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Mercans CountryIntel ® Finland Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in Finland

Finland has the #1 business environment in the world as well as the #1 most stable country in the world for the 14th year in a row. It’s transparent government, independent judicial system, highly industrialized and innovative economy make it attractive to foreign investment.

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Doing Business in Finland

Finland offers growth opportunities particularly for companies in bioeconomy, clean and smart technologies, health and wellbeing, ICT and digitalization as well as travel and tourism. A global champion in cleantech, Finland is also a premier location for health R&D.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Finland is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: 9:15 am to 4:15 pm from Monday to Friday

Working Week

The standard working week is from Monday to Friday from 9:00 am - 6:00 pm

Labor Law

The main laws governing the employment relationship in Finland include the Employment Contracts Act 2001, Working Hours Act 2019, Annual Holidays Act 2005. FInnish nationals who regularly work outside Finland are governed by the law of the country in which they habitually perform their work.

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Main Industries

Electronics, machinery, vehicles and other engineered metal products, forest industry and chemicals, timber and several mineral and freshwater resources

GDP Growth

4.20%

Dates & Numbers

dd/mm/yyyy

Official State Name

Republic of Finland Suomen Tasavalta

Population

5.531 million

Capital

Helsinki

Major Languages

Finnish, Swedish

Currency

Euro €

Internet Domain

.fi

International Dialing Code

+358

Finland
Helsinki, FI
7:39 am, July 7, 2022
17°C
few clouds

Payroll

Companies that operate a multi-country payroll must take note that there is no national statutory minimum pay. Minimum wages are usually regulated by industry-specific collective agreements. Discretionary bonus schemes are common. An employee posted to Finland is entitled to the salary determined by a universally valid FInnish collective labor agreement for the sector.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 10 years

Reports

4 weeks

Annual Leave

10 days of paid sick leave

Sick Leave

105 days of unpaid maternity leave and 54 days of unpaid paternity leave

Maternity & Paternity Leave

14 days notice if the employee is employed for at least one year

Employee Termination

This is usually paid before the employee takes their vacation

13th month salary

There is no minimum wage but employees are backed by collective agreements that specify minimum rates

Minimum Wage

Overtime pay is 150% of the regular salary rate of pay for the first two hours and 200% for any subsequent hours

Overtime

There are no provisions for severance pay.

Severance Pay

Tax and Social Security

Residents are taxed on their worldwide income at progressive tax rates. There is also a flat tax rate for municipal (and church and social security) tax purposes. Non resident individuals (those who occasionally work in Finland) are taxed on Finnish-source income only. In Finland, the social security system consists of services and cash benefits that provide economic security.

Tax

The employer is required to withhold tax on all salaries paid to the employee and this amount is determined on a progressive basis by the amount of salary (including benefits). An individual is regarded as a resident if they have a permanent home or have stayed in the country for over six months.

20%

Corporate Income Tax

56.9%

Personal Income Tax

24%

Sales Tax

24%

VAT

Social Security

Overall, the Social Insurance Institution (Kela) covers those who live in Finland on a permanent basis and those who work as well. In certain situations, individuals who live abroad may also be covered. Social security is implemented by Kela, the municipalities, the unemployment funds

31.5%

Social Security Rate

20.6%

Social Security Rate for Employers

10.8%

Social Security Rate for Employees

Employment Law

Finnish law does not categorize workers. The Employment Contracts Act defines what an employment contract is, that is, an agreement to personally perform work for an employer, under the employer’s direction and supervision in return for pay or remuneration. Independent contractors are not categorized as employees and therefore, not covered by mandatory statutory employment rights.
Required contributions by employers include social security, unemployment insurance, earnings-related pension insurance contribution, group life insurance premium and occupational accident insurance.

Employment Agreement

Written employment contracts are not required in Finland but a written statement of key employment terms must be provided to the employee. This statement must contact terms covering the employee’s main duties, duration of contract, probationary period, salary and pay terms etc. It is, however, customary to have written employment contracts.

Working condition

Regular working hours must generally not exceed eight hours a day and 40 hours a week. Overtime work can only be performed on the employer’s initiative and with the employee’s consent. The maximum amount of work including overtime is an average of 48 hours a week during a four month period. Employers also cannot propose variable working hours if they have a permanent need for labor.

Leaves

The total number of paid holidays is 30 days per year. There are approximately 10 annual public holidays a year when employees are entitled to a paid day off. Maximum amount of holiday per year is five week (if not otherwise determined in a collective labor agreement).

Employment termination

Unless otherwise provided, parties to an employment agreement can agree on the notice period in the employment contract. If the notice period is not set out in a collective agreement, the employer and employee must apply the appropriate notice period. The employer must apply a notice period based on the employee’s length of service.

14 days

Minimum notice period for terminating an employee

10

Total number of public holidays

40

Working hours per week

No legal recognition

Total number of days for Compassionate & Bereavement Leave

Immigration

Permits for entrepreneurs and employees depend on whether the person is from or resides in another Nordic country (Sweden, Norway, Denmark and Iceland), an EU country or or comes from outside the EU.

Residency permits

Citizens of Nordic countries may freely enter and reside in Finland  as well as take up paid employment without a residence permit. EU citizens have the right to enter, reside, study and seek work for three months without a residence permit. If they wish to stay longer than that, they must register their right to reside at a police department. Individuals from outside the EA require a work permit and a residence permit.

Work Permit validity

Two years

Required Documents

Valid work contract in Finland

Possessing a university degree (except for seasonal work)

Work professionally in your field

Clear of any criminal charges

Must not be a danger to Finland and must uphold all Finnish laws

Must not be subjected to any travel bans in the Schengen Area

For a specialist visa: the individual must qualify as a highly-skilled worker

For welfare and healthcare: the individual must be authorized to practice their profession.

Compliant, reliable, error-free and touchless payroll in Finland

Build the best team and hire top talent compliantly in Finland. Get in touch with Finland payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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