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Finland - Special considerations for short-term assignments

Special considerations for short-term assignments

Taxation of international executives


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Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency Rules

Are there special residency considerations for short-term assignments?

A foreign employee is treated as a Finnish resident if they stay in Finland for a continuous period exceeding 6 months during 1 or 2 calendar years. It shall be noted that the stay in Finland may be regarded as continuous despite of a temporary absence from the country/territory.

Payroll considerations

Are there special payroll considerations for short-term assignments?

According to the general rule, all social security premiums shall be paid when a person is working in Finland, regardless of the length of the working period in Finland. However, if the assignment is expected to last for less than 4 months, no employer’s social security premium and employee’s sickness insurance premium is due.

If a foreign employer assigns an employee, who does not belong to a pension scheme of an EU/EEA or a social security agreement country/territory, to Finland, they should not be insured for pension purposes if the length of the assignment does not exceed 2 years.

If the assignment will last for less than 6 months the assignee will be considered non-resident and a flat source tax will be withheld instead of normal progressive payroll tax. 

Taxable income

What income will be taxed during short-term assignments?

Normally, during short-term assignments (lasting less than 6 months in total) only employment income (remuneration paid in-cash or in a form of fringe benefits) will be taxed in Finland.

The employment income related to a short-term assignment may be tax exempt on the basis of the relevant tax treaty.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in Finland?

If the assignment is deemed as a business trip as determined in the Finnish tax law, travel expenses, daily allowances and housing may be provided exempt of tax. Please note that the current tax practice regarding temporary business trips is unclear and these issues need case-by-case investigation.

© 2019 KPMG Oy Ab, a Finnish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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