Remote work has made international hiring much easier. A company can now find a strong specialist in another country and work with them without opening an office there.
But when an employee works remotely from Finland for a foreign employer, the legal and payroll situation must be handled correctly.
For international companies, the main question is simple:
Can our employee live in Finland and continue working for us?
In many cases, yes. But the arrangement must be structured properly.
Why remote work from Finland creates obligations
If a person lives and works in Finland, Finnish tax, employment and social security rules may become relevant.
The Finnish Tax Administration states that if a person works from home in Finland for a foreign employer, they generally need to pay tax on their wages to Finland. If the employer is not a Finnish employer, the employee may need to pay Finnish tax through prepayments.
This is often inconvenient for both sides.
The employee wants a normal employment structure. The company wants to avoid building a Finnish payroll system just for one person.
This is where an Employer of Record can help.
Common remote work scenarios
Foreign companies usually face this issue in one of several situations.
1. Existing employee moves to Finland
An employee may relocate to Finland for family, personal or lifestyle reasons. The employer wants to keep the employee, but does not have a Finnish company.
2. Candidate already lives in Finland
The company finds the right candidate in Finland but cannot hire them directly because it has no local legal entity.
3. Specialist wants to relocate to Finland
A highly skilled employee wants to move to Finland and continue working for the same foreign employer.
4. Company wants to test the Finnish market
The business may want a local representative, developer, project manager or consultant in Finland before deciding whether to open a local entity.
Why contractor status may not be enough
Some companies try to solve the issue by turning the employee into an independent contractor.
This may work in limited cases, but it can also create risk.
Finnish occupational safety authorities describe an employment relationship as being created when work is agreed between employer and employee, performed under the employer’s supervision, and paid for by the employer.
If the person works like an employee, full-time, under company direction, using company systems and reporting to company management, contractor status may not reflect the real relationship.
In that situation, an employment structure may be more appropriate.
Social security and insurance
Social security is another important issue.
The Finnish Centre for Pensions explains that if a remote worker works in Finland for a foreign employer, the employer must arrange statutory social security for the worker in Finland, unless a specific exception such as an A1 certificate applies.
This is often the point where foreign employers realise that remote work is not only a private arrangement between company and employee.
There may be employer-side obligations in Finland.
How EOR helps
An Employer of Record provides a local employment structure.
With TaigaTrust, the employee is formally employed in Finland by TaigaTrust. The foreign company continues to manage the employee’s daily work, while TaigaTrust handles the Finnish employment administration.
This may include:
- Finnish employment contract
- Payroll
- Salary payment
- Tax withholding
- Employer contributions
- Statutory insurance administration
- HR documentation
- Employment compliance support
When EOR is a good solution
EOR is especially useful when:
- the employee lives in Finland;
- the foreign company has no Finnish entity;
- the company wants to avoid opening a subsidiary;
- the employee works long-term for the foreign company;
- the company wants a compliant payroll and employment setup;
- the arrangement involves a high-paid specialist or key employee.
Conclusion
Remote work from Finland can be a good solution for both the employee and the foreign employer. But the legal, tax and social security structure should not be ignored.
TaigaTrust helps foreign companies employ remote workers in Finland through an Employer of Record model.
If your employee works from Finland or wants to relocate to Finland, contact TaigaTrust to discuss the best structure.
