Payroll in Finland: A Comprehensive Guide for 2026

Introduction

Payroll in Finland requires withholding income tax based on each employee's individual tax card, paying employer social insurance contributions, and reporting every salary payment to the Incomes Register.

Employer contributions in 2026 include a 17.10% average pension contribution (TyEL) and a 1.91% health insurance contribution, while employees have pension, unemployment, and health care contributions withheld from gross pay. Finland has no national minimum wage, so sectoral collective agreements set the pay floors, overtime premiums, and many other terms.

These obligations run on two separate channels. Withheld income tax and the employer health insurance contribution go to the Finnish Tax Administration, while pension and unemployment contributions go directly to the insurance providers that handle those schemes, each on its own schedule.

In this guide, we cover Finland's payroll processing phases, statutory components, public holidays, employer and employee contribution rates, termination notice periods, and how foreign companies can run compliant payroll without setting up a local entity.

What is the payroll process in Finland?

The payroll process in Finland includes three main phases: pre-payroll, payroll calculations, and post-payroll.

Pre-payroll phase

During the pre-payroll period, you'll gather documentation, communicate policies, and get ready to pay employees while staying compliant with all laws.

Setting up the organization

Set policies in place, such as leave policies, pay frequency, and attendance. Make sure all of your employees are on board.

Business profile

Your company should have a registered business number, which will be needed to send out things like tax forms and payslips. In Finland, this means registering with the Finnish Tax Administration and obtaining a Business ID (Y-tunnus) before hiring.

Work location

Requirements can differ locally or regionally within Finland. If you're based all over the country, each workplace can have its own policies.

Leave policy

Let all your employees know about your leave policies. Employees are legally entitled to some categories of leave in Finland, including parental leave, sick leave, and paid holidays.

Attendance policy

Document timesheets, doctor's notices for sick leave, and supervisor permission for requested time off. Biometric devices can help keep track of hours worked.

Statutory components

Account for everything you need to pay or provide your employees by law.

Salary components

Salary in Finland typically includes base monthly pay, holiday pay accrual, and any allowances set by the applicable collective agreement, plus statutory social security contributions split between employer and employee shares.

Pay schedule

The payroll frequency in Finland is monthly, usually paid on the last day of the month.

Employee information

Collect and record employee information, such as their department and job titles.

Payroll calculation phase

The main component of the process is the Finland payroll calculation phase. Data from the pre-payroll phase is input into a system to calculate each employee's paycheck, resulting in the salary paid after deductions, withholding, and taxes.

Post-payroll phase

Salary payments

The post-payroll phase is when employees are paid. After all payroll calculations are made and are complete, send your bank advice to your corporate bank for salary disbursements.

Payroll accounting

Payroll is an important and large expense. Balance the accounts and keep track of total payroll funds spent after payments have been sent out.

Payroll reporting and compliance

Finland runs payroll reporting through the Incomes Register, maintained by the Finnish Tax Administration. Every salary payment must be reported to the Incomes Register within five calendar days of the payment date, with Saturdays, Sundays, and holidays counted in those five days.

If the fifth day falls on a non-business day, the report can be submitted on the following business day. The register feeds data automatically to the Tax Administration, pension providers, and social insurance institutions, so this single filing replaces the multiple separate reports employers had to send before 2019.

What is payroll management in Finland?

Payroll management means keeping accurate financial records for payroll, paying employees, generating payslips, and obeying labor laws.

Finland's monthly payroll cycle requires withholding income tax based on each employee's individual tax card issued by the Finnish Tax Administration, deducting employee shares of pension and unemployment insurance, and issuing payslips that employees can reconcile directly against their Incomes Register records.

Skuad's global payroll platform helps keep these components aligned from a single system, covering payroll processing in 70+ currencies, statutory contribution workflows, and employment documentation across supported markets, without your team rebuilding the calculation logic every time rates change.

What is payroll compliance in Finland?

Part of the process of managing payroll is making sure you are compliant with labor laws and benefits regulations, such as taxes, leave entitlements, and other laws.

Finnish payroll compliance runs on two parallel channels. Withheld income tax and the employer's health insurance contribution are paid to the Finnish Tax Administration by the 12th day of the calendar month following payday, and every salary payment must be reported to the Incomes Register within five days of payment.

Pension and unemployment insurance contributions, by contrast, are remitted directly to the insurance companies handling those schemes, on the schedules those companies set.

Missing the Incomes Register deadline or under-reporting wages triggers an estimated assessment from the Tax Administration with a punitive tax increase, which is why most employers integrate Incomes Register reporting directly into their payroll software rather than filing manually.

Skuad's Shield compliance layer helps your team stay aligned with statutory obligations across supported markets, covering contribution workflows, regulatory monitoring, and employment documentation, without independently tracking every regulatory update.

What are the main payroll components in Finland?

Many of Finland's payroll components, such as minimum pay levels, overtime premiums, and sick-pay continuation, are governed by the applicable sectoral collective agreement on top of the baseline set in statute. The core figures and rules are below.

Compensation

Finland has no national minimum wage, but requires employers to pay a minimum wage agreed upon in collective agreements.

Working hours

Regular working hours are 8 per day or 40 per week. Total working time, including overtime, can't exceed an average of 48 hours per week over four months.

Overtime laws

All hours worked above and beyond the normal working hours are counted as overtime, regulated by the mutually-agreed employment contract and collective bargaining. Under the Working Time Act, pay plus 50% for the first two hours worked and pay plus 100% for each subsequent hour are payable for daily overtime.

Each instance of overtime needs the employee's consent, and the cap is 138 hours over any four months, with 330 hours as the annual limit.

Sick leave

If the employee has worked at least one month, you pay full pay through the ninth day following the date of falling ill. If the employee has been with you less than one month, the obligation is 50 per cent of their pay during that same period.

Parental leave

The pregnant parent can start pregnancy leave 14-30 working days before the expected date of birth, and Kela pays pregnancy allowance for 40 days. After that, parental allowance for one child runs to 320 working days in total.

With two parents, each gets 160 working days, and up to 63 working days can be turned over to the other parent or another caregiver. The days can be used within 2 years. If you keep paying salary during the leave, Kela pays the allowance to you directly instead of the employee.

Parents can also take childcare leave, which is unpaid time off to care for a child under three at home, or for two years after adoption.

Study leave

An employee can take study leave for at most two years during a period of five years if their full-time employment with the same employer has lasted for at least one year in one or more periods. If the employment relationship has lasted less than a year but at least three months, the employee is entitled to a maximum of five days of study leave.

Annual leave

Employees earn an annual holiday of 2 weekdays per month if the employment relationship has lasted for less than 12 months by the end of the holiday credit year, and 2.5 weekdays per month if it has lasted for more than 12 months.

How many public holidays are there in Finland?

There are 12 standard public holidays (Easter Sunday listed for completeness even though it mostly falls on a Sunday) in a year in Finland for which employees must be given paid time off. If an employee must work on a holiday, they are to be paid double pay.

What are payroll taxes in Finland?

Finland's corporate income tax rate is a flat 20% on company profits, levied under the Income Tax Act. Payroll taxes in Finland fall into two categories: contributions the employer pays on top of gross salary, and contributions withheld from the employee's pay, and both are mandatory.

Health insurance and withheld income tax go to the Finnish Tax Administration; pension, unemployment, accident, and group life contributions go directly to the insurance providers and the Employment Fund, as shown in the Payable To column.

Employer Contributions

Employers in Finland pay social insurance contributions for each eligible employee. The rates below apply to wages paid in 2026.

Employee Contributions

Employers withhold the following contributions from employee salaries before remitting them to the relevant authorities.

Employers also withhold personal income tax from each salary payment based on the employee's tax card (verokortti), issued by the Finnish Tax Administration.

Finland's total employer cost runs well above gross salary once you stack the 17.10% TyEL pension contribution, 1.91% health insurance, tiered unemployment insurance, and industry-variable occupational accident and group life premiums, all remitted to separate authorities on separate schedules.

Skuad's employee cost calculator helps estimate the cost of hiring across supported markets, including employer social and tax contributions, statutory deductions, and net-to-gross conversion, so finance teams can model headcount costs before committing to a hire.

What is the employee termination policy in Finland?

Terminating an employment contract in Finland is governed by the Employment Contracts Act. Employers cannot terminate an indefinite contract without a proper reason, either related to the employee's conduct or a substantial and permanent reduction in available work. Employees may resign at any time, subject to the applicable notice period.

Probation period

The maximum probation period in Finland is six months. For fixed-term contracts, the trial period cannot exceed half the contract length, and is always capped at six months. Either party may terminate the contract during the trial period without notice, provided the grounds are not discriminatory.

Notice periods

Notice periods are set by the Employment Contracts Act and depend on the length of service. When the employer terminates:

When the employee resigns:

The maximum notice period is six months. The employee's notice period cannot exceed the employer's notice period.

Looking for payroll support in Finland?

Finland has no national minimum wage, which means the pay floor, overtime premium, and sick pay continuation for each employee depends on which sectoral collective agreement applies to their role. Get the wrong agreement, and the entire payroll calculation is off from the start.

Layer on a 17.10% TyEL pension contribution, a 1.91% health insurance contribution, tiered unemployment insurance, and industry-variable occupational accident premiums, each going to a different provider on a different schedule, and the employer cost stack is both higher and more fragmented than most foreign employers expect before their first hire.

An Employer of Record model helps simplify this by enabling companies to run payroll in Finland without setting up a local entity, while Skuad supports payroll processing in 70+ currencies, statutory contribution workflows, employment contracts, and compliance across supported markets through its EOR capabilities.

The next step is to align your hiring plans and evaluate how an EOR setup can support compliant payroll operations in Finland without the overhead of entity registration.

Start running payroll in Finland without entity setup. Book a demo.

FAQs

1. What deductions come out of a Finnish pay slip?

Employees in Finland have income tax withheld according to their personal tax card (verokortti), plus a 7.30% pension contribution (TyEL), a 0.89% unemployment insurance contribution, and a health insurance contribution. The employer withholds all of these and remits them to the relevant authorities and insurers.

2. How much does it cost an employer to run payroll in Finland?

On top of gross salary, the employer pays a pension insurance contribution (TyEL), which averages around 17% of wages for the employer share, a 1.91% health insurance contribution, an unemployment insurance contribution, and industry-rated occupational accident and group life premiums. Each goes to a separate provider.

3. When are payroll taxes and contributions due in Finland?

Withheld income tax and the employer's health insurance contribution go to the Finnish Tax Administration by the 12th of the month after payday. Every salary payment must be reported to the Incomes Register within five calendar days. Pension and unemployment contributions go to the insurers on their own schedules.

4. What is the penalty for late payroll filing in Finland?

Reporting late to the Incomes Register or under-reporting wages triggers an estimated assessment from the Tax Administration with a punitive increase. Late payment of withheld tax and health insurance draws automatic interest, set at 9.5% for 2026. Applying a non-verified tax card requires a flat 60% withholding rate.

5. Can a foreign company run payroll in Finland without a local entity?

Running payroll in Finland requires registering with the Finnish Tax Administration and arranging pension, unemployment, and accident insurance, which requires a local entity. Companies without one typically use a global Employer of Record, which becomes the legal employer, holds the registrations, supports payroll, and reports to the Incomes Register.

6. How long does it take to set up payroll for a new hire in Finland?

It depends on whether registrations and insurance are already in place. Registering as an employer with the Finnish Tax Administration and arranging TyEL pension and accident insurance takes a couple of weeks. Through an Employer of Record that already holds these, a new hire can be onboarded in days.