Do I Need a Local Entity to Hire in Finland?

In Finland, a "local entity" typically refers to a recognized legal presence, such as a subsidiary or branch office, that can act as the employer. This setup allows you (or a provider acting on your behalf) to be recognized locally and fulfill payroll and employment obligations.

Without a local employing setup, you generally can't register as an employer, manage mandatory social security processes, run local payroll with required withholdings, or issue compliant employment terms. Finland's Tax Administration outlines employer responsibilities for paying social security contributions, which is essential for compliance.

What is Required to Employ Someone in Finland?

• Local employing entity required to directly employ? Yes (to manage payroll and comply with local laws)
• Payroll registration required? Yes (employer registration with the Tax Administration is mandatory)
• Withholding/tax remittance required? Yes (payroll withholding obligations apply)
• Social contributions required? Yes (employer must pay contributions to the Finnish social security system)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (statutory leave, social security coverage, and other entitlements)
• Works council/collective agreements considerations? Often (many sectors have applicable collective agreements)

Best Options If You're Hiring in Finland

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but it can be risky if the relationship resembles employment.

While hiring contractors doesn't require a local entity, Finland has strong worker protections, and misclassification can lead to significant liabilities. Authorities typically assess the nature of the relationship, focusing on whether the contractor operates independently or is integrated into your business.

The risk of misclassification increases if:

• the work is exclusive or closely tied to your business
• you control the hours, location, tools, or methods of work
• the role is core to your business and the worker is treated like an employee

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Finland, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated €300–€700 per month ($320–$750)
• Payroll provider: Estimated €20–€60 per employee per month ($21–$64)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated €1,500–€4,000 per year ($1,600–$4,300)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Finland

Hiring in Finland can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Finland quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.