Au pairs from abroad arriving in Finland
Pocket money paid by a Finnish family to a foreign individual working as an au pair is taxable wage income. However, the au pair's wages are usually not subject to employer's and employee's health insurance contributions.
A Finnish household may employ an au pair from another country to take care of their children and assist in household duties. Usually the household provides the au pair with free accommodation and meals and pays them pocket money.
The pocket money paid to the au pair is regarded as taxable wage income. The fringe benefit consisting of free accommodation, meals and the like is also regarded as taxable income. Tax assessment depends on the au pair's period of stay in Finland.
Is the au pair staying in Finland 6 months or longer?
If the au pair stays in Finland for longer than six months, they will be taxed according to the same rules as other Finnish tax residents. This means that their wages and other earned income are subject to progressive taxation in Finland.
If the au pair stays in Finland for six months or less, their employer withholds a 35% tax at source on their income. Alternatively, if the au pair resides in a country within the European Economic Area or a country that has a tax treaty with Finland, they may request that they should be taxed progressively instead. If the employee requests progressive taxation instead of paying tax at source, they must apply for a non-resident taxpayer's tax card. Read more: Work in Finland
Au pairs need a tax card
For purposes wage payment, au pairs must get a Finnish tax card as soon as they start working in Finland. If the work lasts longer than six months, they must also apply for a Finnish personal identity code. The Tax Administration will send a pre-completed tax return to all employees who have either stayed longer than six months in Finland or requested progressive taxation. The taxpayer is expected to check the pre-completed tax return. If the pre-completed tax return is inaccurate, additional data can be submitted or errors corrected in the MyTax e-service or on a paper form.
Employee's and employer's health insurance contributions
All wages are usually subject to the employee's and the employer's health insurance contributions. However, au pair work is exempt from these contributions if the work in Finland lasts less than four months, if the au pair's total wages (pocket money + fringe benefits) are less than €1,211 per month or if they work fewer than 18 hours a week.
If the au pair moves to Finland permanently, the health insurance contributions must be paid unless the employee has a certificate from Kela indicating that they are not covered by Finnish health insurance or the Finnish residence-based social security system.
Example: An au pair comes to Finland to work for calendar year 2019. The host family provides accommodation, meals and €300 per month. Accommodation and meals are a taxable benefit valued at €517 per month. Taxable wages total approximately €817 per month. No employee's health insurance contribution is withheld from the wages, nor does the host family pay the employer's health insurance contribution on the wages.
A household employing an au pair must follow the instructions given on the employee's tax card on withholding or tax at source. Tax and other payments withheld from the employee's wages and the potential employer's health insurance contribution are 'employer contributions' that must be reported and paid to the Tax Administration. A tax return on employer's contributions must be filed electronically, for example in MyTax.
The household must also file an annual information return (Employer Payroll Report) by the end of January following the wage payment year. The last annual information return that must be filed is on wages paid in 2018. File wages on the form Annual Information Return – Employer Payroll Report (7801e). You can file the form electronically or on paper.
Wages paid on or after 1 January 2019 must be reported to the Incomes Register.
Read more: Household employers
Tax credit for household expenses
Wages paid to an au pair can entitle the household to a tax credit for household expenses. The tax credit for household expenses is 20% of the employee's gross wages (wages paid + fringe benefits) and the indirect wage expenses payable by the employer, such as the employer's health insurance contribution. Read more: Tax credit for household expenses