Key employees from other countries

Special tax rules apply to the employment of foreign citizens as key employees (Provisional Act). As a key employee, you may be taxed at the 35-per-cent flat rate instead of the usual Finnish tax based on the progressive scale, even if you stay longer than 6 months.

Key employee rules will apply if all the following requirements are met:

Instead of being a nonresident employee, you become a Finnish tax resident as soon as you start working.

You earn a regular cash salary of at least €5,800 per month. Fringe benefits should not be included in this figure. However, if you arrive for work at an institute of higher education in a teaching position or as a researcher, there is no minimum salary requirement.

Your tasks and responsibilities while employed by your Finnish-based or Finnish employer require your special expertise.

You do not have Finnish citizenship and you have not been a tax resident in Finland at any time during the five years preceding the year when you accept employment in Finland.

These tax rules are only applicable to wages regarded as sourced in Finland under the Finnish Income Tax Act (TVL). A further requirement is that the work is for a Finnish-based employer and is mainly performed in Finland. The Act governing the taxation of key employees also applies to the pay received from a foreign employer but paid, on behalf of that employer, by a Finnish entity or person (such as an accounting firm).  For more information on foreign key employees, see the guidance of the Tax Administration (available in Finnish and Swedish) "Taxation of individuals arriving to Finland — Ulkomailta Suomeen tulevan verotus".

This tax relief will not be granted unless recorded in your tax card

If the key employee tax relief scheme is applicable, it should be printed in the text showing in the employee's tax card (the employee's withholding allowance certificate). To qualify for the benefit, you will be expected to submit a request to the local tax office for a tax card within 90 days of starting work as a key employee. To obtain a tax card you will need a Finnish personal identity number. For more information, click Finnish personal identity codes for workers arriving in Finland.

No separate form exists for tax card requests by key employees; instead, you should use the ordinary request form for a tax card. Make clear when filling in the form that you are applying for key employee tax relief. You will normally be required to enclose a copy of your employment contract, showing the cash amount of your wages and the tasks requiring special expertise. The maximum duration for the tax relief to be effective is 48 months.

The employer withholds tax and insurance premiums

The system of tax payment involves the employer, who withholds an amount from your wages as a final tax, to be forwarded to the Finnish Tax Administration. Your wages will not be subject to the Finnish health insurance contribution or daily allowance. However, the employer’s social security fee and old age pension insurance premium will be collected in the normal way unless you hold the certificate of a posted employee (E 101 / A1) or other equivalent certificate showing you to be covered by insurance in your country of residence.

None of the usual tax deductions are available to the key employee; no deduction is granted for any costs for the production of income, nor can deductible costs be set off against any other income that you have. If you earn other income, your tax bracket will be higher on the progressive scale because of your salary as a key employee.