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The Ultimate Guide To
Employment in Finland

Finland Facts

Population size: 5,523,904
Currency: Euro (EUR, €)
Capital city: Helsinki
Languages spoken: Finnish, Swedish
Ease of Doing Business: 13

Employing in Finland: What You Need to Know

The Finnish labour market is characterized by highly organized relations between employee and employer, with a crucial role played by collective bargaining power in labour regulation. The core of Finnish employment legislation lies in comprehensiveness and detail of the legislation complemented by collective agreements. Around 80% of Finnish employees are covered by a collective bargaining agreement.

Key Factors to Consider When Employing in Finland

The regulations and rules governing employment contracts, such as its definition, process of beginning and ending the contract, basic right and rules of job protection are codified in the Employments Contracts Act, applying to blue-collar workers and salaried employees, while managing directors typically fall outside these provisions. Specific provisions are also provided for other categories of workers, such as seamen and agricultural workers.

Due to the prevalence of collective agreements in the Finnish labour market, Finnish employers are obliged to provide their employees with more beneficial terms than they would receive under the statutory requirements. The power of Finnish trade unions therefore plays a significant role in the Finnish employment landscape.

  1. Contracts

    Employment Contracts

    There are several forms of basic employment contracts in Finland, administered under the Employment Contracts Act (ECA), which include permanent/fixed-term contracts, special contracts of employment, temporary agency work and probationary work. Employment contracts must be written exclusive of terms and conditions that may breach mandatory laws and provisions under the ECA or Collective Agreements Act (CAA).

    Contracts may be written, electric or oral, and for employment contracts extending longer than a month, the employer is obliged to provide a written contract detailing the following terms:

    • Location of work
    • Starting date and/or probationary period
    • Primary duties
    • Normal working hours
    • Collective agreement terms
    • Salary calculations
    • Holiday entitlements
    • Duration of contract
    • Required period of notice

    A main feature of the Finnish employment contract is that they are assumed to last indefinitely, unless a reasonable case or justification can be made for hiring an employee using a fixed-term contract for a certain period, or if the employee wishes to do so. A fixed-term contract does not need to be written, but the terms and conditions of the employment contract must be explicitly stated.

    Collective Agreements

    Collective bargaining of Finnish workers is regulated by the Collective Agreements Act which details to provisions for the terms of an employment contract negotiated between Finnish employers’ associations and trade unions. Collective agreements are very common in the Finnish labour market, with 80% of workers being members of a trade union. The collective agreements extend employment terms such as wage, salary, working hours, overtime, holidays, notice periods, etc. for the employee which are often more favourable than those stipulated under Finnish employment legislation. For example, Finland has no statutory minimum wage, but collective agreements specify minimum salaries for particular sectors which employers are obligated to comply with.

    In Finland, collective bargaining is divided into three levels: national, industry and company. The industry level negotiations involve setting out terms related to rates and basic conditions for a minimum standard in a particular industry, which in most cases employers are bound to.

Employee Entitlements

Information Explanation
Statutory Working Hours ?

Statutory rules for working hours in Finland are covered by the Working Hours Act. The act is a general law which applies to all sectors, and may be added upon by collective agreements that contain trade specific provisions on working hours. Working hours typically do not include travel time and any training time unless stated in the collective agreement or employment contract.

The standard working hours under the Working Hours Act is 8 hours a day with 40 hours a week maximum. Certain trades and services afford the benefit of flexible special working hours, such as hotels, transportation and telecommunications, where hours worked may be up to a maximum of 120 hours over three weeks. Any overtime which exceeds the weekly maximum hours worked will have a 50% overtime rate in the first two hours, and 100% thereafter. The rates may be subject to change in collective agreements. Generally, overtime hours should not exceed 250 hours per calendar year.

Collective agreements have sought to regulate working hours through reducing the weekly hours worked by 12.5 days a year, where some collective agreements in the industrial sector generally work for 37.5 hours a week only.

Employees are entitled to a total rest period of at least 11 hours for each 24-hour period, which may be flexible depending on any collective arrangements or provisions in the employment contract.

Working on Sundays ?

On a Sunday in Finland many businesses choose to close as Sunday is classed as both a religious day and a day of rest. However many businesses such as shops and restaurants do still open. The normal working hours for Sunday workers is 12.00pm- 21.00pm.

By law, any individuals required to work on a Sunday are to be paid double pay (100% bonus). They are also required to receive a timetable of the work shifts they are needed to work (highlighting the employees start and end times).

Each schedule of work shift has to be handed to the employee at least a week before the work period begins. Work shifts can be changed, of course with the employee’s consent, or when special occasions appear and the employer is unable to let the employee in advance.

Time Off Work ?

In order for a worker in Finland to earn their paid holiday entitlement they must first work a ‘holiday credit year’. This starts on the 1st April every year and ends on the 31st March the following year. An employee will earn themselves 2.5 days of holiday for each month of the ‘holiday credit year they work for, therefore giving them an overall 30 days of paid holiday per year.

Employees that have been working with the company for less that a year will only be able to earn 2
holiday days off work per month, giving them only 24 days per year. Another way holiday allowance can be managed is by using a collective agreement; however it must apply to the Finish holiday laws (as above).

Medical Leave ?

Workers in Finland are entitled to sick pay once they have worked for a company for one month, as long as they are able to provide a doctor’s certificate.
Sick pay during the first month of employment is usually 50% of the worker’s salary. According to Finnish law, workers can earn up to 9 days’ worth of sick pay, though this can be altered by mutual agreement.

If an employee uses up their sick pay allowance from their employers, they will receive around 70% of their salary from the Social Insurance Institution of Finland (KELA).
It is the employer’s responsibility to set up an occupational health service for their employees.

Annual Leave Accrual Entitlement ?

Under the Annual Holidays Act (2005), employees are entitled to 2.5 days of holiday for every full holiday credit month worked for employees working longer than 12 months, and 2 days of holiday per working month for those in employment contracts shorter than 12 months. Typically, there will be 30 days of holiday a year, equating to five weeks, or 24 days for those who have been working less than a year.

For employees to qualify for the accrual of holidays, they must work a minimum of 14 days or 35 hours during a particular month. Employees who have worked less than 14 days or 35 hours every month of the year are entitled to 2 days per holiday credit month.

The employer may grant the employee holiday leave in one of the two holiday seasons apart from exceptional circumstances. The summer holiday runs from May 2 to September 30 each year, while the winter holiday runs from 1 October to 1 May.

An employee is entitled to receive holiday pay for the period of his/her holiday, commencing when their holiday starts. Collective agreements have also incorporated a holiday bonus (loomaraha) amounting to 50% of the statutory holiday pay.

The employer is liable to pay wages during sick leave, given that the employer is informed of the employee’s disability without delay. The employee is obliged to provide a doctor’s certificate containing a diagnosis to be eligible for sickness benefits.

The following statutory entitlements for employees who are on sick leave are as follows:

  • Full salary for 10 days for employment is longer than one month
  • Half salary for 10 days if employment is shorter than half a month
  • National sickness allowance based on the employee’s income is payable by Kela (Finnish Social Insurance Institution) under the Sickness Insurance Act (2004) for sick days after 10 days, up to a maximum of 300 days. The allowance is usually 70% of the employee’s salary, which decreases the higher the income.

For most collective agreements covering blue-collar workers, employers are obliged to pay salary from the second day lost through sickness up to 4 – 8 weeks depending on the employee’s duration of employment. Salaried employees are entitled to full pay from 4 weeks up to 3 months. At this time, the Sickness Allowance provided by Kela is instead paid to the employer.

Employees under a collective agreement typically receive greater benefits. Collective agreements have incorporated provisions for illnesses, including the omission of any sick pay if the illness or disability was caused deliberately or severe negligence.

 

Maternity Leave in Finland ?

Maternity leave is arranged for women during pregnancy and after childbirth is a means of protection for the employee and baby. The right to family leave is regulated under Chapter 4 of the ECA.

The employee may commence maternity leave from 30-50 weekdays prior to the birth of the child, and lasts 105 weekdays. During this period, the employee receives a daily maternity benefit from the Social Insurance Institution equal to 90% compensation rate for the first 56 days, and 70% for the remaining period. Most collective agreement provisions oblige the employer to grant the employee full pay in during the first two or three months of the maternity leave, where the maternity allowance is instead paid to the employer.

Parental leave is granted after the maternity leave period finishes, and lasts 158 weekdays. Either the mother or the father may take this leave, where a parental leave benefit is provided up to 70% of earnings.

The ECA contains provisions for child care leave as well, which begins after parental leave and lasts until the child reaches three years old. A child care benefit is payable for this period if the parents choose not to place the child in day care.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

Compensation under Finnish legislation is dependent on the extent and justification of an employee’s unfair dismissal under Chapter 12 of the ECA. If the employer is dismissed without a just cause, the termination is considered illegal, where the compensation awarded to the employee may equal to 3-24 months’ pay. The extent of compensation depends on criteria such as:

  • Loss of earnings suffered by employee
  • Unemployment benefits awarded to compensate loss
  • Duration of employment relationship
  • Degree of guilt found on employer’s side

If the employer provides a valid reason for termination but not for termination without notice, the compensation equals to the pay for the period of notice.

Severance / Redundancy Pay ?

Suspension from work on medical grounds – The employee must inform the employer of any absence from work immediately. The employer is entitled to ask the employee to present them with a form of proof of sickness, such as a medical certificate.

Termination of Employment ?

There are many reasons for why an employer or an employee may choose to terminate an employment contract. However they both have a legal obligation to give the correct period of notice, stated in the collective agreement. An employer cannot end an employees contract without a weighty and justified reason, however if they feel that their employee is not longer fulfilling their job role correctly, then they have the legal right end their employment without a period of notice.

Other reasons for which an employer may not have to give notice are:

  • Serious breach or neglect of obligations of the employee, or such essential changes in the conditions necessary for working related to the employee’s person
  • The work has diminished substantially and permanently for financial or production-related reasons, or for reasons arising from reorganization of the employer’s operations.

A negotiation period up to a maximum of six months’ notice period may be negotiated in the employment agreement. If the employment contract fails to incorporate a notice period, the ECA and the collective agreements is responsible for defining an applicable notice period for both the employer and employee.

The employer’s statutory notice period differ depending on the duration of employment:

  • Up to 1 year employment – 14 days
  • 1 year to 4 years – 1 month
  • 4 years to 8 years – 2 months
  • 8 years to 12 years – 4 months
  • More than 12 years – 6 months

These notice periods are specified under Chapter 6, Sec. 3 of the ECA, and may be adjusted through negotiation of the employment contract.

The employee may give notice of termination without stating the reason. The employer may only dismiss an employee if they provide substantial reasons for termination. The list of applicable reasons are covered in the ECA, however each case must be evaluated individually.

During the notice period, employers must pay the regular salary to the employee, and the employee must work normally unless otherwise agreed.

Termination without a notice period is possible, although an extremely weighty justification for dismissal is required. If an insufficient reason for termination is provided, the employer is liable to pay compensation. Typically equal to the pay foregone during the notice period.

Probation

Information Explanation
Probation Period ?

Parties may negotiate a probationary period up to a maximum of four months from the commencement of employment. If the employer offers the employee a training period that exceeds four months, the probationary period may be prolonged to a maximum of six months. The probationary period is strictly limited to no more than one half of the employment contract’s duration for fixed-term contracts shorter than 8 months.

During the probation period, either party is free to terminate the contract without notice effective immediately, except in cases where the termination by employer is due to discriminatory reasons or reasons against the probation period’s purpose.

Pension

Information Explanation
Pension Requirements ?

The Finnish pension program is covered by two pension schemes: the National Pensions Scheme and the Employment Pensions Scheme. The National Pensions Scheme provides a minimum income and is a residence-based provision that covers all persons residing in Finland. The Employment Pensions Scheme is accrued for most earnings with no pension ceiling, accruing at the age of 18.

National Pensions Scheme (NPS)

The NPS offers a basic income for individuals with a very small earnings-related pension or those without any income-based pension at all. National pensions are administered by Kela, and are financed through employer contributions and tax revenues. The NPS under the National Pension Act is applicable to those older than 16 living in Finland, and includes old-age pensions, disability pensions, unemployment pensions, survivor’s pensions and early old-age pensions.’

Employment Pensions Scheme

Under the Employees Pensions Act (TyEL) is a mandatory benefit arrangement established through collective agreements which covers most of the private sector for earnings-related provisions. The TyEL provides protection for old age, incapacity for work, part-time pension, rehabilitation benefits, and farmers’ early retirement aid. The TyEL pension system is financed by both employers and employees and is administered under a decentralized system by pension insurance companies, company pension funds and industry-wide pension funds. These activities are coordinated by the Finnish Centre for Pensions (ETK).

Unemployment Benefits

The unemployment benefits in the Finnish labour market provide unemployment allowances via:

  • Basic Unemployment Allowance – Paid by Kela (Social Insurance Institution of Finland). Paid to registered job seekers who have been employed for at least 8 months in the previous two years. The allowance extends up to 500 days, and averages EUR551 per month. The amount depends on criteria like number of dependents and reasons for dismissal. Those who do not satisfy the conditions of the basic unemployment allowance may be eligible for the Labour Market Subsidy.

 

  • Earnings-related Unemployment Allowance – Paid by Unemployment funds. This allowance is paid to unemployment members of the unemployment funds. The allowance constitutes of a basic component, an earnings-related component and increases based on children.

GEO Solutions or DIY Employment in Finland?

Companies entering Finland must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Finnish Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Finnish entity established that can run payroll.

A DIY approach will typically be delayed until there is a properly incorporated company ready to run payroll and may be a costly option. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Outsourcing Employment Through a GEO Employer of Record Service

Using Shield GEO Employer of Record Services in Finland

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Finland. For companies which intend to employ their staff directly through their incorporated Finland entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Finland.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Finland.

The Shield GEO solution is an attractive alternative where:

the company is looking to employ staff quickly

the company doesn’t have an appropriately incorporated entity in Finland

the company wants to work within a defined budget

the company wants to limit its initial commitment in Finland

the company needs help with tax, employment, immigration and payroll compliance in Finland

Shield GEO can contract directly with the company to employ and payroll their staff in Finland. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

Payroll

Payroll Finland
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

Currency ?

Euro (EUR, €)

 
Grossed income Tax Rate (%)
€0 - €16,300 0
€16,300 - €24,300 6.5 (€8)
€24,300 - €39,700 17.5 (€528)
€39,700 - €71,400 21.5 (€3,223)
€71,400 - €100,000 29.75 (€10,038)
€100-000+ 31.75 (€18,547)

Flat tax amount corresponding to each tax bracket shown in parentheses

Tax Returns Supplied

Yes

Employers Social Security and statutory contributions

Social security taxes are applied as a percentage of gross wages and salaries. The average total percentage of all contributions for private-sector employers is 23.60%, which consist of:

  • Employer’s social security premium: 2.14%
  • Group life insurance premium: 0.067%
  • Pension premiums: 17.75%
  • Accident insurance premium: 1%
  • Unemployment insurance premium: 0.75%
Employees Social Security and statutory contributions

Social security contribution for employees in Finland consists of a Medicare contribution and a per diem contribution.

  • Medicare contribution: 1.32% of municipal taxable income.
  • Per diem contribution: 0.84% of salary income.
  • Pension insurance premium: 5.55% (7.05% for employees over 53)
  • Unemployment insurance premium: 0.5%.

Payroll and Tax in Finland

Finnish legislation on taxes for foreign employees are not as stringent, although are typically higher given the high levels of social security in the Finnish tax system. Salary earned abroad is exempt from tax in Finland if the Finnish resident works continuously abroad for at least six months, while non-resident employees are only subject to income taxes from Finnish sources. There are some notable consideration with Finnish tax laws that foreign employers must be aware of, such as the different social security contributions, the VAT and withholding tax.

Information Explanation
Remote Payroll ?

A remote payroll in Finland is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Finland. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Finland is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.

Local Payroll Administration ?

In some cases, a company will register their business in Finland under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to Finland may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Finnish payroll and can fulfil all tax, withholding tax and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Finnish employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in Finland to a GEO, like Shield GEO. This is possible for both foreign workers and Finnish nationals. This is the easiest, fastest and safest way to payroll staff in Finland.

Shield GEO manages all aspects of payroll for workers in Finland, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Finland

Information Explanation
Employee Information Required ?

When a new employee starts employment with a new company, there are several pieces of information that the company require in order to set up the employee with the business. These are the following:

  • Employee Name
  • Address/Postal mailing address
  • Phone number
  • Bank account details
  • Tax code number
  • Expected salary
  • Pension details
Tax Registration Requirements ?

Registration as an employer is mandatory if wages or salaries are paid in Finland to at least two employees on a regular basis or to at least six employees at the same time on a temporary basis. The company must withhold tax on the wages it pays to employees, following the instructions printed on each employee’s tax card.

Social Security Registration ?

Before applying for social security coverage under the Finnish social security system, individuals moving to Finland must register at a population register office. Once registered, the individual must then complete form Y 77e, from KELA, the Finish Governments office. This enables the individual to qualify for social security benefits.
A written decision on whether or not the individual will be covered by the Finnish residence-based social security system will be sent to them via post. If your application is not accepted, the individual can appeal the decision.

KELA Card

If the application is accepted, a photoless KELA card is sent to the individual automatically, at no cost. Their KELA card is the individual’s personal health insurance card. By presenting their card at the pharmacy or at many private medical clinics, they will be entitled to on-the-spot reimbursement of their costs.
For a fee individuals can also get an ID card with health insurance data. The ID card can be used as a travel document in many European countries and as authentication when logging into various online government services.

Documentation Required for New Employees ?

When a new employee begins a job role with a business, the employer has the responsibility to provide them with a written statement of employment. The written statement must include a guideline of what will be expected of the employee and general information of the position and business.

The employer also has a responsibility to create an employment contract for their new employee. The employment contract can either be an oral collective agreement or a written document.

Tax Figures

Information Explanation
Corporate Income Tax ?

The Corporate Income Tax Rate is currently 20.0%, lowered from 24.5% in January 2014.

Income Tax Rate ?
Grossed income Tax Rate (%)
€0 - €16,300 0
€16,300 - €24,300 6.5 (€8)
€24,300 - €39,700 17.5 (€528)
€39,700 - €71,400 21.5 (€3,223)
€71,400 - €100,000 29.75 (€10,038)
€100-000+ 31.75 (€18,547)

Flat tax amount corresponding to each tax bracket shown in parentheses

Sales Tax ?

VAT (arvonlisävero): Applies to all individuals and companies importing goods into Finland.

VAT rate: 24% as the general rate.
VAT rate: 14% for the supply of foodstuffs, animal feed and restaurant/catering services.
VAT rate: 10% for the supply of books, pharmaceutical products, transportation, accommodation etc.

Withholding Tax ?

Finnish companies are required to apply a 20% or 15% withholding tax on payments to foreign corporations depending on the country, and a 30% withholding tax on payments to non-resident individuals.

No withholding tax is levied on dividend payments received by companies in the EU/EEA.

Reduced rates are applicable to certain countries engaging in double tax treaties with Finland.

Other Tax ?
  • Municipal Tax: Flat rate ranging from 16.5 – 22.5% of taxable income depending on municipality.
  • Church Tax: Levied for members of certain churches at a rate from 1 – 2.2%
Time to prepare and Pay Taxes ?

93 hours

Time required to start a Business ?

14 days

Payments

Information Explanation
Payment Mode ?

There are various ways a business may choose to pay their employees’ salaries. Most large businesses will choose to do it via electronic bank transfer. This is a very fast and efficient way of ensuring that all employees receive their wages on time, straight into their bank accounts.

Smaller businesses that only have a minimal number of employees may find it easier to pay their workers salaries by use a cheque or cash.

Frequency of Salary Payment ?

There are a range of different frequencies in which a company may choose to pay their employees these are:

  • Daily
  • Weekly
  • Bi- weekly
  • Fortnightly
  • Monthly
  • Quarterly
  • Annually
Invoice / Payslips required ?

Yes, payslip is required.

Minimum Wage ?

Finland does not have a set national minimum wage. A collective agreement is used in order to calculate a salary for any new employee in a job role. The amount in which the employee is going to be paid is usually determined based on their level of professional skill. The employer must, in connection with payment of wages, give the employee a calculation which indicates the amount of pay and the grounds of its determination.

Immigration and Work Permits in Finland

Foreign workers are required to have the proper visas and work permits in Finland, as established by immigration laws.  Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Finnish market.  If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.

Use your own Company?

Citizens from any EU or EEA country are free to reside and work in Finland for up to three months, and must register the right of residence at a local police station if extending their employment. Nationals who are from countries in the Schengen zone only require a valid passport and travel documents instead of a visa for stays up to three months.

Foreign nationals who are not from Nordic, EU or EEA countries require an employee’s residence permit or an ordinary residence permit when working with an employer based in Finland. For most cases of foreign employees wishing to enter and work in Finland, the relevant permits must be obtained under the Aliens’ Act. The process for a Finland-based company employing a foreign national is a comparatively simple process, where in many cases only a residence permit is required to legally employ a foreign employee.

Process:

Employee – Residence Permit Application

  • The employee is offered a position at a company in Finland where employment will commence in the future under an employment contract.
  • The employee submits a ‘residence permit for an employed person’ application to the Finnish diplomatic embassy in their country prior to travelling to Finland.
  • The employee submits documents for identity verification along with the permit application, such as a valid passport, fingerprints, photo and supporting documents.
  • The Employment and Economic Development Office makes a partial decision on the merits of the employee’s application.
  • Migri (Finnish Immigration Service) investigates whether the employee fulfils the necessary conditions to be granted a residence permit and makes the final decision.
  • The employee is informed of the decision by mail through the embassy if abroad, and through either the police or Migri if in Finland on the status of the application. The employer is also notified by mail.
  • The employee obtains a residence permit card from the Finnish embassy or from the police.
  • The first permit is granted for one year, and may be renewed at a local Finnish police station once expired given that the conditions for the residence permit are still met.
  • The employee may travel to Finland and begin employment.

Required Documentation – Employee:

  • Employment contract
  • Valid passport
  • Passport photo
  • Residence permit for an employed person application
  • Payment details
  • Medical certificates, e.g. Salmonella, Tuberculosis, etc.

Employer

  • An employment agreement is drafted stating the terms and conditions of the employment relationship, detailing the duration, employee’s salary, etc.
  • The employer must confirm the employee’s application for a residence permit for an employed person by filling in the TEM 054 form.
  • The employer cannot apply for a residence permit on behalf of the employee, but may advise the employee on the steps and forms to follow.
  • For individuals who are already residing in Finland, it is up to the employer to ensure that the employee has the right to work and is a legal resident in Finland.
  • On the employee’s arrival, the employer must verify that the foreign employee has a valid residence permit card or sticker in a travel document, or is from a country where a permit is not required. Illegal employment without valid documentation attracts fines from €1,000 to €30,000.
  • Once all documentation has been confirmed, the employee may commence work.
  • The employer must retain all relevant documents, such as the employment contract, record logs, and copies of each foreign employee’s residence permits for inspection by the police, occupational safety and health authorities, or the Finnish tax administration.

Required Documentation – Employer

  • Employment contract
  • TEM 054 form (Confirmation of residence permit application by employer)
  • Certificate of paid taxes or tax debts
  • Certificates on employer’s statutory insurance premiums such as TyEL insurance
  • Report on the number of employees in the company
  • Report on recruitment of labour force from the Finnish labour market and EU/EEA labour market

Processing Time:

The expected processing time is at most 4 months

Processing Fee:

A fee of €450 must be paid by the applicant.

 

Use the Shield GEO Employer of Record Solution?

Once you get in touch with us, one of our consultants will take all the work off your hands, coordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.

Types of visas in Finland

Category Description of Visa
Business Visa

The business visa is a standard visit visa that permits an individual to enter the country for no more than 90 days. The business visa allows the worker to engage in conferences, seminars and similar business-related activities, but may not engage directly with work. The period of residence may not exceed 90 days. The visa is not required if the individual is from a Nordic country, an EU Member State, or a visa-free country. Business visas may be single, double or multiple entry depending on the nature of the visit.

Processing Time: at least 15 days

Processing Fee: €60

Residence Permit for an Employed Person

For foreign nationals seeking to work in Finland for an extended duration, a residence permit is required, which applies to most forms of employment for foreign employees. The permit card indicates the type and duration of the employment for the individual. There are three categories of residence permits:

– Continuous (A): Extended for a maximum of 4 years at a time
– Temporary (B): Extended for 1 year at a time
– Permanent (P)

The type of permit issued is typically tied to the nature of the work. The permanent permit may only be granted if the employee meets certain requirements and they have resided and worked in Finland for four years without interruption.

Residence permits are usually granted for a single professional field depending on the job, although permits can be granted for those with several lines of trade. In most cases, the permit is only issued for a single employer and the employee will not be able to engage in employment with another employer unless they renew the permit.

Processing Time: Maximum of 4 months

Processing Fee: €450

Residence Permit for Self-Employment

This permit is applicable for those who wish to be self-employed once they entire Finland. They must register their business with the Trade Register at the National Board of Patents and Registration before the permit can be issued. Private entrepreneurs, partners, general partners, and members of a cooperative are all categorized under this permit. They must provide supporting documentation as proof of their professional status and evidence of their business.

Processing Time: Maximum of 4 months

Processing Fee: €450

Setting up a company in Finland

When setting up a company you may want to consider these factors:

  1. Business Factors

    • The industry and type of business
    • Nationality of headquarters/individuals
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Regional Language

    Regional Language may be an important consideration. An overwhelming majority of Finnish citizens speak Finnish as their primary language, with a small minority speaking Swedish. There is minimal fragmentation of languages between regions, where Finnish largely dominates, while English is also one of the primary foreign languages with around 70% of Finnish citizens having a basic to proficient understanding of English.

The process of incorporation is relatively straightforward in Finland, as the Finnish legislation on incorporation encourages foreign investors to do so with ease. The procedures are similar to most countries in the EU. The laws pertaining to incorporation in Finland is regulated by the Limited Liability Companies Act. There are broadly three categories of business entities that may be assumed by foreign companies:

  • Limited Liability Company
  • Limited Partnership
  • Branch, Subsidiary or Representative Office

This page provides a general guideline for foreign businesses on entering Finland for business purposes. In particular it looks at common pathways to establishing a business presence in Finland, generally through a representative office, branch office or establishment of a legal entity. Various economic, tax and regulatory facts are provided throughout as a source of useful information to assist those who will enter the Finnish economy.

Limited Liability Company

PLC

The Limited Liability Company (LLC) in Finland may be private (osakeyhtiö-Oy) or public (julkinen osakeyhtiö-Oyj), where private LLCs may not trade their shares on the stock exchange, whereas the public companies have the ability to do so. This is the most common form of incorporation for foreign firms entering Finland.

Capital Requirements

Private Limited Liability Company: €2,500

Public Limited Liability Company: €80,000

Management Structure

In private LLCs, the management is assured by at least one manager. Major decisions for the firm’s future are made during the general meeting of the shareholders.

In public LLCs, the management must be assured by a management board that is composed of more than 3 members, where more than half must be EEA residents. A managing director is required if the invested capital exceeds €80,000.

Process of Registration

  • A bank account must be opened with proof that the minimum share capital was deposited into the banking institution.
  • The following documents must be submitted to the banking institution to obtain a certificate of verification or receipt that the capital has been deposited:
    • Foundation deeds
    • Memorandum of association
    • Description of the company’s business
    • Description of the company’s banking activity
    • Information of the shareholders and directors
    • Notarized copies of passports for bank account users
  • An application known as the Start-up Notification of a LLC is lodged to the National Board of Patents and Registration and the Tax Administration, which streamlines the business registration process. This must be done three months from the signing of the memorandum of association.
  • The following documents must be accompanied with the application:
  • All relevant documents are submitted to the Finnish Trade Register along with the proposed business name to check violations of existing names or trademarks.
  • The company then registers for pension insurance, accident insurance and medical insurance at any pension provider.

Documentation Required

  • Notarized copies of passports for authorized bank account holders
  • Foundation deeds
  • Memorandum of association
  • Description of the company’s business
  • Description of the company’s banking activity
  • Information of the shareholders and directors
  • Declaration of incorporation under the Finnish Limited Liability Companies Act
  • Certificate from auditors confirming the shares under the LLC Act.

Costs

Fee for Start-up Notification: €380

Average total fees: €11,855

Time

Minimum 14 days up to 10 weeks

Limited Partnership

The limited partnership is formed by an agreement between two partners. The extent of liability for the partners depends on the type of partnership it is: general or limited. Although partnerships are fairly common in Finland, they are not used as often as a method of incorporation for establishing a business in Finland from overseas.

 

The limited partnership arrangement in Finland may be registered by two or more individuals or legal entities, and may be either a General Partnership or Limited Partnership. In a General Partnership (avoin yhtiö-Ay), at least two members, or general partners, are involved in the establishment and incorporation of the business, with all members equally responsible for debts, liabilities and profits. In the Limited Partnership (kommandiittiyhtiö,-Ky), one partner assumes the role of general partner who executes all decisions and may claim all profits, while the limited partner remains ‘silent’, has no decisional power or claim on profits, but is entitled to a return for their investment. The limited partner is only liable to the extent of their contribution to the business.

 

Capital Requirements

There are no capital requirements in a partnership arrangement.

Management Structure

There are no formal requirements for management. However, the general partner has the power to intervene in the company’s management and exert authority over managers, while limited partners may not do so.

Process of Registration

  • A bank account must be opened
  • The following documents must be submitted to the banking institution to obtain a certificate of verification or receipt that the capital has been deposited:
    • Foundation deeds
    • Memorandum of association
    • Description of the company’s business
    • Description of the company’s banking activity
    • Notarized copies of passports for bank account users
  • An application known as the Start-up Notification of a LLC is lodged to the National Board of Patents and Registration and the Tax Administration, which streamlines the business registration process. This must be done three months from the signing of the memorandum of association.
  • The following documents must be accompanied with the application:
  • All relevant documents are submitted to the Finnish Trade Register along with the proposed business name to check violations of existing names or trademarks.
  • The company then registers for pension insurance, accident insurance and medical insurance at any pension provider.

Documentation Required

  • Notarized copies of passports for authorized bank account holders
  • Foundation deeds
  • Memorandum of association
  • Description of the company’s business
  • Description of the company’s banking activity
  • Information of the shareholders and directors
  • Declaration of incorporation under the Finnish Limited Liability Companies Act
  • Certificate from auditors confirming the shares under the LLC Act.

Costs

Fee for Start-up Notification: €380

Average total fees: €11,855

Time

Minimum 14 days up to 10 weeks

Branch Office

A branch office (sivuliike) may be established by the foreign business that operates under the company name while carrying out regular business activities. Foreign companies may find this option attractive as it provides greater exercise of control over business operations, while business functions like accounting, HR and tax do not become burdensome.

A branch office may engage in any function that the parent company engages in as stipulated in the corporate rules, as long as the activities of the branch are permitted by Finnish law and regulations. The wide range of activities available to branches makes it an advantageous method of establishing a business presence in Finland.

Branch offices must be registered with the Finnish Trade Register under the Trade Register Act, which details provisions on the compulsory registration and disclosure of annual accounts of the foreign company.

Companies from the EEA may establish branch offices by simply submitting a notification to the Finnish Trade Register. Countries from other regions must apply through the National Board of Patents and Registration as well.

A Finnish resident must be appointed as the domestic representative of the branch with authority to act on the company’s behalf. A board of directors is not required, although the foreign company is still liable for all debts and obligations of the branch, nots imply the invested capital.

 

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Finland, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Finland they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Finland
  • the company needs help with tax, employment, immigration and payroll compliance in Finland

The complexity of employment regulations in Finland makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Finland allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Finland.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Finland. Read more about outsourced employment through Shield GEO.

  • Finland Employer of Record Overview

Finland Employer of Record Overview

  • Finland Employer of Record Overview

Finland

Finland

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