhold the worker's share of the unemployment insurance contribution from the pay;
  • withhold the worker's share of the pension insurance contribution from the pay.

You must also pay the following employer's contributions and payments:

  • pension insurance contribution (including the employer's and the worker's shares) to the pension insurance company;
  • taxes and the employer’s health insurance contribution to the Tax Administration;
  • occupational accident and disease insurance to an insurance company;
  • unemployment insurance contribution (including the employer's and the worker's shares) to the Unemployment Insurance Fund.

Report the wages, the worker’s share of the pension insurance contribution and unemployment insurance contribution withheld from the wages, and the employer’s health insurance contributions to the Incomes Register.

You can pay the withholding in MyTax (tax.fi/mytax). The payments will be available in MyTax. The Tax Administration receives the information from the Incomes Register.

 

Further information: A household hires an employee – households as employers (incomesregister.fi)

Further information is also available on insurance companies’ websites. The payments are subject to age and euro limits.

Pay calculation and reporting in Palkka.fi

Household employers can pay wages through the Palkka.fi e-service. The service offers a functionality where you can calculate your worker’s wages and indirect wage expenses. It sends reports to the Incomes Register automatically. In Palkka.fi you can take care of all the employer obligations described in these instructions. If you pay wages through Palkka.fi, you do no need to report separately to the Incomes Register.

The e-service also allows you to request a tax credit for household expenses on the wages you have paid. The data will be transferred to your pre-completed tax return automatically. You can also print out a payslip for your worker. Palkka.fi stores all data for 11 years.

Go to Palkka.fi

If the wage estimate changes during the year

The estimate of the amount of wages may change during the year. If you have estimated the wages does not exceed €1,500 a year, you have not been required to withhold tax or pay the employer's health insurance contribution on the wages. However, if you pay more than €1,500 during the year, you must start withholding tax on the wages when the €1,500 threshold is exceeded. You do not need to withhold tax afterwards on the wages you have already paid. However, you must pay the employer’s health insurance contribution for the total amount of wages you have paid over the year. 

Example: If the €1,500 threshold is exceeded in October and the total wages paid over the year amount to €2,000, you must withhold tax on €500. The employer's health insurance contribution you must pay for the whole amount, i.e. €2,000. In addition, you must carry out withholding and pay the employer’s health insurance contribution on the total amount of wages you pay in November and December. The statutory pension insurance and occupational accident and disease insurance contributions are required for the entire wage payment period.

Calculation of net pay

From the gross wages agreed by the employer and the worker, the payments payable by the worker are subtracted. If the wages total more than €1,500 a year, the amount paid to the worker, i.e. the net pay, is calculated as follows:

gross wages
– withholding
– pension insurance contribution (employee’s share)
– unemployment insurance contribution (employee’s share)
= net pay

In addition to the wages, the employer must also pay:

  • employer's health insurance contribution (previously 'social security contribution');
  • pension insurance contribution (employer's share);
  • occupational accident and disease insurance contributions;
  • unemployment insurance contribution;
  • group life insurance contribution.

Information on the amounts to pay (Employers’ and employees’ pension and insurance contribution rates (%) in 2019, in Finnish and Swedish only) 

Note: If you are entitled to a tax credit for household expenses, you will be credited 20% of the wages and indirect wages expenses you have paid.

Withhold tax as indicated by the worker's tax card

If the pay to a worker exceeds €1,500 a year, the employer must withhold tax on it. If the pay is max €1,500, a household employer does not have to withhold tax unless the worker asks for it. However, tax withholding is recommended in order to help the worker to avoid back taxes.

The worker must give their tax card to the employer. The worker's personal withholding rate is printed on it. The original tax card should be given to the main employer, although a photocopy may be shown if the work is a side occupation. If the work is a side occupation, the worker does not have to give the card to the employer. It is enough if the employer takes note of the worker's personal data, withholding rates, and other similar facts displayed on it.

If the worker does not present a tax card, the employer must withhold tax at the rate of 60%.

Handing a pay slip to the worker

Household employers must produce a document serving as a pay slip. No restrictions or requirements are in force as to its format, however, the following facts should be displayed:

  • employer's name, personal identity code, address and telephone
  • worker's name, personal identity code and address
  • amount of gross wages and the amount withheld on it
  • pay date
  • pension and unemployment insurance contributions withheld from the worker
  • amount of the health insurance contribution

The pay slip should be handed out even if no amounts had been withheld or if only a part of the pay were subject to withholding.

Keep the records for 6 years

As an employer, the household is expected to keep notes and records to report the following:

  • worker's name and personal identity code
  • pay date
  • amount paid as wages, and the value of any fringe benefits
  • amount paid as coverage of out-of-pocket expenses
  • pay period.

Notes, records, invoices and receipts must be kept for 6 years after the end of the payroll year.

Joint pool of household employers

Several households may become the joint employer of a day care provider, cleaner or other household employee.   For pools of this type among households we recommend that agreement be reached on who will take care of payroll withholding, payments of contributions and other employer obligations. The person agreed to take charge of this must use his or her own personal identity code when filing and paying taxes on behalf of the pool.

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