Payroll in Finland - Rely on Our Local Accountants
Payroll in FinlandUpdated on Thursday 06th July 2023
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Employment in Finland comes with the payment of various taxes that are computed under the payroll system in order to streamline them as much as possible. This system usually is handled by the accounting department of the company or by an accounting firm.
If you need support with the payroll in Finland, you can rely on our specialists. Our team of accountants and lawyers in Finland work together in order to offer a complete range of services to companies operating in this country.
Employment regulations in Finland
The Labor Code is the main law providing for employment in Finland. However, workers here benefit from a very well organized system which is why many foreign citizens decide to immigrate and apply for Finnish residence permits.
Finland used the Monday through Friday workweek. Also, in most cases, the work schedule is from 8 AM to 4 PM. From these points of view, payroll in Finland is quite simple.
Payroll and income taxes in Finland
Individuals in Finland are subject to a dual income tax system that makes the difference between the personal income and the capital income.
Every type of earned income is then subject to:
- national taxes;
- municipal or local taxes;
- church levies;
- social security contributions.
All earnings made by employees must have their tax withheld at the source by the employer. Municipal tax rates range from 16.5% to 23.5%, and the national income tax rate is progressive and can go up to 31.25%. The capital gains tax rate is flat 30% (up to EUR 30,000) or 34% (more than EUR 30,000).
If you need support in computing Finnish payroll in accordance with these regulations, you can rely on us for tailored accounting services.
Payroll regulations in Finland
Payroll in Finland is regulated by several different laws and regulations, including:
- The Income Tax Act: This law regulates the withholding of income tax from employees’ salaries;
- The Social Security Act: This law regulates the contributions employers are required to make to social security funds on behalf of their employees;
- The Employment Contracts Act: This law sets out the minimum terms and conditions of employment in Finland, including rules around pay and working hours;
- The Annual Holidays Act: This law provides the rules around annual leave for employees;
- The Act on the Protection of Privacy in Working Life: This law regulates the collection, use, and storage of personal information about employees.
Employers in Finland are also required to comply with various regulations issued by government agencies, such as the Finnish Tax Administration and the Finnish Centre for Pensions. Employers need to stay up-to-date with changes to these laws and regulations to ensure compliance with payroll requirements in Finland.
If you are interested, you can rely on our company formation consultants to open a branch in Finland.
How our payroll specialists can assist you?
Our payroll specialists can provide valuable assistance to employers who are dealing with payroll in Finland. Here are some of the ways that our payroll specialists can help:
- Ensuring compliance: One of the most important roles of our payroll specialist is to ensure that employers are complying with all relevant laws and regulations related to payroll in Finland. This includes staying up-to-date on changes to tax laws, social security regulations, and other requirements;
- Handling payroll processing: Our payroll specialists can handle the day-to-day processing of payroll, including calculating employee salaries, taxes, and social security contributions. This can be a time-consuming and complex task, so having a specialist on hand can be a valuable resource for employers;
- Providing advice: Our payroll specialists can offer advice to employers on a range of payroll-related issues, such as: tax optimization strategies, employee benefits, and compliance issues;
- Resolving issues: Our payroll specialists can help employers resolve any issues that arise related to payrolls, such as discrepancies in pay or tax filings, or disputes with employees over salary or benefits.
Our payroll specialists can play a critical role in helping employers navigate the complex world of payroll in Finland. By ensuring compliance with regulations, handling payroll processing, and offering advice and support, they can help employers manage their payroll responsibilities more efficiently and effectively.
Social security contributions in Finland
Contributions for social security to the pension fund are the main component of payroll in Finland, and they computed differentiated based on the age of the contributor (employee). Here is an example:
- if the employee is under 53 years old, he/she must contribute 7.15% of their monthly wage to their pension;
- the contribution rate rises to 8,65% for employees over the age of 53;
- for those over the age of 63, it is 7.15%.
Depending on the discounts the company obtains, the employer's portion of the pension payment is approximately 17.40%. Monthly pension payments must be made by the employer to the pension provider.
Another contribution associated with payroll is the one to the unemployment fund, which is divided into:
- the unemployment insurance for workers between the ages of 17 and 67 which is levied at a rate of 1.50% of the monthly wage;
- the employer also contributes 0.50% to the unemployment insurance.
Finnish employers must make quarterly payments of unemployment insurance to the Employment Fund.
The employer also covers the 1.34% health insurance premium, the 0.06% group life insurance premium, and the 0.3% to 7% accident insurance premium, depending on the industry they operate in.
In order to verify their contributions, employees can male inquiries with the Finnish Incomes Register.
If you need support with the payroll in Finland, feel free to get in touch with us.
Setting up the payroll for a Finnish company
Each employee must provide the following information for Finnish payroll purposes:
- their personal information, including an address;
- an employment contract;
- tax identification information.
Because of Finland's progressive taxation, net-based salaries are not common and are difficult to manage in payroll. Payroll reports must be kept for at least 10 years in the company’s archives.
If you need support in payroll in Finland, we are at your service, so contact us. You can also rely on us if you want to apply for citizenship in Finland.