Do you live in another Nordic country and intend to work as a self-employed person in Finland?
Do you live in another Nordic country and intend to work in Finland as a self employed person? Please read the following to learn about the taxation of such income.
Registration in Finland - Personal identity number, Business ID
Please contact the local tax office after your arrival in Finland. In addition to giving you tax advice, the local tax office can help you apply for a Finnish personal identity number or Business ID.
If you are an employer with employees on your regular payroll in Finland, you should in Finland request for entry in the Tax Administration's register of employers. This obligation only exists if you employ other people and pay wages regularly. If you work alone, you do not need registration as an employer.
Income tax in Finland
The local tax office will issue you a tax card or a tax-at-source card. This document is a withholding allowance certificate. The local tax office will first examine your circumstances and draw conclusions as to whether your income will be taxable in Finland. If your income does not fall in to the taxing rights of Finland, the local tax office will give you a zero-rate certificate. This is called either a zero-rate tax card (0%-verokortti; 0%-skattekort) or a zero rate tax-at-source card (0%-lähdeverokortti; 0%-källskattekort). You should show this card to your customers or clients. When they pay you, they have the obligation to withhold tax, unless you present a zero-rate certificate.
If you have a permanent establishment in Finland, you will pay income tax on your income from Finnish sources.
If you stay in Finland for less than six months, income tax rate will equal 35 %.You can request that your earned income (except dividends) be taxed under the progressive scale instead of the tax at source. The progressive tax rate depends on the amounts of annual income and deductible expenses
If you stay longer, income tax rate will be progressive, so it will grow along with your income.
If you have a permanent establishment or if you stay longer than six months, you will have to submit an income tax return in Finland, the deadline being April of the following calendar year. Please contact the local tax office to receive a tax return form.
No permanent establishment
The local tax office will usually issue a zero-rate certificate only if you do not have a permanent establishment in Finland, and are not staying longer than 183 days during a period of consecutive 12 months. For more information on permanent establishments, see "General info".
If several Finnish customers buy your services, you can request for entry in the tax prepayment register, which is easier, because then you will no longer have to request for zero-rate certificates separately for each client or customer.
Income tax in your Nordic country of residence
Please submit the usual income tax return in your home country, and declare the entire result and profits of your activities, including your income from self-employed work in Finland.
If you have paid any tax in Finland, please include full explanation of it in your home-country tax return and demand that it be credited from the tax you pay for this income in your home country.
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, etk.fi) in Finland.
Obligations of an employer in Finland
If you have a permanent establishment in Finland and you pay wages regularly to employees, you have the usual employer's obligations. 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.
Read more tulorekisteri.fi/english (Incomes Register).
Value added tax
When a foreign entrepreneur, i.e. a person who does not have a permanent establishment in Finland, who stays or lives permanently in Finland, has VAT-liable sales of goods or services in Finland, there becomes a liability to pay value added tax. Who pays the VAT depends on the goods sold, service rendered and the buyer.
When the seller is a foreigner without a fixed establishment in Finland, and the buyer has registered as VAT-liable in Finland, a so-called reverse charge procedure applies, i.e. the VAT on goods and services sold in Finland is usually reported and paid by the buyer. The seller can however apply to be VAT-registered and become VAT-liable on application.
If the buyer is not VAT-registered in Finland (e.g. a private individual or a foreign company), the seller has to be VAT-registered and to declare and pay Finnish VAT. Selling goods or services in Finland, or having other taxable transactions in Finland will usually result in the liability of paying VAT at the basic 22-percent rate.
If a foreigner renders services at another entrepreneur's permanent establishment the service is considered to have been rendered in the country where the permanent establishment is situated. Then, usually the reverse charge procedure applies.