Hiring an employee in Finland without a Finnish company: employer of record, foreign employer or subsidiary

Karma Accounts · Published 27 October 2026

A foreign company can employ someone in Finland without a Finnish company. There are three routes: an employer of record (EoR), a company with its own Finnish registrations that becomes the legal employer while you direct the work; employing the person directly as a foreign employer; or a Finnish subsidiary or branch. Employing directly, you normally insure the work in Finland (TyEL pension, unemployment and accident insurance) and report the pay to the Incomes Register (tulorekisteri) within five days of each payday. You withhold tax if you have a permanent establishment or effective management in Finland, or register as an employer.

The three routes side by side

Route	Who is the legal employer	What you register in Finland
Employer of record	the EoR company	nothing as an employer; the EoR does it
Foreign employer	your foreign company	insurances, usually a Business ID, often the employer register
Subsidiary or branch	the subsidiary; for a branch, your foreign company	the subsidiary or branch, then the same employer steps as a Finnish business

Route	Ongoing duties for you	Typical fit
Employer of record	a service contract and its fee; directing the work, with the duties that go with it	testing the market with one or two people
Foreign employer	payroll, Incomes Register reports, insurances and payments	a longer hire, without a Finnish entity
Subsidiary or branch	everything a Finnish employer does, plus the entity's own books	a team, premises or Finnish customers

How fast? An EoR starts once its own onboarding is done. Employing directly, accident insurance must be in force before the work starts and TyEL arranged by the first Incomes Register report. A subsidiary or branch is registered first; our article on branch or subsidiary compares the two.

Route 1: an employer of record

An employer of record signs the employment contract, runs the payroll, withholds tax, insures the employee and files the reports, in its own name. You pay a service fee and direct the work.

Directing the work brings duties. Under the Employment Contracts Act (chapter 1, section 7), the company an employee is transferred to gets the right to direct and supervise the work and the employer's duties directly connected with it. The Occupational Safety and Health Act (section 3) applies its employer provisions to that company during the work.

For it: quick to start, with no Finnish registrations of your own.
Against it: the contract is between the employee and the EoR; the fee adds to the cost; and an EoR does not settle whether your business has a permanent establishment in Finland (below).

Karma Accounts is not an employer of record and does not employ people on anyone's behalf.

Route 2: employing directly as a foreign employer

Step by step

Get a Finnish Business ID. The Incomes Register takes reports primarily under one; a foreign identifier is used only without it. A foreign corporate entity posts form Y1 with form 6204 (both at ytj.fi); with a Business ID, use form Y4 or MyTax.
Check the employer register (työnantajarekisteri). With a permanent establishment it is compulsory if you regularly pay two or more employees, one regular and one or more temporary, or six or more at once. Without one it is voluntary; the table below shows what registering then means.
Take out accident insurance before the work starts. It is required once the year's wages exceed 1 500 euros (2024–2026 limit).
Arrange TyEL pension insurance with a Finnish pension company: a contract is needed for a continuing employee or 10 272 euros of wages over six months (2026). Withhold the employee's 7.30 %.
Unemployment insurance. Withhold the employee's 0.89 %; the Employment Fund (Työllisyysrahasto) invoices both shares once the year's wages exceed 1 500 euros.
Ask for the tax card if you withhold. Without tax card details the withholding is 60 %.
Report every payday to the Incomes Register within five calendar days of the payment date, with "Foreign employer" as the payer type if you have no permanent establishment and your effective management is not in Finland.
Pay the withheld tax by the 12th of the month after the payday month (monthly tax period), or the next business day if the 12th is not one.

When you must withhold tax

Your situation	Withholding	Employer's health insurance contribution
No permanent establishment, not registered	none	not paid
No permanent establishment, registered voluntarily	for employees resident in Finland; tax at source only for leased workers	not paid; separate report shows 0
Permanent establishment or effective management in Finland	yes, as a Finnish employer	paid, 1.91 % in 2026, for insured employees aged 16–67

This follows the Tax Administration's 2026 guidance. If you do not withhold and the pay is taxable in Finland, the employee pays tax in advance themselves, unless a Finnish substitute payer withholds. Even unregistered, you report to the Incomes Register when the employee is insured in Finland, stays over six months, or is a leased worker Finland may tax. The employer's separate report is due by the 5th of the following month: every month for a registered employer, and for months with wages for an unregistered one with a permanent establishment. Earnings payment data reported after the 8th day of the month following payday is charged a late-filing penalty.

A worked example

A German company without a permanent establishment, registered voluntarily, pays a 35-year-old developer living and insured in Finland 4 000 euros on Wednesday 25 November 2026. Tax card rate 25 % (assumed), monthly tax period.

Item	Employee	Employer
Gross salary	4 000.00	4 000.00
TyEL, 7.30 % and 17.10 % average	−292.00	684.00
Unemployment insurance, 0.89 % and 0.31 %	−35.60	12.40
Accident insurance, 2026 average 0.48 %		19.20
Tax withheld at 25 %	−1 000.00
Net pay / statutory cost before group life	2 672.40	4 715.60

With a permanent establishment, the health insurance contribution of 76.40 euros makes it 4 792.00. Deadlines: Incomes Register report by Monday 30 November; separate report by Monday 7 December (5 December is a Saturday, 6 December Independence Day); withheld tax by Monday 14 December; TyEL invoice normally by Thursday 31 December. The employer TyEL and accident rates are averages; see TyEL in 2026 and employer costs.

Access and mandates

A payroll provider needs two Suomi.fi mandates: "Managing of tax affairs" for MyTax and "Reporting earnings payment data" for the Incomes Register (outsourcing payroll). Logging in without Finnish bank codes: VAT returns for foreign companies. Written terms and occupational health care: hiring checklist.

Posted or hired locally

Hired locally. Someone who lives in Finland and works only from here, even fully remotely, is covered by Finnish social security, so the employer insures them here.

Posted from abroad. For a temporary posting from the EU/EEA or Switzerland, your company applies for an A1 certificate at home (a social security agreement country has its own certificate). The employee then stays insured at home. Under the EU rules the posting is expected to last at most 24 months and must not replace another posted worker. Without a certificate, you insure the employee in Finland. From a country without an agreement, pension insurance can stay at home for work under two years; check the other contributions. A posting company must also, as a rule, notify the occupational safety authority before the work starts and name a representative in Finland.

A word on permanent establishment

A permanent establishment is a fixed place of business through which the company carries on its business; where a tax treaty applies, its definition governs. In the Tax Administration's guidance, an employee's home office may become one if used permanently, particularly when you require home working and have business interests in Finland; occasional, preparatory or auxiliary work does not count. A person who regularly concludes contracts for you can also create one. The result is Finnish corporate tax, 20 %, on the profit attributable to it. Employer registration is a separate matter and does not settle the question. If the employee sells, signs contracts or runs your business from Finland, have it looked at before the hire.

What we do

Karma Accounts runs payroll and Incomes Register reporting, in English or Finnish, for employers in Finland, including foreign companies registered as employers here. We make the payslips, file the reports on time and tell you what to pay; your company remains the employer. See our payroll services or request a quote with the number of people and where they work.

Frequently asked questions

Can I hire an employee in Finland without a Finnish company?

Yes: directly as a foreign employer, through an employer of record, or through a subsidiary or branch. Employing directly, you insure the work in Finland and report each payday to the Incomes Register.

Does a foreign employer have to withhold Finnish tax?

Yes, with a permanent establishment or effective management in Finland, or after registering as an employer. Otherwise not, but you still report to the Incomes Register when the employee is insured in Finland or stays over six months.

Employer of record or subsidiary in Finland?

An EoR is quicker to start and carries the payroll, tax and insurance duties for a fee; you direct the work and keep the duties that come with it, such as safety. A subsidiary has its own books and filings and suits a team or a lasting business.

Do I need TyEL for a remote employee in Finland?

Yes, as a rule, if they live in Finland and work only from here: the foreign employer arranges TyEL, unemployment and accident insurance. A posted worker with an A1 certificate stays insured at home.

Sources

Please note: this is general information about Finnish rules, not advice for your own situation, and the rules change. Ask us before you act on it.

Payroll from the first hire

Payslips, the Incomes Register report within five days and the amounts to pay by the 12th worked out, for 15 € a payslip plus VAT. See payroll services.

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