Do you live in another Nordic country and intend to work as a self-employed person in Finland?

This applies to you who live in another country and intend to work as a self-emplpyed person in Finland. This information only concerns taxation of this type of income

Registration in Finland

When you work in Finland as a self-employed person, you must have a Finnish personal ID if:

- you stay in Finland longer than 6 months,
- the place where you work is a building site,
- you submit an application for progressive income taxation,
- you sign up for the VAT register,
- you are treated as operating business from a permanent establishment in Finland.

Read more: (Working in Finland as a self-employed person)

If you have a permanent establishment in Finland, you must apply for Prepayment registration. If you have a permanent establishment in Finland and you pay wages or salaries to at least two employees on a regular basis, you must be registered as an employer. However, taxpayer registers are open for entry on a voluntary basis.

Read more: (Starting up business in Finland)

Income tax in Finland

Permanent establishment

If you have a fixed base or a permanent establishment in Finland, you must pay tax to Finland on all the income relating to it. The length of your stay does not have an impact on taxation of a permanent establishment.

A definition of permanent establishment is available under General information/ Permanent establishment.

The Tax Administration sends blank tax returns, and pre-completed forms, to all self-employed residents and nonresidents who operate a trade or business according to the database of the Tax Administration. The required facts to be reported on tax returns include business income within the charge of Finnish tax, assets and liabilities connected with the business operated here. You must file a business income tax return also in force in situations where Finland does not have the taxing rights with respect to an operator's income. If you have not received pre-completed forms you can report required information on form 5 or via MyTax.

No permanent establishment

Finland does generally not have right to tax your income, if you don´t have permanent establishment in Finland or you do not stay in Finland for longer than 183 days in the course of a 12-month period.

If you stay in Finland for longer than 183 days in the course of a 12-month period, the length of your stay will determine whether you must pay e.g. 35% in source tax or whether your tax rate will vary according to the progressive scheme of income taxation.

Read more: If you stay in Finland for no longer than 6 months or If you stay longer than 6 months.

Income tax in your Nordic country of residence

Remember to report the income that you receive from Finland to your home country’s tax authorities.
If your country imposes a tax on foreign-sourced income, it will also remove any double taxation on it.

Social security coverage

There are special regulations according to which it will be decided where you should have the social security insurances. For more information you shall have to contact the social security authorities in your country of residence or Finnish Centre for Pensions (FCP/ETK, in Finland.

Obligations of an employer in Finland

If you have a permanent establishment in Finland and you pay wages on a regular basis to employees, your obligations as an employer are the same as those of a Finnish employer. This means that you should withhold payroll tax and pay employers' social security contributions. The taxes withheld and social security contributions paid should be reported in the Incomes Register.

You also have to submit reports for all paid wages for work done in Finland if the beneficiary is a Finnish tax resident even if no permanent establishment or fixed base exists. Furthermore, if the employee is insured in Finland, the reports must be submitted in all circumstances. In addition, they must submit payroll reports on any wages paid to an employee whom he or she has leased out to a Finnish service recipient

Read more: Incomes Register (International situations).

Value added tax

Foreign self-employed operators of a trade or business who are liable to pay VAT must become registered for VAT in Finland if their operation gives rise to a fixed establishment for VAT purposes. If no fixed establishment for VAT purposes is formed in Finland, the general rule is that the buyer must pay any VAT that becomes chargeable (under the reverse-charge VAT scheme). However, certain circumstances will always require that the foreign operator must apply for VAT registration in any case.

It is important to be aware that the facts and circumstances that give rise to a permanent establishment for purposes of income tax are not the same as those referred to in the VAT rules. For this reason, it is possible for a foreign operator to have a fixed establishment for purposes of VAT, but to not have a permanent establishment for purposes of income taxation; and vice versa.

Read more: (VAT registration of foreigners).


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