The Land of a Thousand Lakes – since it has over 180,000 lakes – Finland is known for its Northern Lights, Polar nights, and is also the birthplace of Nokia. It has one of the world’s best education systems based on equality, minimal standard testing, and creativity.

The country has an overall business-friendly environment and is quite advanced on the digital forefront. It has developed a National Strategic Roadmap for enhancing nationwide digitization by 2030. About 82% of the population also possesses basic digital skills, which is the highest level in the entire EU. Finland has implemented a Digital Infrastructure Strategy to roll out 5G by this year, making it a world leader in communications networks. 

The country also excels in the IT domain by making digital innovations in AI, VR, cybersecurity, and big data. This has led to tremendous growth in gaming, smart health, and electronics. In fact, the Finnish AR & VR market is projected to reach USD 125.9 million by 2025.

  • Finland’s nominal Gross Domestic Product (GDP) was approximately USD 295.5 billion in 2023.
  • Finland consistently ranks as the happiest country in the annual World Happiness Report.
  • The current median age in Finland is approximately 43.0 years.
  • Primary exports include machinery and equipment, forest industry products (paper, pulp, wood products), refined petroleum, chemicals, steel and non-ferrous metals, gaming (it is the birthplace of Angry birds and Clash of Clans), transportation equipment like cruise ships, and marine vessels.
  • Finland consistently ranked high in the World Bank’s Ease of Doing Business Index. In the 2020 report, the country ranked 20th out of 190 economies. 
  • The official language is Finnish or Suomi, which is spoken by approximately 89% of the population. People in coastal areas speak Swedish.

Helsinki is one of Europe’s top startup cities, and it hosts the annual Slush Conference – one of the biggest startup events of the world connecting entrepreneurs and investors. 

It also has supportive programs like ‘Business Finland’ and ‘Startup Refugees’ that provide mentorship, funding, and networking opportunities to new businesses.

So, for startups, it is indeed one of the best places to begin. Since the new businesses are already low on finances, the best way to start in Finland is to look up and hire independent contractors. These come without any long-term commitments and significantly reduce the overhead costs as you don’t have to pay for employee benefits. Keep reading to learn more about independent contractors in Finland and where to find them.

What Are Independent Contractors in Finland?

Independent contractors are sole traders (toiminimi) or freelancers in Finland. They are self-employed individuals who provide services to different businesses under a contractual arrangement. In Finland, the working of independent contractors is covered by the Contracts Act (228/1929). 

They are not classified as employees and work under a B2B arrangement with the companies. They also do not receive any statutory employment benefits like paid leaves, unemployment insurance, or pension Funds. Independent contractors must also register with the Finnish Patent and Registration Office PRH and the Tax Administration (Vero).

Difference Between Employees and Independent Contractors in Finland

The primary differences between employees and independent contractors in Finland are according to the legal definitions under the Employment Act and the Contract Act. These acts determine the social security contributions, rights, benefits, and tax obligations of independent contractors and employees.

Aspect Independent Contractors Employees
Employment Relationship Contractors operate under a service agreement that outlines the project scope, work process, and payment terms. Employees work under an Employment Contract, which defines job responsibilities, work schedules, and compensation.
Control Over Work Contractors have full autonomy over their work, including schedules and methods. Employers control the employee’s tasks, working hours, and workplace policies.
Tax Responsibilities Contractors handle their own income tax filings and VAT payments (if applicable). They also contribute to their own pension. Employers withhold and remit income taxes on behalf of employees. They also pay social security and pension contributions.
Social Security and Benefits Contractors do not receive employer-funded benefits and must arrange their own pension and insurance. Employees are entitled to statutory benefits such as paid leave, unemployment insurance, and occupational healthcare.
Employment Protection Contractors are not protected under labor laws and do not have statutory employment rights. Employees are protected by labor laws, including regulations on working hours, annual leave, and non-discrimination.
Termination Rights Contracts can be terminated as per the agreed terms between both parties. Termination is regulated by Finnish labor laws, including mandatory notice periods.

Employment Relationship

Employees work under an Employment Contract in Finland. They have a supervisor-subordinate relationship with their employer. They have to follow the guidelines, timelines, schedules, workplace policies, and receive a monthly salary and employment benefits in return for their services.

The independent contractors, on the other hand, operate as self-employed individuals or businesses. They have complete control over their work schedule, process, and the tools and equipment they need to work.

Taxation and Social Security Contributions

Employers deduct income tax and pay social security contributions on behalf of the employees. They also handle pension payments under the TEL (Employees Pension Act). The employees are also given unemployment insurance benefit. 

Independent contractors have to pay their own income taxes and VAT if applicable. They are responsible for their self-employed pension contributions and don’t get any employer-funded benefits. However, they can contribute to a pension scheme.

Benefits and Protections

The employees are entitled to statutory benefits in Finland, such as paid leaves and sick leaves, unemployment insurance, and occupational healthcare. They also have certain legal protections like limits for daily and weekly working hours, right to paid annual leave, nondiscrimination, and against unfair dismissal.

However, independent contractors do not receive any employment benefits. They must make arrangements for their insurance and pension plans, and are also not covered under the labor protections.

Termination and Contractual Rights

Employee termination is strictly regulated in Finland. The employees must serve a notice period as applicable based on their length of service. However, there is no statutory severance pay requirement, though some employers may offer severance packages during mass layoffs.

The contract with the independent contractors can be terminated based on the terms or mutual agreement between both parties. There are no Finnish laws that regulate the termination rights of the contractors.

Supervision and Work Control

Employers instruct employees about working hours, tasks, and work locations. Meanwhile, independent contractors have complete autonomy and can set their own work schedules.

Benefits of Hiring Independent Contractors in Finland

Hiring independent contractors in Finland gives businesses the flexibility and efficiency to complete the tasks and access specialized skills as needed per project or job. Here are some of the key benefits of hiring independent contractors in Finland.

Flexibility in Workforce Management

Hiring independent contractors allows businesses to scale up or down the workforce per the needs of the project. You can hire a skilled workforce on a contractual basis, for short term or specialised tasks, without committing full time to them.

Reduced Employment Costs

Employers are not required to pay for the benefits, including social security contributions, pension payments, or other taxes, for independent contractors. This has a significant impact on labor costs, which are quite low compared to when you have to make deductions for full-time employees.

Access to Specialized Talent

Finland has a very skilled workforce in IT, engineering, and other creative industries. You can get easy access to specialized and niche talent in the country without being bound to the workers for a long time or making long-term commitments with them.

Less Administrative Burden

Independent contractors completely manage their taxes, insurance, and benefits. So, businesses have far fewer administrative burdens when they work with them. They are just required to pay them and are not required to provide for the sick leave or other benefits.

Independent contractors usually work in their own setting using their own equipment and tools, so there is less administrative overhead when working with them.

Fast Hiring Process

There are no red tape requirements for hiring or onboarding independent contractors. It is much easier and quicker compared to employees, where you need to follow the complete procedure. In this way, you can respond to the market demands or needs of the business in a timely and accurate manner and complete the project efficiently.

Labor Laws in Finland

In Finland, there is a clear distinction between employees and independent contractors as they are governed by a separate legal framework defining their obligations, protections, and rights.

Employees

Here are the key Finnish laws and acts that mandate the labor laws for employees.

  • Employment Contracts Act: The Employment Contracts Act sets the base for employment relationships, defining the rights and obligations for both employers and employees.
  • Working Time Act: This Act specifies that regular working hours for employees should not exceed eight hours a day and 40 hours a week.
  • Annual Holidays Act: This law entitles employees to paid annual leaves.
  • Non-Discrimination Act: The Non-Discrimination Act ensures equal treatment of all employees in terms of working conditions and employment terms.

Independent Contractors

Independent contractors or freelancers work under the Civil Contract and are governed by the Finnish Commercial Code.

  • Autonomy: The independent contractors have the freedom to set their work activities, hours, and place of work. They don’t take orders or are supervised by their client.
  • Contractual Basis: The independent contractors work under individual agreements. The employment laws do not apply to them.
  • Tax and Social Contributions: Independent contractors manage their own taxes and social security contributions.

Taxation

In Finland, the taxation Framework for employees and in-house contractors is quite distinguished. Here are the applicable taxes on both, and the laws that apply:

Employees

The employees have to pay a progressive national income tax, as well as a municipal tax, which ranges between 4.7% and 10.9%, depending on the municipality.

Independent Contractors

Independent contractors have to manage their own taxes, including the National Progressive Income Tax and the municipal income tax. They must file their own returns and make necessary payments independently. VAT may be applicable to specific goods and services, and the standard VAT rate in Finland is 25.5%. 

If a company is operating through a legal entity, like if it is a limited liability company, then it is also subject to a corporate income tax rate of 20%.

Consequences of Misclassification

Misclassifying employees in Finland as independent contractors can have significant legal and financial repercussions. The Finnish labor laws mandate that the employment relationship must be classified correctly, as these laws are defined to protect the workers’ rights. 

Misclassification can result in penalties, including fines and monetary sanctions. These are especially applicable when the employer does not comply with the Occupational Safety and Health Act and other labor regulations.

Misclassification can also lead to claims for compensation under the Non-Discrimination Act by the employee. The employer will have to make payments for the unpaid benefits. So it is very important to accurately classify the workers as employees or independent contractors, as applicable, per the Finnish Employment Laws.

How to Pay Independent Contractors in Finland

Paying independent contractors in Finland is relatively easy. Since they are not the direct employees, they present an invoice for their services and accept payments via bank transfers and online platforms. 

Here are the top payment methods used all over Finland to pay independent contractors:

Bank Transfers

SEPA or Single Euro Payments Area is the most common way to make quick and easy payments in the European Economic Area (EEA). Most Finnish contractors prefer direct deposits and bank transfers from OP Financial Group, Danske Bank, and Nordea, which just take 1-2 days to process.

Online Payment Platforms

Online payment platforms like PayPal, Wise and Payoneer are also available in Finland to make fast and secure online payments. PayPal has slightly higher transaction fees than Wise, though. 

So, many people prefer using Wise as it offers more favorable exchange rates and fees. Payoneer is another online platform for making transactions in multiple currencies outside the Eurozone.

Top Independent Contractor Providers in Finland

When considering expanding your business operations in Finland, the best way to find a workforce without investing considerable time and resources is to partner with a PEO or EOR independent contractors provider. 

Here’s a list of our top 5 independent contractor providers in the country.

Remote People

Remote People homepage new

Remote People provides reliable Employer of Record (EOR) and Contractor of Record services to help companies hire and onboard employees in Finland compliantly. The platform supports every stage of employment—from drafting compliant contracts to managing payroll and benefits—ensuring a seamless hiring experience.

With operations across 180+ countries and the ability to process payments in over 100 currencies, Remote People simplifies global workforce management. Its team of 130+ HR and legal experts offers dedicated support, helping businesses navigate Finland’s employment laws and onboard talent quickly and efficiently.

Safeguard Global

Safeguard Global homepage

Safeguard Global provides EOR services in Finland, which facilitates the hiring process with or without a local presence. It offers global payroll solutions for making multi-currency payments, ensuring accuracy and compliance. The key services include global recruitment, payroll management, legal entity setup in the new country, and hiring and onboarding of new workers.

Oyster

Oyster HR homepage new

Oyster is another global employment platform serving over 180 countries, including Finland. The company provides identifying, hiring, and onboarding support for new employees and independent contractors.

For employees, it offers customized packages to keep them engaged with the business. The platform has a team of experts who provide support and guidance to new businesses venturing into the Finnish market.

Deel

Deel Homepage new

Deel serves over 150 countries providing end-to-end HR services without relying on any third-party support. Their services include visa support and immigration assistance, global payroll solutions, contractor of record services, IT management, AI insights, integrations for automated HR workflow, and equity management.

Remote

Remote homepage new

Remote provides a range of EOR services for businesses entering the Finnish market to find and hire national talent. It provides payroll processing and benefits administration services for employees. It also provides recruitment, payments, and compliance handling for hiring independent contractors.

Other services include employee profile and document management, time off tracking, expense management, and contract template designing and e-signing.

Accelerate Business Growth by Hiring Finnish Independent Contractors

While the Finnish market is conducive for new business (especially startups), it is hard to keep up with the changing market needs. Hence hiring independent contractors is the best approach to expand your business in the region while remaining compliant with the labor laws. You can easily tap into the market via these experts without making any full-time commitments. In this way, you will be able to save more and optimize your workplace resources.

So, are you looking to hire independent contractors in Finland? Connect with us at Remote People today, and we will take over the entire hiring process for you. We provide top-rated, background checked, and quality contractors so you get the best match for your requirements. Our services are in line with the Finnish labor laws and available at 40% reduced rates.

Contact us today and we will help move your business forward in Finland, without the usual hiring headache.

Frequently Asked Questions

To hire independent contractors in Finland, you must ensure you enter into a formally drafted contract with them. It must establish the scope of work, payment terms, and VAT obligations if applicable. You also need to carefully classify them as employees or contractors per their working terms.

 

Also, the contractors have to handle their taxes, social contributions, and VAT obligations.

No, independent contractors are responsible for managing their own taxes including income tax, VAT, and social security contributions. 

The best way to pay independent contractors in Finland is via direct transfers or the SEPA bank transfers. You can also use online platforms like Wise, PayPal, and Payoneer.

Although the Finnish population is well-educated and skilled, it can be hard to locate independent contractors for a new business.

 

The key issue in hiring an independent contractor on your own is ensuring you abide by the labor laws. Since they are quite strict, any discrepancy can lead to fines and penalties.

 

Hence it is the best practice to partner with the independent contractor providers and hire the top talent. You can connect with the PEO and EOR service providers like Deel, Oyster, etc. You can also reach out to us at Remote People, where we offer services at 40% reduced prices.