Employer's contributions to be reported and paid to the Tax Administration
Employer's contributions are taxes that are withheld on the payments of wages (or other similar payments) to employees, and the employer's social security contribution. The employer is expected to remit these contributions to Tax Account and also to report them in periodic tax returns to the Tax Administration. The period covered by a periodic tax return is either one month or one quarter, depending on what the agreed interval of reporting is. The payments are also to be reported in Employer payroll reports. They are due at the end of January in the calendar year following the reporting year.
This instruction is intended for all companies, organizations and other entities that are in the role of employers.
Withholding
The employer is expected to withhold tax in advance through a withholding system. Amounts payable to an individual taxpayer as wages or as nonwage compensation are subject to withholding, and the tax card is designed to give instructions as to what rate of withholding to apply. If the beneficiary doesn’t present a tax card or if no registration in the prepayment register is in force, the payer will have to apply a 60 % rate of withholding.
Amounts payable to a company, organization or consortium as nonwage compensation are subject to withholding at the rate of 13%, unless the beneficiary has a valid registration in the prepayment register. (Examples of these beneficiaries include limited liability companies, cooperative societies, associations, foundations, general and limited partnerships and shipping companies.) If a self-employed individual has performed work and is to receive payment, withholding should be made as instructed in his or her tax card. If no tax card is presented, the payer will have to apply a 60 % rate of withholding. No VAT should be included in the base of withholding.
More information in Finnish Ennakonpidätyksen toimittaminen.
Employer's social security contribution
The employer has the obligation to pay a social security contribution payment (utilized as a health insurance premium), if the worker is covered by the Finnish social insurance system, as provided in the Act governing health insurance. As of the year 2011, the employer's social security contribution only concerns workers in ages 16-67 years. The payroll sum total is usually the basis for the calculation of the social security contribution. The rate applied to this basis is the same for all employers. The rate is officially confirmed for each calendar year, and the rate effective for the year is to be applied to the wages paid during that calendar year. No importance is attached to the calendar year during which the worker performed the work.
The employer's social security contribution payment is payable even in cases where no withholding is made. Examples of situations that involve no withholding are payment of fringe benefits instead of cash, and payment of wages to a worker whose tax card instructs the payer not to withhold tax. No social security contribution is payable on nonwage compensation.
Until the end of 2011, employers located in some municipalities are entitled to exemptions. For more information, see official instruction in Finnish Työnantajan sosiaaliturvamaksusta vapauttaminen eräissä kunnissa vuosina 2003-2011.
Payment and reporting of withholding tax and social security contributions
Regular employers should use Tax Account to remit the amounts that they have withheld, along with the social security contribution that is payable. They should file the periodic tax return to report the facts and information regarding these obligations. The period covered by a periodic tax return is either one month or one quarter, depending on what the agreed interval of reporting is. An employer who does not pay wages regularly (a casual employer) is expected to file the periodic tax return every time after payment of wages has occurred. If filed electronically, the due date to submit the periodic tax return is the 12th day of the reporting month, if submitted on paper form, the due date is the 7th day of the reporting month.
Periodic tax returns are filed for each taxable period. The most common taxable period is the calendar month. An employer with the monthly reporting period should pay and report the employer's contributions by the 12th day of the calendar month following the month of wage payments.
- Example: If the payday is 31 January, the due date to remit and to electronically report the employer's contributions will be 12 February.
It is not permissible to file periodic tax returns with longer intervals unless the employer has received an official decision allowing for extended reporting periods. An employer with the quarterly reporting period should pay and report the employer's contributions by the 12th day of the second calendar month following the taxable period.
- Example: If amounts were withheld and social security contributions were payable during the January-March quarter, the due date to remit and to electronically report the employer's contributions will be 12 May.
If the due date falls on a Saturday, Sunday or a holiday, payment and reporting will be due on the following business day. If you are a regular employer, you are expected to file periodic tax returns on every due date, even if you had paid no wages during some calendar months. In this case, fill out the Period no wage payment s -box on the form to give the necessary details.
If a periodic tax return is filed late, the filer should pay a late-filing penalty charge. The amount of the penalty charge is based on each tax amount to be reported, so that 20% per annum is added to each tax amount covered by the filing that arrived late. Interest will thus be counted as of the next day after the due date up to the actual arrival date of the filing. Minimum charge is €5 per tax type, and maximum charge is €15,000, however, the charge cannot be higher than the relevant tax amount being reported.
Employer payroll report
Employers are expected to file annual Employer payroll reports to give details on all paid wages and other payments, taxes that were withheld, and employer's contributions that were made. Employer payroll reports are due by end of January, the calendar year following the payroll year.
More information How to file annual employer payroll reports - companies and organisations.