sub contractor regulations in finland

[cors187]

Ofcourse i have employed people,all of them sub contractors in Australia.
AS the main contractor i only ask for an invoice with an Australian business number on it.We agree on the price, often its not negotiable (take it or leave it kind of thing), if the sub contractor is GST(good and service tax) registered(register only if turnover is above 70,000AUD per year) then he adds 10% GST , but the agreed price is inclusive of GST whether the sub contractor is registered or not, so as the main contractor i dont get a 10% increase on the agreed price.
Every time I(main contractor) buys something for the business the 10% GST(which is on every goods or service) is deducted from my GST.
Example- I earn 100,000 per year.I buy 40'000 worth of equipment,services,goods.
The $100,000 i earned sees me take $10,000 of the governments money as GST.
The $40,000 i spent sees me return $4,000 of the governments GST to other people.
I now owe the GOV $6,000 in GST, which i have to pay at my final.
That sums up the duties of the main contractor.

The sub contractor(GST registered or NOT) simply has to remember that he is paying his own pension fund or in AUS we call it superannuation., so if he dont pay it he only has himself to blame.
In regards to the social system in Australia we have 1 payment per year for everyone who earns above the 12,000 or 15,000(cant remember). Anyway if you earn above the threshold you pay about $400 per year. end story

I wish you could sum up the Finnish system in that much simplicity!

[cors187]

You know another thing about Europe, which includes finland and Russia.You guys "top heavy" your companies with Administration and paper work.If i was talking to some foreign businessman on an AUS forum we would have closed the thread due to the simplicity of our business.Two paragraphs and there's not much to forget.

[cors187]

Yes. And then define "performance" in your contract (with or without the help of a lawyer) - but that is nothing to do with Vero, Kela, the State or anyone else.

I think you need to get your head around the meaning of the word "sub-contract" versus what is meant by "employment". Have you ever hired anyone before? If so, how/where/what did you do it then?

You see , we have a simple way of creating the work as we see fit.
Sub contract means that "I" the main contract holder do here by sub divide the work out ,so the work outlined on the Main contract can be fulfilled.

Most of the time, in fact almost all of the time there was a main contract that was above my contract so i was also a sub contractor, who used sub contractors to fulfill my contract, i know the word too well and have eaten it as a diet for 24 working years.
Im here because i landed in a different part of the cafe and the menu looks a bit irregular! I am looking for someone who has dined here before and knows the ingredients.

[Rosamunda]

It sounds to me like GST is the same as VAT. So there's not much difference there. In Finland a company (which could be one person) has to be registered (as you call it) if they do over 8500€ of business a year. In fact, as far as business to business is concerned (which is what subcontracting is) I don't see any real differences between Finland and Australia. Your VAT calculation works exactly the same here as Down Under.

As Upphew stated

Pay bills, pay vat.

That doesn't sounds too heavy to me.

The company that you subcontract to sorts out it's own tax issues, social security contributions etc etc etc. All you need to do is check in the company register that you are doing business with a bona fide company http://www.prh.fi IIRC, there is also a new rule this year that every worker on a construction site must where a name tag with his/her social security number visible. That's to prevent the use of tax-evading labour (whether illegal immigrants or not).

I think your problem is that you keep talking about "employment" and "social security" and stuff like that which is NOTHING to do with subcontracting. As a prime contractor you are not employing anyone. You are simply purchasing services, the same way you did it in Australia.

In Finland your subcontractor might be a limited company (Oy) or a family partnership (Ky) or a sole trader (TMI). Depending on which type of company the subcontractor has set up, his social contributions will be different. But that is not your problem, you are not the employer. You're just buying a service.

So, you just pay the bill with the VAT. Then you reclaim the VAT through your tax account at Vero.

One difference though, when you ask a subbie for a quote, you should ask whether it is with or without VAT because I think the default option in Finland is generally WITHOUT. So if someone says they can do the job for 10,000€ then you would probably get an invoice for 12,300€ (23% VAT).

[cors187]

I think your problem is that you keep talking about "employment" and "social security" and stuff like that which is NOTHING to do with subcontracting. As a prime contractor you are not employing anyone. You are simply purchasing services, the same way you did it in Australia.

Its not really my problem but if i forget about it then it may be a problem, i have to talk about the employment benefits(self employment benefits and social funds)whatever FIN has to pay into. As an income earner in FINLAND ,either a main contractor or sub contractor , i still get money from someone so everyone in the contract game(except payroll employees) somehow fits into sub divided contracts or sub contracting.There maybe a main contractor for the construction of a large arena but the construction contract is just part of the building contract which is part of the financial contract.
If i am a sub contractor i must have more financial obligations to the state than just collecting VAT.

On one side is the formula of the main contractor and his obligations to the sub-contractor and state.
On the other is the formula of the sub-contractor and his obligations to the main contractor and state.

The main contractor and sub-contractor are not any different to each other on paper,again they must have a variety of obligations to the state.
I am questioning whether giving me a blanket statement like "collect VAT,pay VAT" is enough .I must have regulations regarding my obligations.
I looked at your list of employer obligations to the state on behalf of the employee and its not just a couple of things, although not taking into account the % of each fund as the % can change. You did a rather good job at showing the formula for employees.Can you do the same for sub-contractor obligations?And thanks for your replies.

[Upphew]

main-contractor - sub-contractor relationship is b2b, no social security, pension, etc. stuff there. main gives the contract that sub does, main pays to the sub and VAT to the taxman. In construction that is. Other areas main pays the sub and sub pays the VAT.

sub-contractor - employee relationship is b2c, now you start to talk about pension, ss, insurances, taxes. The sub might be one man company, tmi., but the company still pays for the person something, the names and sums of the payments might change, but not disappear. Eläkevakuutus vs. yrittäjän eläkevakuutus, etc.

edit. and the b2c example you can leave the sub- part out. It is the same regardless on what part of the chain you are: you pay your employees' wages and all the other stuff that come with it. And you pay your bills regardless where they came from: electricity has vat included, sub-contractors bill doesn't so you pay the vat to the taxman.

[Upphew]

IIRC, there is also a new rule this year that every worker on a construction site must where a name tag with his/her social security number visible. That's to prevent the use of tax-evading labour (whether illegal immigrants or not).

Tax number. It is printed to your tax card. Dunno how well it works, I have heard that it is not uncommon to see Estonians giving the name tags to each other while changing the shift at site.

[cors187]

main-contractor - sub-contractor relationship is b2b, no social security, pension, etc. stuff there. main gives the contract that sub does, main pays to the sub and VAT to the taxman. In construction that is. Other areas main pays the sub and sub pays the VAT.

Do you think you could link a page that shows the definitions of your explanation? about how in Construction the Main contractor subtracts the VAT from the invoice and pays it to the taxman.Is there also other pages that show the difference between what is classed as construction and what is not.The implication of the main either holding or passing the VAT% seems ambiguous and could cause a company to pause and think about its situation.

[Upphew]

main-contractor - sub-contractor relationship is b2b, no social security, pension, etc. stuff there. main gives the contract that sub does, main pays to the sub and VAT to the taxman. In construction that is. Other areas main pays the sub and sub pays the VAT.

Do you think you could link a page that shows the definitions of your explanation? about how in Construction the Main contractor subtracts the VAT from the invoice and pays it to the taxman.Is there also other pages that show the difference between what is classed as construction and what is not.The implication of the main either holding or passing the VAT% seems ambiguous and could cause a company to pause and think about its situation.

http://www.kaanteinenarvonlisavero.fi/m ... netty-alv/
http://www.rakennusteollisuus.fi/RT/K%C ... lveluista/

Main doesn't subtract anything. It either pays the bill that includes the VAT or pays bill that doesn't include VAT and pays the 23% tax on top of that.

[cors187]

So i am back to re visit this thread with some info that i found out along the way

In Finland you cannot sub contract unless you have a business number , and to get a business number you need to be a business registered in the system.

In Australia you need an ABN(aus Business number) to sub contract, and to get a ABN you can just apply online , providing the application with your details which must include a TFN(tax file number),which every Australian who has worked or intends to work has.


So there you go!!!!!!!!

[Upphew]

In Finland you cannot sub contract unless you have a business number , and to get a business number you need to be a business registered in the system.

In other words: in Finland you either sub contract to a company or hire people.

[cors187]

What i mean is that you cannot sub contract in finland unless you have a business number(registered business).

[Upphew]

What i mean is that you cannot sub contract in finland unless you have a business number(registered business).

True. It would be work contract if you hired a private person to do the work.

[cors187]

What i mean is that you cannot sub contract in finland unless you have a business number(registered business).

True. It would be work contract if you hired a private person to do the work.

And a hired person is an employee under contract who receives travel allowances,sick leave payment,vacation money and overtime adjustments.Wheres the middle ground in finland.This is why the workers here are lower than average, if your not good enough to run a business then that person doesn't,and is left with only one choice, to milk everything he can from a guy who is running a business.

In Australia everyone is given a chance to become a self employed (sole trader) if they choose.
Example, i had a lot of work on and i knew this kid who was 19.i asked if he wanted to work and he said yes, i told him to apply online using his TFN and ID details and instantly he has become a sole trader who i negotiated a starting wage of $19.50 AUD per hour.

I didnt have to deal with any details at all , at the end of the week i receive an invoice with his costs(which included by agreement ,superannuation money and petrol money).
I dont have to worry if a worker is useless or not ,if they are bad then they dont get work , if the worker is good then i have to give him more money to keep him or he just goes somewhere else , either working for himself or working for another guy.

This ideal drives the wages up in the country , good workers get more and bad workers get no work.

In finland your wages are not driven up by efficiency, they are forced up by some form of collective agreement!!
Good and bad workers equally sharing the benefits.

[Rosamunda]

Anyone can set up their own toiminimi in a few minutes online and then offer their services to other businesses or to private individuals, charging whatever they like plus vat.
Then they do their own vero, kela and yel contributions.
Not really difficult.
I don't really understand your dilemma.