Tax Figures
Corporate Income Tax
The Corporate Income Tax Rate is currently 20.0%, lowered from 24.5% in January 2014.
Income Tax Rate
- €0 – €16,300: 0%
- €16,300 – €24,300: 6.5% (€8)
- €24,300 – €39,700: 17.5% (€528)
- €39,700 – €71,400: 21.5% (€3,223)
- €71,400 – €100,000: 29.75% (€10,038)
- €100,000+: 31.75% (€18,547)
Flat tax amount corresponding to each tax bracket shown in parentheses
Sales Tax
VAT (arvonlisävero): Applies to all individuals and companies importing goods into Finland.
VAT rate: 24% as the general rate.
VAT rate: 14% for the supply of foodstuffs, animal feed and restaurant/catering services.
VAT rate: 10% for the supply of books, pharmaceutical products, transportation, accommodation etc.
Withholding Tax
Finnish companies are required to apply a 20% or 15% withholding tax on payments to foreign corporations depending on the country, and a 30% withholding tax on payments to non-resident individuals.
No withholding tax is levied on dividend payments received by companies in the EU/EEA.
Reduced rates are applicable to certain countries engaging in double tax treaties with Finland.
Other Tax
- Municipal Tax: Flat rate ranging from 16.5 – 22.5% of taxable income depending on municipality.
- Church Tax: Levied for members of certain churches at a rate from 1 – 2.2%
Time to prepare and Pay Taxes
93 hours
Employers Social Security and statutory contributions
Social security taxes are applied as a percentage of gross wages and salaries. The average total percentage of all contributions for private-sector employers is 23.60%, which consist of:
- Employer’s social security premium: 2.14%
- Group life insurance premium: 0.067%
- Pension premiums: 17.75%
- Accident insurance premium: 1%
- Unemployment insurance premium: 0.75%
Employees Social Security and statutory contributions
Social security contribution for employees in Finland consists of a Medicare contribution and a per diem contribution.
- Medicare contribution: 1.32% of municipal taxable income.
- Per diem contribution: 0.84% of salary income.
- Pension insurance premium: 5.55% (7.05% for employees over 53)
- Unemployment insurance premium: 0.5%.
Payroll
Finnish legislation on taxes for foreign employees are not as stringent, although are typically higher given the high levels of social security in the Finnish tax system. Salary earned abroad is exempt from tax in Finland if the Finnish resident works continuously abroad for at least six months, while non-resident employees are only subject to income taxes from Finnish sources. There are some notable consideration with Finnish tax laws that foreign employers must be aware of, such as the different social security contributions, the VAT and withholding tax.
Remote Payroll
A remote payroll in Finland is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Finland. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Finland is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in Finland under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to Finland may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Finnish payroll and can fulfil all tax, withholding tax and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Finnish employment laws.
Setting up payroll in Finland
Currency
Euro (EUR, €)
Employee Information Required
When a new employee starts employment with a new company, there are several pieces of information that the company require in order to set up the employee with the business. These are the following:
- Employee Name
- Address/Postal mailing address
- Phone number
- Bank account details
- Tax code number
- Expected salary
- Pension details
Tax Registration Requirements
Registration as an employer is mandatory if wages or salaries are paid in Finland to at least two employees on a regular basis or to at least six employees at the same time on a temporary basis. The company must withhold tax on the wages it pays to employees, following the instructions printed on each employee’s tax card.
Social Security Registration
Before applying for social security coverage under the Finnish social security system, individuals moving to Finland must register at a population register office. Once registered, the individual must then complete form Y 77e, from KELA, the Finish Governments office. This enables the individual to qualify for social security benefits.
A written decision on whether or not the individual will be covered by the Finnish residence-based social security system will be sent to them via post. If your application is not accepted, the individual can appeal the decision.
KELA Card
If the application is accepted, a photoless KELA card is sent to the individual automatically, at no cost. Their KELA card is the individual’s personal health insurance card. By presenting their card at the pharmacy or at many private medical clinics, they will be entitled to on-the-spot reimbursement of their costs.
For a fee individuals can also get an ID card with health insurance data. The ID card can be used as a travel document in many European countries and as authentication when logging into various online government services.
Documentation Required for New Employees
When a new employee begins a job role with a business, the employer has the responsibility to provide them with a written statement of employment. The written statement must include a guideline of what will be expected of the employee and general information of the position and business.
The employer also has a responsibility to create an employment contract for their new employee. The employment contract can either be an oral collective agreement or a written document.
Payment Mode
There are various ways a business may choose to pay their employees’ salaries. Most large businesses will choose to do it via electronic bank transfer. This is a very fast and efficient way of ensuring that all employees receive their wages on time, straight into their bank accounts.
Smaller businesses that only have a minimal number of employees may find it easier to pay their workers salaries by use a cheque or cash.
Frequency of Salary Payment
There are a range of different frequencies in which a company may choose to pay their employees these are:
- Daily
- Weekly
- Bi- weekly
- Fortnightly
- Monthly
- Quarterly
- Annually
Invoice / Payslips required
Yes, payslip is required.
Minimum Wage
Finland does not have a set national minimum wage. A collective agreement is used in order to calculate a salary for any new employee in a job role. The amount in which the employee is going to be paid is usually determined based on their level of professional skill. The employer must, in connection with payment of wages, give the employee a calculation which indicates the amount of pay and the grounds of its determination.
