Most foreign founders who register a Finnish Oy understand what it costs to employ someone in Finland. Very few understand how to actually do it. The Incomes Register, TyEL pension insurance, withholding tax, unemployment contributions, collective agreements and holiday pay accrual each arrive through a different authority, on a different deadline, through a different system. Miss the wrong one and you face an estimated assessment, retroactive insurance liability, or a collective agreement claim you never knew was binding on you.
This is the step-by-step payroll guide for a Finnish Oy that most guides don't provide.
- Incomes Register reporting must happen within 5 calendar days of each salary payment, not monthly
- TyEL pension insurance is contracted with a private insurer of your choice, not registered with Vero
- Total employer cost runs 30% to 38% above gross salary, excluding holiday pay accrual
- The 2026 employer health insurance contribution is 1.91%; TyEL employer rate averages 17.10%
- Sector collective agreements (TES) bind Finnish employers even without trade union membership
- The annual payroll declaration to the Incomes Register replaces the former Vero annual summary
Payroll setup: before you pay your first employee
Running payroll from a Finnish Oy requires three separate registrations before the first salary can be paid. None of them are automatic, and they go to different authorities. Getting the order wrong creates avoidable delays.
Register as an employer with Vero (OmaVero)
Log in to OmaVero (Vero's online service) and register as a regular employer (vakituinen tyonantaja) if you employ at least one permanent employee. Occasional employers (satunnainen tyonantaja) with 1 to 5 employees and irregular payroll don't need this registration but still report every payment to the Incomes Register. The employer registration activates your withholding obligation and your health insurance contribution account.
Contract TyEL pension insurance with a private insurer
TyEL (Tyontekijain elakevakuutus, the earnings-related pension) is not registered with Vero. You must contract directly with one of Finland's licensed pension insurance companies: Ilmarinen, Varma, Elo, Veritas, or others. The insurer sends a monthly or quarterly invoice based on wages paid. Failure to insure creates a retroactive liability: if discovered by an authority, the insurer recovers the missing contribution going back up to ten years, plus a penalty contribution.
Contract accident and occupational disease insurance
Mandatory once total annual wages exceed €1,500. This is also contracted with a private insurer (not Vero, not the pension insurer). The rate varies by industry. Occupational health care is a separate obligation with a service provider of your choice; the minimum is a statutory health assessment and workplace health safety assessment. Keep receipts: the cost is deductible and partially reimbursable from Kela.
Obtain a withholding tax card for each employee
Each employee provides a tax card (verokortti) obtained from OmaVero. It specifies the withholding rate and income ceiling for that employee's current year. Without a valid tax card, you must withhold at 60%. Tax cards are renewed automatically for the new year; the employee does not need to request one annually, but each employer must retrieve the current-year card from the Incomes Register using their Business ID and the employee's national ID.
Check the applicable collective agreement (TES)
Before setting a salary figure, identify whether your industry has a generally binding collective agreement. TES agreements are published at Finlex and by sector employer associations. They set minimum pay scales, working time norms, overtime rates, and holiday entitlements that override a contract of employment. Even if your Oy is not a member of any employer association, the generally binding status means the agreement applies. See Section 6 for how to identify the relevant TES.
Finnish payroll infrastructure is split across five systems: OmaVero (withholding), the Incomes Register (reporting), a private TyEL insurer (pension), a private accident insurer (occupational risk), and your occupational health provider (Kela). There is no single point of registration that activates all five. Foreign founders who have employed people elsewhere and expect one integrated system consistently encounter this fragmentation as the main source of compliance risk in the first payroll cycle.
2026 employer contribution rates: the full cost stack
The official 2026 employer social insurance contribution rates are set by Vero (Verohallinto) and ETK (Finnish Centre for Pensions). These are the confirmed figures:
| Contribution | Authority / Provider | Employer Rate 2026 | Employee Share |
|---|---|---|---|
| Health insurance (sairausvakuutus) | Vero / Kela | 1.91% | n/a (separate employee levy) |
| TyEL earnings-related pension | Private pension insurer | ~17.10% (average) | 7.30% (all ages, 2026) |
| Unemployment insurance | Employment Fund (Tyollisyysrahasto) | 0.31% (wages up to €2,509,500/yr) 1.23% above that threshold |
0.89% |
| Accident and occupational disease | Private accident insurer | Varies by industry (typically 0.1% to 2%) | 0% |
| Occupational health care (minimum) | Service provider + Kela reimbursement | ~€100 to €400/employee/year | 0% |
| Approximate total employer cost above gross salary | 30% to 38% (excluding holiday pay accrual) | ||
The 17.10% TyEL employer rate is a national average published by Vero. Individual pension insurers invoice at their own confirmed rate, which varies slightly. Ilmarinen's 2026 basic rate is 24.85% total (employer + employee combined), implying an employer share of approximately 17.55% when the 7.30% employee share is deducted. Always confirm your specific invoicing rate with your chosen pension insurer at the start of the year.
Holiday pay accrual adds a further layer. Under the Annual Holidays Act (Vuosilomalaki), employees earn 2 to 2.5 days of holiday per month worked. Many employers budget 50% of one month's gross salary annually for holiday pay accrual and lomaraha (the holiday bonus, described in Section 7). Including this, the full employer cost is typically 45% to 55% above gross salary on an annualised basis.
The monthly payroll process: step by step
Finnish payroll is not a single calculation. It is a sequence of steps across multiple systems. The critical constraint is the Incomes Register: the five-calendar-day reporting window runs from the payment date, not the month end. This is the process for each pay period:
- Apply the employee's current-year tax card withholding rate
- Calculate employee's TyEL contribution: 7.30% of gross
- Calculate employee's unemployment contribution: 0.89% of gross
- Deduct both from gross to reach net payable
- Confirm any benefits in kind (fringe benefits) are included in gross for withholding
- Pay net salary to employee bank account
- Record the exact payment date: this starts the five-day Incomes Register window
- Issue a pay slip (palkkalaskelma) with gross pay, deductions, and net pay itemised
- Archive payroll records: Finnish law requires 10-year retention
- File the earnings payment report (palkkatietoilmoitus) in tulorekisteri.fi
- Report gross pay, withholding amount, fringe benefits by type, and each contribution deducted
- Use the employee's national ID (henkilotunnus) or Business ID for a foreign employee without one
- Corrections must be filed as a corrected report (korjausilmoitus), not a new report
- Pay withheld tax and health insurance contribution to Vero via OmaVero
- Pay unemployment insurance contribution to the Employment Fund
- TyEL insurer issues its own invoice on its own cycle (monthly or quarterly depending on your contract)
- Accident insurer invoices separately, usually quarterly or annually
Finland's Incomes Register is one of Europe's most real-time payroll reporting systems. The five-calendar-day window for the palkkatietoilmoitus is not a grace period: a report filed on day six triggers an estimated assessment (arviolisays) for the unreported amount, plus a failure charge. For a company with one or two employees, the per-incident cost is manageable. For a company paying weekly or bi-weekly, missing several reports in a quarter creates compounding liability. The rule applies to every payment: salary, holiday pay, lomaraha, expense reimbursements above the tax-exempt daily rate, and benefits in kind.
Incomes Register (Tulorekisteri) reporting in practice
The Incomes Register (tulorekisteri.fi) replaced all employer salary reporting to Vero, Kela, the Employment Fund, and Statistics Finland from 2019 onwards. A single filing feeds all four authorities simultaneously. Despite this consolidation, it is not a simple system. It has distinct report types, mandatory and optional fields, a foreign employer pathway, and a strict correction protocol.
What must be reported per payment
The mandatory fields in the palkkatietoilmoitus for each payment include: amount of wages paid (broken down by pay type code), amount of withholding tax deducted, any benefits in kind with the specified benefit type code, and the payment date. Optional but strongly recommended: the period the wages relate to (e.g. November 2026), and each insurance deduction itemised.
If you employ a non-Finnish resident who does not yet have a Finnish national ID number (henkilotunnus), you can still report their wages using their date of birth and full name, plus their foreign tax ID or passport number. This is not a temporary workaround: some foreign employees on short-term assignments will never receive a Finnish ID. The Incomes Register accepts both pathways, but the Business ID of the foreign employee's home-country employer must also be reported if the assignment is a cross-border posted worker situation.
Report types you will use
There are two report types in day-to-day payroll use. The earnings payment report (palkkatietoilmoitus) is filed within five days of every salary payment, for every employee. The employer's separate report (tyonantajan erillinen ilmoitus) is filed monthly by the 5th of the following month if you are a regular employer; it confirms the total employer health insurance contribution for the month and replaces the former monthly employer declaration to Vero.
When a report contains an error, file a corrected report (korjausilmoitus) using the original report's reference number. Do not file a new report for the same period and employee: duplicates create assessment errors that are difficult to unwind.
TyEL: choosing and running pension insurance
TyEL is mandatory for every employee who is at least 17 years old, whose monthly earnings exceed the lower threshold (€68.57 per month in 2026), and who is under 68 years old. The obligation applies from the first qualifying payment.
How to choose a TyEL insurer
Finland has six licensed TyEL pension insurance companies. The main choices for a small Oy are Ilmarinen, Varma, Elo, and Veritas. All are regulated to the same contribution rate framework; the differences are in administration fees (which slightly affect the invoiced rate), online portal quality, and customer service response times. For a small Oy with one to ten employees, the differences are marginal. The Pension Alliance (ETK) website allows insurer comparison. You can switch insurers annually at year-end.
How TyEL invoicing works
Your TyEL insurer invoices you based on wages reported through the Incomes Register. You do not need to send a separate payroll report to the insurer: since the Incomes Register feeds the insurer, they calculate the contribution and issue the invoice. For small employers, invoicing is typically monthly or quarterly. The employer pays the full TyEL contribution on the invoice; separately, you deduct the employee's 7.30% share from their salary and report it as a deduction in the Incomes Register report.
TyEL is unique among Finnish employer obligations in that non-compliance creates a retroactive claim going back up to ten years. The Finnish Centre for Pensions (ETK) can conduct an audit of an employer's pension coverage history at any time. If a gap is found, the employer owes the missing contributions, a penalty contribution (laiminlyontimaksu) of up to twice the missing amount, and interest. This is the highest-risk compliance area for foreign-owned Oy companies that set up payroll informally. It is also the reason why TyEL setup should happen before the first salary payment, not at year-end.
Collective agreements (TES) and minimum pay floors
Finland has no statutory national minimum wage. Pay floors are set by sector through collective agreements (tyoehtosopimus, TES). Of approximately 160 TES agreements currently in force, the majority have been declared generally binding (yleissitova) by the Ministry of Social Affairs and Health. Generally binding status means the agreement's minimum pay scales, working time norms, overtime supplements, and holiday provisions apply to all employers in that sector, regardless of whether the employer is a member of any employer association.
How to identify your TES
Go to Finlex (finlex.fi), select Tyoehtosopimukset, and search by industry code (toimiala) or job description. The Confederation of Finnish Industries (EK) also publishes binding agreements by sector. If your Oy operates across multiple sectors (e.g. a technology company that also employs warehouse staff), each employment relationship is assessed against the TES for that employee's work, not the company's primary industry.
The TES obligations are assessed per employment relationship, not per company. A foreign company's Finnish Oy cannot contract below the applicable TES minimum simply because the parent company operates under a different labour law framework. If an employee brings a TES claim, the Finnish Labour Court (Tyotuomioistuin) applies the agreement regardless of what the employment contract says. For a company in its first Finnish employment, an employment law review before signing any contract reduces this risk significantly.
Holiday pay, lomaraha, and accrual budgeting
Under the Annual Holidays Act (Vuosilomalaki), employees accrue holiday entitlement based on months worked in the qualifying year (1 April to 31 March). An employee who worked the full qualifying year is entitled to 24 or 30 days (2 or 2.5 days per month), depending on whether they have been employed for less than or more than one full qualifying year.
Holiday pay calculation
Holiday pay (lomapalkka) is calculated at the regular daily wage rate for the holiday days taken. For employees on a fixed monthly salary, the daily rate is the monthly salary divided by 25. Holiday pay is paid before the holiday is taken. It is treated as wages for Incomes Register purposes and must be reported within five days of payment, with its own pay type code distinguishing it from regular salary.
Lomaraha (holiday bonus)
Lomaraha is not a statutory obligation under the Vuosilomalaki but is required by most sector TES agreements. It is typically 50% of the holiday pay entitlement for the year, paid in June or July when the main holiday period begins. For a monthly salary of €4,000, the lomaraha is approximately €2,000 on top of regular holiday pay. This is a known cash-flow event: budget it in January, not June.
Finnish job advertisements quote monthly gross salary. The employment contract specifies monthly gross. Neither figure includes lomaraha. An employer who budgets 12 times the monthly gross salary as annual payroll cost has underestimated by approximately 8% to 10%, before social contributions. For a company hiring its first Finnish employee at €4,000/month gross, the true annual cost (salary, lomaraha, TyEL, health insurance, unemployment insurance, accident insurance, occupational health, and holiday pay accrual) is typically €72,000 to €80,000 against a headline annual salary of €48,000.
Year-end obligations and the annual payroll declaration
Since the introduction of the Incomes Register in 2019, the year-end payroll obligations for a Finnish employer are lighter than the pre-2019 framework. There is no longer a separate annual salary summary to file with Vero for each employee: the monthly Incomes Register reports fulfil this function continuously throughout the year. However, specific year-end steps remain:
- Confirm all Incomes Register reports for the calendar year have been filed and are accurate. Run the annual payroll summary in OmaVero and cross-check totals against your accounting records before 31 December.
- Confirm TyEL coverage is complete for all employees for the year. Your pension insurer produces an annual coverage statement. Cross-check against your payroll records.
- File the employer's separate report (tyonantajan erillinen ilmoitus) for December by 5 January of the following year.
- Provide each employee with their annual pay summary (palkkatodistus) by the end of January, or on request at any time for mortgage, loan, or social benefit purposes.
- Confirm holiday pay accrual balance per employee as at 31 March (end of holiday accrual year). Adjust the annual accounts provision if the balance has changed materially.
- TyEL year-end reconciliation: your insurer reconciles actual wages against estimated wages used to calculate advance invoices. Any difference is settled in Q1 of the following year.
Finnish GAAP requires accrual-basis accounting. Holiday pay entitlement earned by 31 December but not yet paid must be recorded as a liability (lomapalkkavelka) in the closing balance sheet. For a small Oy with two or three employees, this is a few thousand euros. For a growing company, it can be a material liability. It also attracts a social contribution load: the TyEL and health insurance contributions on the accrued holiday pay must be provisioned alongside the gross holiday pay accrual.
1Office Finland payroll and accounting services
Running payroll for a Finnish Oy requires real-time Incomes Register access, TyEL insurer coordination, withholding tax payment management, and accounting integration. 1Office Finland handles the full payroll and accounting cycle for foreign-founded and locally owned Oy companies from its Helsinki office.
Frequently asked questions
Take payroll off your to-do list
1Office Finland runs the full payroll cycle from Helsinki: monthly calculations, Incomes Register reports within the five-day window, TyEL coordination, withholding payments, and annual declarations. From €20 per employee per month.
- Vero.fi: Social insurance contributions 2026
- ETK (Finnish Centre for Pensions): TyEL contribution levels 2026
- Ilmarinen: TyEL contribution rates 2026
- Incomes Register (Tulorekisteri): employer reporting guidance
- Finlex: Collective agreements database (Tyoehtosopimukset)
- Annual Holidays Act (Vuosilomalaki 162/2005) as amended
