When leased employees have a foreign employer, tax on their income depends on tax treaties and the length of stay in Finland.
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The e-Service has opened 8.3.2018 for the taxpayers whose personal deadline date for filing a tax return is 3.4.2018 (self-employed traders and self-employed professionals). For other taxpayers, the opening date is at the end of March.
This article is intended for leased employees whose employer is a foreign company, and the country where they come from has no tax treaty with Finland, or is one of the following: Iceland, Norway, Sweden, Denmark, Germany, Estonia, Latvia, Lithuania, Poland, Moldova, Georgia, Kazakhstan, Belarus, Isle of Man, Guernsey, Bermuda, Jersey, the Cayman Islands and Turkey, Cyprus, Tajikistan and Turkmenistan.
If you arrive in Finland as a leased employee from a country with which Finland does have a tax treaty but your country is not mentioned above, this guidance is not for you. Instead, read the articles
Definition of 'a leased employee'
Leased employees have an employer-employee relationship with the foreign employee leasing agent, which pays their wages. However, they usually work at the premises of the Finnish recipient of the service, the hirer. They use the hirer’s tools and materials, and are under their direction and supervision. If you are a leased employee working on board a ship or aircraft, see the Operation of ships and aircraft in international traffic guidance.
Your income is taxable in Finland
If you are a leased employee working in Finland and you come from one of the above countries, your wages will be taxed in Finland starting on your first day of work regardless of how long you stay.
However, how much you must pay is affected by the length of your stay:
- If you stay for less than six months, you are considered a tax nonresident. You will pay tax at source at the rate of 35%. The taxable portion of your wages is not your entire pay, as a deduction known as lähdeverovähennys; källskattsavdrag will first be applied and it equals €510 per month, or €17 per day if you work for a shorter period.
- If you stay longer than six months or if you live in Finland on a permanent basis, you are considered a tax resident of Finland. Your income is then taxed at the rates determined by the progressive schedule.
You must pay tax to the Finnish tax authorities during the year
For purposes of tax assessment it may be necessary that you request a Finnish personal identity number. For more information, click Finnish personal identity codes for short-term use.After you have been assigned a Finnish personal identity number the local tax office can compute the Finnish taxes on your income.
To fulfill your obligation to pay taxes in advance, you must contact the local tax office of the district where you live; do this immediately, or no later than by the end of the month after your first month of work. The tax office will give you an official calculation for tax prepayments that you must pay on your estimated income. You must make the prepayments during the year when you work in Finland. If you are a nonresident and you neglect your prepayments, the Tax Administration may impose a punitive tax increase — maximally €2,000 — that makes the final amount of your taxes higher.
Monthly withholding or self-initiated prepayments?
The method of payment of the Finnish taxes depends on whether your foreign employer has been entered in the Register of employers in Finland, and it also depends on whether your foreign employer's business in Finland constitutes a "permanent establishment" for tax purposes. To check the Register of employers, visit www.ytj.fi> BIS Search and enter the name of your employer company. To check whether a permanent establishment exists in Finland for tax purposes, ask your employer.
If your employer is not entered in the Register of employers
If your employer is not registered and has no permanent establishment in Finland, you must make the prepayments yourself. You need a Finnish personal identity code.
If you stay in Finland for six months or a shorter time, ask the tax office to give you a tax-at-source card: Complete Form 6201a.
In this case, you pay 35% of your income as tax at source. However, the deduction amounting to €510 per month or €17 per day is applied, so the calculated income for which you pay tax is reduced. The tax is a final tax, and there is no obligation to file a tax return in Finland.
If you stay longer than six months (the counting of time is not interrupted if you leave Finland for a short time and come back), ask the tax office to give you a standard tax card: Complete Form 5042a. You need a Finnish personal identity code.
Your taxation is progressive, in other words, the rate of tax is dependent on the total annual gross income. It may vary from 0% to 50%.
If you do not have an A1 (E101) Certificate or a similar document from your home country, the foreign employee leasing agent (your employer) may have to buy Finnish insurance in order to cover your social security. For more information, visit the website of Pensions Centre, www.etk.fi or contact Finnish pension insurance and accident insurance companies.
In addition – if you work for four months or longer, a contribution known as the health insurance premium of the insured (at the rate of 1.53 % for 2018) must be withheld on your pay. However, it will not be withheld if you present the A1 (E 101) Certificate showing you have 'posted employee' status and are not covered by the Finnish social security system; you remain under the social insurance regime of your home country.
Asking for progressive income taxation
As an alternative, you can request that your income be taxed under the progressive scale, that is, in the same way as that of those who stay in Finland longer than six months. If your taxation is by the progressive scale, you will receive a Pre-populated tax return during the following year on which you will find a specification of your income and deductions, and the final result of your assessment (whether you must pay more taxes or whether you get a refund). You must check the contents of that tax return and send it back to us with corrections if necessary.
Longer than 6 months in Finland – must file an income tax return
During the spring season after the calendar year when you worked in Finland, the Tax Administration sends you a Pre-completed tax return, or in some cases, sends you a blank form to fill out. You should check all the computer-pre-filled amounts and information, and if you note any errors and omissions, make the necessary corrections. If no corrections are needed, the Pre-completed tax return is treated as a final notice of tax assessment for the year.
If you do have something to add or correct, you must send Section One of the form back to the address printed on the top of the page. An online interface named Veroilmoitus verkossa is available to individual taxpayers (it only works in Finnish and Swedish) who can log in to it and make corrections over the Web. There is no need to send back the paper form if you have reported all your corrections and additions this way. The Tax Administration will send you a new notice of assessment later, in the autumn, displaying the new amounts. You will also receive instructions for appeal.
There is no need to report the income you have received prior to your arrival or after you left Finland.
We have made almost all tax return forms and instructions available not only in Finnish and Swedish but also in English.
3001e, Blank sample of the Pre-Completed Tax Return
When you are preparing to move away, you must file a Notification of Move, take the necessary action to ensure that your tax reporting obligations are fulfilled, and cancel your automatic tax prepayment if you are in the prepayment scheme. For more information, click Foreign employee moving away from Finland.