Salaries and employer contributions
If your company regularly pays salaries, you should
- be on the Employer Register
- give the details of salaries, withholding taxes and employer health insurance contributions in the Incomes Register every month
- pay the withholding taxes and employer’s health insurance contributions to the Tax Administration as agreed
- remember also to make the other compulsory payments and pay the other insurance premiums.
Withholding tax is an estimated amount for tax that employees pay on their salary or compensation for work. However, as an employer, you must pay the withholding tax to the Tax Administration.
Pay withholding tax on your employee’s salary based on the details on their tax card. If employees cannot provide a tax card, they are not entered in the withholding register and their withholding tax rate will be 60%.
Compensation for work in this context is payment for work done that is not a salary. If the recipient of compensation for work is a limited liability company, a co-operative, or a general or limited partnership, the withholding tax rate is 13%. If the recipient of compensation for work is a trader, pay withholding tax based on the details on the entrepreneur’s tax card. If the entrepreneur cannot provide a tax card, the withholding tax rate is 60%.
In addition to salaries and compensations for work, your company must pay withholding tax on, for example, staff benefits and anniversary gifts that are subject to taxation. Also pay withholding tax on payments made to employees upon termination of their employment and on certain reward schemes such as low interest on employee loans.
For what payments must my company pay employer health insurance contributions
The employer’s health insurance contribution is a social insurance payment that covers the health insurance system’s costs, such as sick pay, rehabilitation allowances and maternity, paternity and parental allowances.
Your company must pay employer health insurance contributions on the salaries it pays if the employee is insured in Finland under the Health Insurance Act. The contribution is not paid on salaries for employees under the age of 16 or over the age of 67. No health insurance contribution is payable on a compensation for work either.
The health insurance contribution is calculated on the total for the salaries your company pays. A salary also includes fringe benefits. In addition to salaries, your company must pay a health insurance contribution on staff benefits and anniversary gifts.
The rate is the same for all companies. Apply the rate for the year in question to salaries paid that year. It makes no difference when during the year a salary is earned.
Also pay the health insurance contribution even if you cannot pay withholding tax.
Give the details of salaries and compensations for work paid and tax withheld by your company in the Incomes Register. Provide this information no later than five days after salaries have been paid.
Also state in the Incomes Register the employer health insurance contributions as an employer’s separate notification. Provide the notification on the fifth day of the month following payment of salaries.
If your company is listed in the Employer Register but does not pay any salaries in any one month, provide these details in the Incomes Register. Give separate notification of this by the fifth day of the following month.
Provide this information using the Incomes Register’s e-service. You can also provide the information using the Palkka.fi service, if you use this for salary calculations.
Note that you no longer have to enter annual notifications about salaries, compensations for work and other payments made in the Incomes Register.
You can pay withholding taxes and health insurance contributions using the My Tax service, online banking or a financial management system. If you pay using online banking or a financial management system, remember to use the correct account and reference numbers. The normal due date for payment is the 12th of the month following the payment of salaries.