Income taxation of wages of leased employees in Finland

There are two categories of tax liability in income taxation: unlimited and limited liability to tax in Finland (= residency and non-residency). According to section 11.1 of the act on income tax (Tuloverolaki (1992/1535)), “residents” means individuals who live in Finland and individuals who live in other countries, but are present in Finland for longer than six months. Non-residents, i.e. taxpayers with limited liability to tax, are those who have not either stayed in Finland during the tax year or have only stayed for a shorter period of time.

Finnish residents are obliged to pay taxes to Finland on anything they earn both in Finland and other countries. Non-residents only pay tax to Finland on what they earn in Finland (§ 9.1 of the act on income tax). Income that must be treated as being from a Finnish source includes wages paid by a foreign employer for work performed in Finland, if the foreign employer has leased the worker to a recipient company in Finland under an employee-leasing contract. This way, even if the leased worker is a non-resident individual taxpayer with limited tax liability, he or she has to pay tax to Finland on wages received for work carried out within the country, unless otherwise stated in the tax treaty between the leased worker’s country of residence and Finland.

As 1st of January 2024, based on the enacted tax treaty amendment in Albania, the taxation of wages from leased work is permitted in the country where the work is done, regardless of the duration of stay, starting from the first day of work. The same arrangement applies already to

  • to the Nordic countries
  • the Baltic countries
  • Poland, Germany
  • Spain
  • Turkey
  • and numerous other countries

Taxation of leased foreign workers

In other cases, the wages of employees from countries with which Finland has signed a treaty are taxed in Finland, if the worker stays for more than 183 days – either over a period of 12 months, or during a calendar year, depending on the provisions of each treaty.

In addition, the wages of a leased worker are also taxed in Finland if the employee comes from a country with which Finland does not have a tax treaty. In this case, the wages are considered taxable income in Finland from the first day of work, regardless of the length of stay.

Read more on Tax Administrations website