Work done by foreign leased employees

If you lease employees, you may have to withhold tax on the amount you pay their leasing agency and submit a report with the names and identities of the individuals who do the work.

Employee Leasing Notice

If you are a Finnish company, a Finnish individual or a foreign company with a permanent establishment in Finland, you are required to inform the Tax Administration of when you have leased employees from a leasing agency.  One of the facts you must report is the name and address of every foreign leasing agency with which you have made an agreement to have people work for you in Finland. Your reporting requirement covers any leased employees from countries that have a tax treaty with Finland, permitting Finnish taxation of their earnings, and the requirement also covers any leased employees from countries that have no tax treaty with Finland.

Countries for which there is a treaty permitting Finland to collect tax on leased employees' earnings:

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

Accordingly, it is the leased employee's country of tax residence that determines which country has the right to collect tax and require tax returns and other reporting; the country of tax residence of the leasing agency is not significant.

You can submit the required report in MyTax.

Alternatively, you can complete Form 6146 – "Report submitted by the hirer of leased employees" (Vuokratyön teettäjän ilmoitus ulkomaisen vuokratyön käytöstä / Inhyrarens anmälan om användning av hyrd utländsk arbetskraft).

You must submit it by the end of the calendar month following the month when you had the first foreign leased employee doing work for you. You must give these details regardless of the duration of the lease or the number of days you had the leased employees.

If there are any changes to the details you have given on Form 6146 (such as change of address, or termination of an activity), you must log in to MyTax to submit an update, or if you use the paper Form 6146, send an updated form to keep us up to date.  

The deadline for sending the update form is the end of the calendar month after the month when the changes occurred. However, you do not have to notify us if you just have a temporary break in your operations.  You are considered to have terminated your leasing operation if you do not lease any employees from the foreign agency to work for you for a period of six months.

If you do not submit the report, or if you submit it late, you may have to pay a penalty for negligence of up to €15,000.

Obligation to withhold tax

When you lease employees you must withhold tax at source on payments to a foreign agency
at a 13% if the agency is a limited-liability company or other corporate entity or 35% if it is a sole trader. You do not have to withhold tax if the foreign agency is on the Finnish prepayment register, or if the foreign agency has shown you a tax-at-source card with the zero withholding rate or other documentation establishing that withholding is not necessary.

However, other documentation is not sufficient if you are making payments relating to:

• the construction industry - building sites; construction, assembly or installation projects: associated supervisory activities
• transportation services
• cleaning services
• nursing services and treatment

For these, you must withhold tax at source unless you are paying an agency that is in the Finnish prepayment register or has shown you a tax-at-source card with the zero withholding rate. This rule applies in situations where the leased employee's country of tax residence is one without a tax treaty with Finland.

If you lease employees to work for you, you may also have other obligations and duties in addition to the ones described here. For more information, visit the website of the Occupational Safety and Health Administration.