Tax Withholding

An employer has a duty to carry out the withholding of tax from the employee’s salary and remit it to the tax administration.

The salary subject to tax withholding includes the normal salary as well as the monetary value of any fringe benefits that the employee enjoys. The Finnish Tax Administration prescribes the taxable values of fringe benefits each year by an Official Decision of the Finnish Tax Administration. Compensation of expenses directly related to working, such as travel expenses is not under tax withholding because it is not considered to be pay. The withholding of tax is carried out by deducting the tax to be withheld from the employee’s monetary salary.

The tax withholding percentages and income limits are set out in the employee’s tax deduction card. The tax withholding percentage is 60% if the employee has failed to provide the employer with a tax deduction card and the employer has not obtained the details of tax withholding in respect of the employee from the tax administration. The employer must retain the employee’s tax deduction card for full-time employment throughout the duration of the employment relationship.

If there is uncertainty as to whether it is the duty of the employer to withhold the tax from the employee’s salary or whether it is the employee’s duty, this may be ascertained from the Business Information System of the National Board of Patents and Registration and the Tax Administration. If the person who is undertaking the work is entered in the prepayment register, the employer does not need to withhold tax.

The tax withholding must be paid to the tax administration on the 12 day of the month that follows the pay.

The employer shall give the tax administration a seasonal tax return of the paid payments and conducted tax withholdings. The seasonal tax return is given usually monthly.