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.