Social insurance contributions and salary for insurance purposes for work abroad
If a person working abroad is covered by Finnish social security, all statutory social insurance contributions for their work must be paid in Finland. The person is covered by Finnish social security if they are granted an A1 certificate by the Finnish Centre for Pensions.
Statutory social insurance contributions in Finland
The Finnish earnings-related pension insurance and workers’ compensation insurance required by law are managed by private earnings-related pension providers and private insurance companies. Unemployment insurance is managed by the Employment Fund. Employers’ and employees’ health insurance contributions are managed by the Tax Administration.
| Statutory social insurance contributions in Finland | Institution managing the insurance | Read more on other sites: |
|---|---|---|
| Earnings-related pension contribution | Earnings-related pension providers | Tyoelake.fi |
| Workers’ Compensation Insurance contribution | Private insurance companies | Tvk.fi |
| Unemployment insurance contribution | Employment Fund | Employmentfund.fi |
| Employer’s health insurance contribution | Tax Administration | Vero.fi |
| Health insurance contribution (for insured employees) | Tax Administration | Vero.fi |
In addition to the statutory contributions, employers often need to pay group life insurance contributions for their employees based on collective labour agreements.
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Employer’s obligations
The employer must pay its own and the employee’s share of the social insurance contributions to the pension insurance provider. The employer withholds the employee’s share of the contribution from their salary and pays it and its own share to the institution that manages social insurance contributions.
If it does not already have it, the employer must take out earnings-related pension and workers’ compensation insurance from the company or institution of its own choice.
The obligation to insure is the same regardless of the employee’s nationality or the employer’s home country.
If the employee is not covered by Finnish social security, the employer will not withhold the employee’s share of the contribution from their wages or pay social insurance contributions in Finland. In this case, however, the employer must make sure that the contributions are paid in the country where the employee is covered by social security.
Online service for employers
If you are a private sector employer, the Finnish Centre for Pensions’ online service ‘Social insurance contributions in international work situations’ can help you with issues relating to social insurance contributions. The service also helps you find out which social insurance contributions you, as the employer, must pay in Finland when your employee goes abroad to work or comes to Finland from abroad to work.
Social insurance contributions if you are self-employed
If you are self-employed and have applied for and hold an A1 certificate from the Finnish Centre for Pensions to show that you are covered by Finnish social security while you work abroad, you must pay your social insurance contributions yourself in Finland.
Together with your pension provider and the Tax Administration, work out how you must handle your social insurance contributions for work abroad.
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Salary for insurance purposes for work abroad
If an employee leaves Finland to work abroad for more than six months and is covered by Finnish social security while working abroad, they must have a salary for insurance purposes.
The employee and the employer define the salary for insurance purposes together. It must be defined regardless of the country where the employee goes to or the type of work they do abroad. The salary for insurance purposes is defined for both posted workers and employees going abroad to do remote work. The employee’s nationality or the employer’s home country does not matter.
The idea behind the salary for insurance purposes is to make sure that employees, who are working abroad, earn a pension in Finland based on a wage level that is similar to that in Finland. A large part of other insurance premiums and Kela’s benefits are also defined based on the salary for insurance purposes.
Employees, who work temporarily abroad, often have an A1 certificate. The certificate shows that they are covered by Finnish social security. However, the salary for insurance purposes must be defined even if the employee does not have an A1 certificate.
The salary for insurance purposes is defined for employees and civil servants but not, for example, for self-employed persons or sailors.
Frequently Asked Questions about salary for insurance purposes
Read the F&Qs to learn more about how to define the salary for insurance purposes and what it affects.
The salary for insurance purposes affects several benefits paid while working abroad, as well as the pension that the employee earns and the insurance contributions that the employer pays to the pension insurance provider.
The employee earns earnings-related pension based on the salary for insurance purposes. Their parental and sickness allowance are also based on that salary.
The statutory social insurance contributions listed below are based on the employee’s salary for insurance purposes. The employer and the employee must pay them in Finland.
- Earnings-related pension contributions.
- Workers’ Compensation Insurance contributions.
- Unemployment insurance contributions.
- Group life insurance contributions.
If a person who is working abroad but insured in Finland has limited tax liability, the health insurance contributions paid by the employer and the employee are also defined based on the salary for insurance purposes.
Usually, the salary for insurance purposes is the wage that would be paid to an employee for similar work in Finland. If a person working abroad has the same employer and does the same job as they did in Finland, the wage paid in Finland is the basis for the salary for insurance purposes.
Often, during work abroad, an employee may be paid a higher or lower wage than they would receive when working in Finland. This is because the real wage for work abroad is affected by things like taxes in the country of work, the wage level and other forms of compensation for work abroad.
We advise that you state the salary for insurance purposes (in euros) in the agreement on work abroad. You cannot agree freely on the salary for insurance purposes – there are certain rules that you must follow.
The employer must report the salary for insurance purposes to the Incomes Register as a separate income category.
Think about these things when you define the salary for insurance purposes:
- Does the work abroad require specific knowledge or skills?
- Is the work more responsible than the work done in the country of residence?
- Are the working hours longer abroad?
- Are bonuses, holiday compensations, in-kind benefits or bonus salaries paid while working abroad?
All of these can lead to a higher salary for insurance purposes. Some factors that relate to work abroad may also lead to a lower salary for insurance purposes.
Factors that increase the salary for insurance purposes include more demanding work, the need for special skills and longer working hours. Any bonuses and pay rises that the employee receives while working abroad should also to be considered when you define the salary for insurance purposes.
Do not consider foreign and circumstance allowances or taxation.
Example: How to consider benefits when defining the salary for insurance purposes
A Finnish company sends an employee to work for its subsidiary in Sweden. The employee has a car at their disposal, and the employer also arranges housing for them. The company has employees working in similar positions in Finland who also drive company cars.
The benefit from the use of a company car must therefore be considered when defining the salary for insurance purposes for the employee working in Sweden. The housing benefit is not considered because that benefit is not offered to employees who do similar work in Finland. The employer can provide the employee with an apartment in Sweden, but this is not included in the salary for insurance purposes, which is the basis for the statutory social insurance contributions while working abroad.
There is no need to define a salary for insurance purposes separately for short work abroad for less than six months, for example, for an employee working abroad remotely for a short period or for a posted worker, if:
- no separate salary has been agreed for working abroad,
- the employee’s salary is paid in Finland like it always has been, and
- the employee’s job abroad is the same or similar to the work they do in Finland.
If all three conditions are met, the salary for work abroad for less than six months can be defined in the same way as if the employee did the work in Finland.
In addition, it’s usually not necessary to define the salary for insurance purposes when an employee works in several countries for a Finnish employer for less than six months. There’s no need to define the salary for insurance purposes if the employee
- repeatedly works abroad,
- works for a Finnish employer,
- works abroad for less than six months at a time, and
- meets the other conditions concerning the payment of wages and work tasks for short-term work abroad.
However, if the employee’s work abroad continues for more than six months, the salary for insurance purposes must be defined retroactively from the time the work abroad began.
Where can we get help with defining the salary for insurance purposes?
The employer’s pension provider can give information on the salary for insurance purposes and offer help with defining it.
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