Finland’s growing data center market offers significant opportunities for international companies providing design, technology, installation, construction and commissioning services. However, tax, payroll, social security, employment law and immigration obligations may arise from the first days of a project, even when the work lasts only a few weeks.
A short duration does not automatically exempt a company from its obligations
The six-month threshold is relevant only to some of the required assessments. Salary may be taxable in Finland from the first day if, for example, the employer has a permanent establishment or the arrangement involves leased employees. Posted worker notifications, the right to work, occupational health care, local employment terms, social security and construction-site tax number requirements may also apply from the outset.
Short contracts or employee rotation do not necessarily reset time limits. For construction and installation activities, the project’s overall duration and the applicable tax treaty must be considered.
What tax and reporting obligations may the project trigger?
A foreign company must assess whether it creates a permanent establishment in Finland. A permanent establishment may give rise to corporate income tax, accounting, tax return and employer obligations. The need to register for prepayment and value added tax purposes must also be assessed.
The taxation of an employee’s salary is assessed separately. Factors considered include the duration of the employee’s stay in Finland, their country of tax residence, the allocation of salary costs and any leased employee arrangement. A foreign employer may have an obligation to report information to the Finnish Incomes Register even if it does not have a permanent establishment in Finland.
Is an A1 certificate or a posted worker notification required?
As a rule, work performed in Finland is insured in Finland regardless of the employee’s nationality or the employer’s country of establishment. An exception may apply based on an appropriate A1 certificate or other Certificate of Coverage (CoC). Without such a certificate, the employer must generally arrange the statutory insurance coverage in Finland, pay the related contributions and report the required information to the Finnish Incomes Register. If there is no certificate of social security coverage, or if it covers only some of the Finnish statutory contributions, the employer must obtain the necessary insurance coverage and fulfil the reporting obligations to the Finnish Incomes Register.
When an employee is temporarily posted to Finland based on subcontracting, an intra-group transfer or temporary agency work, a notification of the posting must generally be submitted to the occupational safety and health authority before the work begins. In the construction sector, a notification must always be submitted, and the exemption applicable to short intra-group transfers does not apply. For postings exceeding ten days, a Finland-based representative is generally required, and certain company and employee information must be kept available in Finland, including right-to-work and employment terms.
Posted workers in Finland are entitled, at a minimum, to certain mandatory terms and conditions of employment under Finnish law, such as provisions on remuneration under the applicable generally binding collective agreement, working hours, rest periods and annual leave.
What is required to access the worksite?
The foreign employer must arrange statutory preventive occupational health care, even for short periods of work. At a construction site, an employee generally needs a Finnish personal identity code and a tax number entered in the public tax number register. A foreign contractor must also provide the main contractor and the client with the information required for employee and contract reporting.
Does every employee have the right to work in Finland?
EU, EEA and Swiss citizens may work in Finland based on free movement, but a stay exceeding three months generally requires registration of the right of residence. Nationals of other countries must have a residence permit suitable for the duties concerned or another valid right to work. A business visa or visa-free entry alone does not automatically entitle a person to perform installation, construction or other productive work.
The employer must verify the employee’s right to work before the work begins and retain the relevant information. Employers may also have an obligation to notify the Finnish Immigration Service when employing a non-EU/EEA citizen.
How can KPMG help?
KPMG helps international companies establish their operations in Finland smoothly and in a controlled manner. We combine tax, payroll, social security, employment law and immigration expertise into one coordinated service: we identify the applicable obligations, manage the required registrations and notifications, and support employee mobility and access to the worksite. This gives the company a consolidated overview, clear responsibilities and a practical action plan for the entire project.
Contact us before finalizing your tender or sending employees to Finland. An advance assessment helps prevent delays and unforeseen costs.
