Withholding tax is the estimated amount for tax that employees pay on their salary, remuneration or other taxable payments. In practice this means that, as an employer, you must deduct the withholding tax and pay it to the Finnish Tax Administration.
Deduct the withholding tax on your employee’s salary based on the information given on their tax card. If the employee does not present a tax card or they have not been entered into the prepayment register, their withholding tax rate is 60%.
Remuneration is a payment for work that is not a salary. If the recipient of remuneration is a limited liability company, a co-operative, a general partnership or a limited partnership, the withholding tax rate is 13%. If the recipient of remuneration 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 remunerations, your company must also pay withholding tax on such payments as 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.
The employer’s health insurance contribution is a social insurance payment that covers such health insurance costs as sick pay, rehabilitation allowances and parental allowances.
Your company must pay employer’s 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 the salaries paid to employees under the age of 16 or over the age of 67. No health insurance contribution is payable on a remuneration 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 a salary, your company must pay a health insurance contribution, for example, for personnel benefits appropriated for one person and anniversary gifts that are subject to a tax.
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 remunerations 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’s health insurance contributions as an employer’s separate notification. Provide the notification on the fifth day of the month following payment of salaries.
If the deadline for the notifications is Saturday, Sunday or other public holiday, you can submit the notifications on the following working day.
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.
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.