Source: https://www.vero.fi/en/detailed-guidance/guidance/49081/leased-employees-from-other-countries-and-taxation-in-finland2/
Timestamp: 2019-12-06 18:41:24
Document Index: 735967675

Matched Legal Cases: ['§ 15', '§ 6', '§ 10', '§ 6', '§ 12', '§ 6', '§ 12', '§ 22']

This article explains the tax treatment of foreign leased workers in Finland and contains guidance for the workers, for foreign employee leasing companies and for contractors in Finland at whose worksites the work is done. The guidance has been updated due to the legislative changes that came into force on 1 January 2019. In addition, some changes were made to the sections of this guidance that concern foreign employers. In addition, the beneficiaries’ filing requirements in 2019 have also changed. The guidance on what an employer should do only concerns the wages and salaries paid on 1 January 2019 or later. If the year of the payday or paydays was 2018, the employer must file the required information according to the previous guidance (A268/200/2017).
However, if you stay longer than a year, your case is handled by the Local Register Office and a Finnish municipality may be entered in the Population Register System as your Finnish domicile. For more information, see maistraatti.fi.
For more information on work rights and residence permits, visit the website of the Finnish Immigration Service, migri.fi.
For more information, click tax.fi/taxnumber.
Example 6: Your first day of work is 7 March 2019. Contact the tax office no later than 30 April 2019.
Workers can complete the Nonresident's application for tax-at-source card, tax card, tax prepayment, or tax number (Form 5057e) in order to ask for pre-assessment. In addition to personal details, you must fill in the following information:
In addition, if you are covered by the Finnish system of sickness insurance, you are liable to pay health insurance contributions. The amount of the contribution is calculated from the wages before the €510/month or €17/day is deducted. No contributions are deducted if you are able to present a Certificate A1 or other proof showing that you continue to be covered by another country's social insurance system.
For tax treatment under the Act on Assessment Procedure, you must prepare an application for prepayments and enclose a Claim for progressive taxation of earned income (6148e) with it.
Please check the information and amounts that affect your taxation. If you notice errors or omissions, report any necessary corrections to us. You can make additions and corrections to tax-return information in MyTax. Alternatively, you can submit them on paper.
Even workers who have not applied for progressive taxation at the pre-assessment stage can apply for it retroactively by submitting their tax return. In this case, a completed “Claim for progressive taxation” (Form 6148e) must be enclosed.
Employers file reports to the Incomes Register on not just the wages paid to leased workers but also on the exact dates when a worker had worked in Finland. This information is transferred to the worker’s tax return. However, if a worker’s pre-completed tax return does not contain information about their wages or the length of their employment, or if the information is incorrect, they must complete Form 50A to give the exact dates when they worked in Finland, in order to be eligible for tax-at-source deductions.
The Finnish Tax Administration calculates the worker's final tax liability and sends a statement to the worker's address in the country of residence by the end of October the following year. This is why it is important that you inform the Finnish Population Information System of your new address after you move house. This can be done online. Guidance for change-of-address reporting is available at posti.fi.
Workers whose employer is a foreign business that does not have a permanent establishment in Finland, or that has not asked to be entered into the Employer Register in Finland, need to take care of their prepayment taxation themselves. It is important for workers to contact their tax office to arrange prepayment taxation. Without prepayment taxation, the resulting back taxes will bear interest. People who arrive in Finland from other countries can request a pre-assessment decision by completing Form 5042e (“Application for tax card, tax prepayment or tax number – current or former foreign residents”). The income-tax prepayment scheme requires that the worker must have a Finnish personal identity code.
Workers who are treated as Finnish residents have the obligation to file a Finnish tax return after the year is over. Generally the country of tax residence imposes tax on all the income of its residents, applying the provisions of its own legislation. In this case, the country of residence will eliminate any double taxation.
6.1 Foreign employers must file reports to the Incomes Register
Legal rules on the information-reporting requirements of foreign employers are found in § 15 a, act on assessment procedure. Information must be given to the Incomes Register, as provided in § 6 of the act governing the Incomes Register (Laki tulotietojärjestelmästä 53/2018).
If a foreign employer pays wages to a leased worker coming to work in Finland from abroad, as referred to in § 10.4c of Income Tax Act, the employer must report any payments to the Incomes Register unless the provisions of an international agreement do not prevent Finland from imposing tax on the wages. In the same way, if a foreign employer pays wages to a wage earner who stays in Finland for more than six months (under § 6.2.10, Income Tax Act), the employer must report the payments to the Incomes Register. The deadline for submitting information to the Incomes Register is the fifth calendar day after payday (§ 12.1, act governing the Incomes Register).
Additionally, if the employer has a foreign leased worker, he must give the Incomes Register the information of the employee-leasing notice (§ 6.2.17, act governing the Incomes Register).
The deadline for submitting this information to the Incomes Register is the fifth calendar day after the day when wages were paid to the first leased worker (§ 12.6, act governing the Incomes Register).
The above information is required if there is no tax treaty preventing Finland from taxing the worker's wages. This is the case with leased workers arriving from Iceland, Norway, Sweden, Denmark, Latvia, Lithuania and Estonia as well as Moldova, Georgia, Belarus, the Isle of Man, Guernsey, Bermuda, Jersey, Poland, Kazakhstan, the Cayman Islands, Turkey, Cyprus, Tajikistan, Germany, Turkmenistan and Spain. Leased workers who reside in Bulgaria but work in Finland as leased employees of non-Bulgarian employers must also be included in this reporting.
You must also give the above information if the leased employee is from a country that does not have a tax treaty with Finland. Finland's current tax treaties are listed on Tax.fi (Tax treaties in force).
The requirement to submit information concerns all foreign employers who are included in the Prepayment Register. If a worker's employer is not included in the Prepayment Register, responsibility for the above information rests with the employer's representative as per section 4a of the Act on Posting Workers. If the employer has not appointed a representative, however, responsibility for giving the information always ultimately rests with the foreign employer.
6.1.1 The Employee Leasing Notice
The employee-leasing notice for a foreign leased worker must be submitted for every leased worker, regardless of the duration of their work.
The submitted notice must contain the estimated duration of the work assignment, and the details of the Finnish employer and the representative of the foreign employer. Furthermore, an estimate must be given of the amount of pay for the entire tax year.
Foreign employers who have a permanent establishment in Finland have a responsibility to apply tax at source or prepayment taxation to their workers' wages, and do not therefore need to report their leased employees' work in Finland as described above.
6.1.2 Consequences of not reporting the required information
If the information-reporting requirement is not complied with, the Tax Administration may, in the following circumstances, impose a penalty charge for negligence as provided in the act on assessment procedure (§ 22a):
The employer has given information to the Incomes Register that contains an error or omission
Reports are filed late
Reports are filed to the Incomes Register, but the employer has not used the correct method of reporting as required by law
The employer fails to submit a report
The employer does not submit a report until prompted to do so
Read more about consequences for non-filing: penalty fees
Employers can register as regular wage-paying employers in Finland even without a permanent establishment in Finland. Foreign employers who are included in the Employer Register have the same withholding obligation in Finland as Finnish employers. This means that they need to deduct taxes from their employees' wages automatically, and their employees do not need to apply for prepayment taxation. However, foreign employers who do not have a permanent establishment in Finland are not employers in Finland as defined in the Income Tax Act, even if they are included in the Employer Register.
Read more about the reporting obligations of foreign employers on the Incomes Register website: Reporting data to the Incomes Register: international situations. See Chapter 4 (Reporting obligation of a foreign employer).
Finnish service recipients also need to provide the details of any representative of the business as per section 8 of the act on posting workers (Laki työntekijöiden lähettämisestä 447/2016) as well as the related contact information. The Tax Administration also needs to be notified of any changes in the information. The above reporting obligations apply to both businesses and natural persons.
The notices are required if there is no tax treaty preventing Finland from taxing the worker's wages. This is the case with leased workers arriving from Iceland, Norway, Sweden, Denmark, Latvia, Lithuania and Estonia as well as Moldova, Georgia, Belarus, the Isle of Man, Guernsey, Bermuda, Jersey, Poland, Kazakhstan, the Cayman Islands, Turkey, Cyprus, Tajikistan, Germany, Turkmenistan and Spain. Leased workers who reside in Bulgaria but work in Finland as leased employees of non-Bulgarian employers must also be included in this reporting.