Set up services for international companies
The business obligations of a foreign company are largely based on international tax treaties. It is necessary to find out what kind of activity the company carries out, what kind of property the company has in Finland and whether the company will have a permanent establishment in Finland.
If an employee receives income from a country other than his or her country of residence, he or she may be taxable in both countries. In order to avoid double taxation of the same income, countries have entered into different tax treaties with each other. Finland has an income tax agreement with more than 70 countries.
Company formation and tax status
In principle, a foreign company must choose a Company Form suitable for its Finnish operations. Many foreign companies operate as foreign companies or establish, for example, a branch or subsidiary in Finland. Econia helps determine the right form of business.
Once the Company Form and Obligations have been defined, the company is registered in the registers of the Tax Administration and / or the Finnish Patent and Registration Office. The company form and registrations of a company operating in Finland determine the company’s tax obligations. Usually companies are on the withholding tax, VAT and employer register.
The operations of a foreign company in Finland may form a permanent establishment for the company in Finland for income tax purposes. In that case, the company must pay income tax in Finland from the activities that the company carries out in Finland.
No withholding tax needs to be paid on the remuneration paid to an operator entered in the advance payment register. Membership of the advance payment register is not obligatory. If the company invoicing the work or usage fees is not entered in the prepayment register, the purchaser of the service must provide a withholding tax on the charged purchase price.
Employer register is maintained by the tax administration listing information on employers who regularly pay wages.
In Finland, employers have various obligations related to the payment of wages, such as:
- making a withholding tax,
- payment of health insurance contributions, and
- payment of employment pension contributions.
Salaries are paid in Finland through the income register. You must register in the register if the entrepreneur or company is a regular employer.
VAT liability and tax register
A foreign trader who conducts business in Finland is liable to VAT here. The company is obliged to register in the VAT register if the company has a permanent establishment in Finland.