Foreign leasing corporations in Finland

If a foreign enterprise operates as a leasing agency – arranges for leased employees to perform work for Finnish service recipients in Finland or on a Finnish vessel or aircraft – it must take care of a number of employer obligations in Finland. The employer obligations are different for foreign companies  treated as having a place of effective management or a permanent establishment for purposes of income tax here, from the obligations of other foreign companies.

This article is designed to give guidance to a foreign leasing corporation (= leasing agency) that provides a service recipient company with a leased employee who will work in Finland – or on board a Finnish vessel or aircraft.

Employee leasing defined

The arrangement by which one enterprise provides workers to another under a leasing contract is what is known as "employee leasing". The enterprise where the people work is known as the service recipient company.

This way, the workers have an employer-employee relationship with the foreign leasing corporation, which also pays their wages. However, the place where they work is usually the premises of the Finnish service recipient. They use the tools and materials belonging to the service recipient, and are under the service recipient's direction and supervision.

It is important to be aware that in subcontracting, direction and supervision of workers is the responsibility of the (foreign) subcontractor company. The same concerns the tools and the materials, because normally, the subcontractor provides them for the workers.

The leased employee must submit an application for tax prepayments, for a tax card or for a tax-at-source card

In general, leased employees whose country of fiscal residence is a foreign country must pay Finnish income tax on their earnings from work done in Finland or on a Finnish vessel or aircraft.  The tax treatment of a leased employee depends on the length of his or her stay in Finland and the provisions of the tax treaty between Finland and the country of residence, and on other factors.

Leased employees, whose actual employer is a foreign company and who perform work in Finland for a Finnish service recipient, must pay Finnish income tax on their wages starting on their first day of work, if the country where they come from is a country with no tax treaty with Finland, or if it is one of the following:

Albania, Belarus, Bermuda, Cayman Islands, Cyprus, Denmark, Estonia, Georgia, Germany, Guernsey, Iceland, Isle of Man, Jersey, Kazakhstan, Latvia, Lithuania, Moldova, Norway, Poland, Sweden, Spain, Tajikistan, Turkey or Turkmenistan. These countries have a tax treaty with Finland.

If a leased employee whose country of fiscal residence is a foreign country comes from a country that has a tax treaty with Finland, but the country is not included in the list above, the leased employee will need to pay tax on their wages to Finland if he or she stays longer than 183 days here, over the course of a period indicated by the treaty (normally either 12 consecutive months or a full calendar year). For more information, see Working in Finland for a foreign employer.

A leased employee whose actual employer is a foreign enterprise, and who works on board a Finnish vessel or aircraft, must pay Finnish income tax on their wage income, if the tax treaty between Finland and the leased employee’s country of residence allows Finland to levy tax on wages. Finland normally has the taxing rights with regard to wages, when the work is done on a Finnish vessel or aircraft. However, we recommend that you check the relevant provisions of the tax treaty.

If Finnish tax on the wage income must be paid, the leased employee will need to submit an application for prepayments, for a tax-at-source card, or for a tax card as soon as possible when starting work here.  A leased employee who is a nonresident must submit the application for prepayments, tax-at-source card or tax card by the end of the calendar month following the month when they started their work.

In general, the amount of Finnish tax to be paid by a foreign leased employee depends on how long this person will stay in Finland.

Read more about taxes on leased employees’ income:

• Foreign leased employees – taxation depends on how long you stay and on the treaty between your country and Finland
• Operation of ships and aircraft in international traffic

It is in the best interests of Finnish service recipients that foreign leasing corporations are prepayment-registered

We recommend registration in the Prepayment Register to foreign leasing corporations. It is a good policy to have a valid registration before the stage is reached when the Finnish service recipient settles your first invoice. If your foreign leasing corporation has a registration in Finland for tax prepayments, your service recipient is no longer under the obligation to withhold tax-at-source (13%) when paying you for the leased workers you have arranged.

Read more about registration for prepayments Starting up business in Finland - foreign company

Foreign leasing corporations have the option to become registered as employers

If your leasing corporation is treated as having a permanent establishment or a place of effective management in Finland, you must have the leasing corporation registered as an employer in Finland before the first time it pays out wages. Alternatively, a foreign leasing corporation has the option to ask for voluntary entry in the Register of Employers even if no permanent establishment or place of effective management exists. When your leasing corporation is registered as an employer, its leased employees who work in Finland are relieved from the obligation to pay their income tax in the form of prepayments.

Business enterprises on the Register of Employers must withhold tax – either tax-at-source or ordinary withholding – from the wages they pay to employees, and after that, pay the amounts on to the Tax Administration. You the employer are expected to carry out the withholding in accordance with the official markings on every individual employee’s tax cards. For foreign leased employees who stay for max. six months in Finland, the tax office will issue a tax-at-source card instead of the usual tax card. However, if the leased employee’s country of residence is an EU country, Norway, Iceland or Liechtenstein or a country that has a tax treaty with Finland, the employee can submit a request for progressive income taxation, and by consequence, receive a tax card designed for a nonresident individual. Those staying longer than 6 months get ordinary tax cards, and their withholding will follow the progressive income-tax schedule.

You must inform the Incomes Register when you start providing leased workers to your customers

All foreign leasing corporations must submit a completed Employee leasing notice, by the fifth calendar day after first payday, to declare that leased employees have begun their work in Finland or on board a Finnish vessel or aircraft. The Employee leasing notice is designed to provide information on each individual employee, one-by-one. Send the report to the Incomes Register.

In addition, you must submit the Employee leasing notice if the leased employee is a fiscal resident of a country that does not have a tax treaty with Finland, or a resident of one of the following countries: 

Albania, Belarus, Bermuda, Cayman Islands, Cyprus, Denmark, Estonia, Georgia, Germany, Guernsey, Iceland, Isle of Man, Jersey, Kazakhstan, Latvia, Lithuania, Moldova, Norway, Poland, Sweden, Spain, Tajikistan, Turkey or Turkmenistan.

The Employee leasing notice, to declare the start of work, must be submitted concerning leased employees who work on a Finnish vessel or aircraft if the tax treaty between Finland and the leased employee’s country of residence lays down that Finland has the right to levy tax on their wage income, or if Finland and the leased employee’s country of residence have no tax treaty. Finland normally has the taxing rights with regard to wages, when the work is done on a Finnish vessel or aircraft. However, we recommend that you check the relevant provisions of the tax treaty. 

• Foreign employers are under obligation to submit an Employee leasing notice and an Earnings payment report to the Incomes Register concerning their leased employees who work on a Finnish vessel or aircraft starting 1 January 2026. The Employee leasing notice must be submitted when a leased employee has performed work on board a Finnish vessel or aircraft, after 1 January 2026, regardless of the point in time when the leased employee had started working there. This means that it must be submitted concerning work done after 1 January 2026 even if the leased employee started working in 2025, for example, or even if he or she had started working before 2025. 

Read more about how to submit the Employee leasing notice: Reporting data to the Incomes Register: international situations.

Registration in the Finnish Register of Employers does not relieve you from the obligation to submit the report to the Incomes Register.

You must provide social security to your employees

If a foreign-resident employee is covered by the Finnish social insurance system, it means that the contributions for pension insurance, unemployment insurance, and health insurance must be withheld on the wages paid to him or her. However, an employee is not covered by the Finnish social security system if they present an A1 Certificate or a similar document proving that they have a 'posted employee' status. In this case, the employee continues to have social insurance in their countries of residence.

If the employee is covered by Finland’s social insurance system, you the employer are responsible for buying insurance and for paying the employer's share of the employee’s pension insurance, employment insurance and accident insurance contributions. Foreign leasing corporations may also have to pay Finnish health insurance contributions, the amounts of which are determined by reference to the wages paid.

Read more: Social insurance contributions

For more information on mandatory pension insurance, contact the Finnish Centre for Pensions or any insurance company. For more information on accident and unemployment insurance policies, contact any insurance company.

Foreign leasing corporations must file reports on paid wages and contributions

Foreign employers must submit a report to the Incomes Register, detailing the amounts paid to a leased employee for work done, for the benefit of a Finnish service recipient, in Finland or on a Finnish vessel or aircraft.  The report to be submitted on paid wages is required in the case of leased employees who work in Finland, and who have come here from one of the following countries: Albania, Belarus, Bermuda, Cayman Islands, Cyprus, Denmark, Estonia, Georgia, Germany, Guernsey, Iceland, Isle of Man, Jersey, Kazakhstan, Latvia, Lithuania, Moldova, Norway, Poland, Sweden, Spain, Tajikistan, Turkey or Turkmenistan.

The report on paid wages must be submitted concerning leased employees who work on a Finnish vessel or aircraft, if the tax treaty between Finland and the leased employee’s country of fiscal residence lays down that Finland has the right to levy tax on their wage income.

Nevertheless, the report must also be submitted even if the leased employee’s country of residence is a country that does not have a tax treaty with Finland.

Additionally, it is always required of foreign employers to submit a report to the Incomes Register on wages paid to an employee who stays in Finland for a continuous period longer than six months. 

If you paid your employees on 1 January 2016 or later: File an earnings payment report to the Incomes Register, detailing the amounts paid and withheld, no later than five days after payday. You must file the earnings payment report regardless of whether you are on the register of employers or not.

You are required to submit an employer's separate report to the Incomes Register to give details on the employer's health insurance contributions you have paid during the month. Submit the separate reports by the 5th of the calendar month following the payment month.

Read more:

Reporting data to the Incomes Register: international situations

Obligations of a foreign employer