International assignments and other types of working abroad

Employee pays taxes according to the taxation practices of the target country, if the working period abroad is over 183 days in either successive 12 months or in a calendar year, depending on the country where the work is done.

This so-called 6 month rule applies only when:

• Work-related stay in a foreign country lasts a minimum of 6 months and
• Tax agreement between Finland and other country does not prevent taxing of wages in the country where the work is done and
• Employee does not reside in Finland more than 6 days/month in average

Aalto University´s Payroll makes the decision of the taxation. After receiving the International Assignment agreement and so called A1 certification (indicating that social security will be kept in Finland during the working abroad period) Aalto's Payroll (HR) contacts the employee to provide guidance with taxation issues. In case the 6-month rule applies, employee must contact the tax officials of the destination country about taxation practices.

 If the employee’s taxation is transferred to the destination country, but the person remains entitled to the Finnish social security, the payroll office withholds from the salary only the health insurance contribution 2,04% (2021).

Employee

• keeps a record of his/her stay in Finland: the number of so-called Suomi days may cause changes in taxation.
• fills in the Finnish tax return form as usual
• provides to the Finnish Tax administration information on income earned abroad as well as paid taxes, even if that income was not taxed in Finland (see form Details on income from foreign sources)

Employer (Payroll office)

• responsible for mandatory employer reporting to the Finnish tax administration and reports to the tax administration the income paid during the assignment, even if the taxation was removed to the destination country.

NOTE! According to the Finnish tax authorities, due to tax agreements, the 6 month rule does not apply to university employees on an international assignment in Greece. The right to tax remains in Finland.

More information at www.vero.fi.

An Aalto University Employee must have a certificate of the entitlement to the Finnish social security (A1 certificate) on the International assignment. The certificate states that an employee is entitled to the Finnish social security during the assignment, and the Aalto payroll withholds the social security contributions to Finland.

1. EU/EEA country, Switzerland, Great Britain and following countries with which Finland has a social security agreement (USA, Australia, Canada, Israel, Quebec, Chile)

   Home department of the Employee must apply for an A1 certificate from the Finnish Centre for the Pensions (Eläketurvakeskus) either online or by filling in the form ETK 2132 (Fi)  / ETK 2146 (Eng)

2. India, China (countries have social security agreement with Finland)

   Home department of the Employee must apply for an A1 certificate from the Finnish Centre for the Pensions (Eläketurvakeskus) either online or by filling in the form ETK 2132 (Fi)  / ETK 2146 (Eng) In addition Home department and employee must fill in the Kela forms Y38 or Y38T.

3. South Korea (country has social security agreement with Finland)

   Duration of the stay max 6 months: Home department of the Employee must apply for an A1 certificate from the Finnish Centre for the Pensions (Eläketurvakeskus) either online or by filling in the form ETK 2132 (Fi)  / ETK 2146 (Eng)

   Duration of the stay more than 6 months: Home department and employee must fill in the Kela forms Y38 or Y38T

4. If an Employee works in a country other than mentioned above:

   Employee must inform Kela (Social Insurance Institution of Finland) if a stay abroad is less than a year by using Kela online service or filling in Kela form Y38. In the form Y38 the Employee reports also the family members who move abroad if the Employer (home department) applies the Finnish Centre for the Pensions (Eläketurvakeskus) A1 certificate for the Employee.

   Home department fills in the paper form Y38T (Employer’s notification concerning an Employee posted abroad), see Kela forms . Also family members moving abroad must be reported in the form Y38.

The Finnish Centre for Pensions sends two copies of the A1 certificate to the contact person who has filled in the application. One copy is for the Employee and one for the Aalto payroll.

The application form and further information: www.elaketurvakeskus.fi .

Further information on Kela and forms: Kela

Grant recipients are considered as self-employed and arrangements are made independently. More information on Mela pages.

In a case where a department/unit has hired a person who lives permanently abroad and is not entitled to the Finnish social security (a German living in Germany and working for Aalto, for example, or a Finnish citizen living permanently abroad), Aalto University must register as an employer in that country. The department/unit which has hired the employee is then responsible for the employer costs (social security, pension, unemployment insurance etc.) and registration fees in the destination country and the accounting fees of the costs.

Aalto's IT instructions for foreign travel, please see here