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Setting up a business, and the Tax Administration’s registers

Accounting

Basic information on VAT

Basic information on income taxation

We’ll help you!

Being an employer

Setting up a business

Support for starting your own business is provided for example by Enterprise

Finland’s business advisors and local Enterprise Agencies

Apply for a start-up grant before you submit a start-up notification

Read more at: tax.fi/newbusiness

Remember: bank account, accounting and insurance

Hiring an accountant or an accounting firm for your business is recommended

Setting up a business - choosing the company form

• A self-employed person who owns and runs a business.

• Liable for the financial obligations and debts of the business with all their assets. Entrepreneur

(self-employed person)

• Founded by two or more persons or companies

• Ay: All partners are liable for the obligations of the partnership with all their personal assets.

• Ky: General partners are liable for the obligations of the partnership with all their personal assets, while limited partners’ liability is limited to their percentage share

of ownership.

General partnership (ay) Limited partnership (ky)

• Independent taxpayer

• Founded by one or more persons or companies.

Limited liability company (oy)

Cooperative

Planning of business operations

Entrepreneur Guide

Setting up a business - start-up notification

Submit a start-up notification to the Business Information System BIS

(ytj.fi)

A Business ID is issued for the business and will be available in the BIS after

around 2 days

Request entry in registers; processing time approximately 3 weeks

– Trade register maintained by the Finnish Patent and Registration Office (PRH)

– Registers maintained by the Tax Administration: Prepayment Register, VAT Register and

Employer Register

Check the video! Requesting entry in registers

Prepayment Register

Being in the Prepayment Register indicates that the business pays its taxes

promptly and correctly.

When your business is found in the Prepayment Register, the invoice payer – or

the buyer of your services – does not have to withhold tax (cf. wage payment).

Precondition of tax credit for household expenses

If your business neglects to pay taxes

or file tax returns, the Tax Administration can remove it

from its register.

So when your business is in the register, it means it

has met its tax liabilities.

■ You can check the business’s register status in the BIS.

After you have registered your business...

Study carefully the letter you receive from you. The letter contains

– information about your business’s registration

– instructions for filing and paying taxes

– the Tax Administration’s bank account numbers and a business-specific reference number

for self-assessed taxes. The reference number is also available in your business’s MyTax

service.

If you have registered your business in the VAT Register or the Employer

Register, mark the due dates of returns and contributions in your calendar.

– You can also find the dates are on tax.fi and in MyTax

You must keep filing returns even for periods when your business has no

business activity or does not pay any wages.

Basic information on accounting

The obligation to keep accounting records applies to all businesses

It is important for a business to keep reliable up-to-date

accounting records.

Provisions on accounting are found in the Accounting Act.

The main purpose is to calculate the net income, keep the

business’s and its owners’ cash flows separate, and provide

information about the business’s financial status.

We recommend that you engage the services of an accounting

firm or an accountant.

The obligation to keep accounting records applies to all businesses

Accrual-based double-entry accounting

For every transaction, the source and use of the money are recorded. The

entries show the reason for the transaction and the account used.

Every transaction must be recorded on at least two accounts.

Exception: Entrepreneurs (=self-employed individuals) may use

cash-based single-entry accounting. In this case, the accounting

period must be a calendar year.

Taxation is based on the accounting records

Transactions are entered in the accounting records in chronological order

and by subject matter. Cash payments are entered without delay.

Accounting records must be kept in such a manner that the required tax

returns and other notifications (such as VAT returns) can be drawn up on the

basis of up-to-date information.

The business’s income tax for the accounting period is calculated from the

business income recorded in the books, adjusted in accordance with

provisions in tax legislation.

>> Read more: Kirjanpidon ABC (Basics of accounting)

(Taloushallintoliitto)

Basic information on VAT

What is VAT?

1. VAT is a consumption tax that the seller collects

from the buyer by adding it to the sales price of goods or services.

2. Your business cannot keep the VAT but must remit it to the

government.

3. VAT is a self-assessed tax, filed and paid according to the

business’s tax period.

All those who sell or rent out goods and services in the conduct of business, or are

engaged in similar activities, are liable to pay VAT.

• Exceptions: turnover of less than EUR 10,000 and e.g. non-profit organisations.

• VAT reverse charge is applied in the construction sector and scrap metal

industry.

VAT rates

General VAT rate: most goods and services

Food, animal feed, restaurant and catering services

Books, pharmaceuticals, exercise services, film shows,

entrance fees to cultural and entertainment events,

passenger transport, accommodation services, and

royalties for broadcasting services

24%

14%

10%

VAT register

Anyone liable to pay VAT must register for VAT.

VAT must be filed and paid regularly

according to the company’s tax period – every month, every three months

or once a year.

+ VAT

All those who sell or rent out goods and services in the

conduct of business, or are engaged in similar

activities, are VAT liable.

Operations outside VAT taxation

Not all lines and sectors of business are VAT liable

Examples:

– selling and renting real estate

– healthcare, medical care and social services

– education and training services specified in the VAT Act

– financial services and insurance services

Your business cannot be registered for VAT if you operate only in the above

sectors. Consequently, you are not entitled to deduct VAT on the purchases

made for the business.

Examples of VAT rates

Small-scale business and VAT?

Registration is not necessary if you estimate that your business’s turnover will

be less than €10,000 during the accounting period (12 months).

– Make a good estimate of your turnover, so that you do not

have to pay VAT retrospectively.

VAT relief, when turnover is €30,000 or less.

– You can apply for VAT relief in the accounting period’s last VAT return.

You can register your business for VAT even if your turnover is less than

€10,000.

You can deduct the VAT on the purchases you have made for your taxable

business activity.

+ VAT

How to calculate and file VAT

Example

The price of the product you sell is €1,000 excluding VAT.

The general VAT rate of 24% applies.

VAT of 24% is added to the price, i.e.

1,000 × 24/100 = €240.

The price including VAT is €1,240.00.

For further guidance, visit tax.fi

Check out the video!

New entrepreneur:

Value-added tax

Reporting value added tax

You report VAT and pay taxes in accordance with your business’s tax period.

Your business must file a return for each tax period – even when it has not had any activity.

As a rule, the tax period for self-assessed taxes is always one calendar month.

– Returns must be filed and tax paid on a monthly basis.

Businesses can apply for an extended tax period, which may be:

– three months (quarter): turnover max. €100,000

– calendar year (VAT): turnover max. €30,000.

VAT is a self-assessed tax.

‘Self-assessed’ means that you must calculate and file the tax on your

own initiative.

How to calculate and file VAT

What is the due date for filing and paying taxes?

NOTE: The tax return must arrive at the Tax Administration by the due

date.

The general due date for

filing and paying VAT

is

the 12th day

What is the due date for filing and paying?

January February March

12th day

VAT is filed and paid in the second month following the tax period.

VAT is a self-assessed tax, so you must calculate it by yourself and

check the due date. Bank details, such as bank account numbers and

reference numbers, are available in MyTax.

Example, tax period one month:

VAT

E-filing

You can submit tax returns in the Tax Administration’s MyTax e-service or

directly through certain accounting software.

Start using MyTax (tax.fi/mytax).

Making corrections

If you find an error in the tax return you have filed, you can correct it by

filing a replacement return for the tax period concerned.

Also state the reason for the correction in the replacement return.

There is also an alternative method for correcting minor errors: if the error

is less than €500, it can be corrected or recognized in future returns.

Errors must be corrected without undue delay.

Don’t worry!

Oops, I made

a mistake…

Filing late

If you file a return late, a late-filing penalty will be imposed. The late-filing

penalty is calculated from the day following the due date until the day we

receive the return.

If the tax return is not filed by the due date, the Tax Administration will estimate

the amount of tax to be paid.

In addition, you will be imposed a punitive tax increase for neglecting your

obligation to file a tax return.

Neglecting the obligation to file a tax return is also sufficient grounds for the Tax

Administration to remove your business from the Prepayment Register.

Late-filing penalty

1–45 days over 45 days

€3 per day,

up to €135

Late-filing

penalty is

not imposed

+2%

of the amount of tax

filed late

Max. €15,000

per tax period /

tax type

First tax return

for the period

Replacement

return

+2%

of the amount of tax

filed late

Return filed late

Note: Unpaid taxes accrue interest for late payment (7% in 2019)

Basic information on income taxation

Take care of your business’s prepayments

Prepayments are income taxes paid in advance.

Businesses make prepayments based on an estimate of their income

for the accounting period. As an entrepreneur, you are expected to

make the estimate by yourself.

Business income is what remains when your business’s deductible

expenses are deducted from its taxable income.

– Taxable income includes, for example, income from the sales of your

business’s products and assets.

– Deductible expenses include the expenses for the production of income,

such as wages, rents and purchases made for the business.

Apply for prepayments in MyTax.

Making prepayments

You will find the decision on your prepayments in MyTax, and it will also be sent

to you by post.

The decision contains the information you need to make payments: amount of

tax, due date and reference number.

The due date for prepayments is the 23rd of the month.

If you are a self-employed individual, the amount of tax also depends on your

other income and benefits.

Number of instalments: how often are prepayments made?

How to make a prepayment: how are prepayments made?

Changing prepayments

1. During the accounting period: follow the amount of prepayments. Request

changes to your prepayments, if necessary.

If your business income is higher than your original estimate, request higher

prepayments. This helps you to avoid back taxes, for example.

If your business income is lower than your original estimate, you can request

lower prepayments.

2. After the accounting period:

Make an additional prepayment, if necessary: you can apply for an additional

prepayment multiple times, up until your tax assessment process has been

completed

Additional prepayments are a way of supplementing withholdings or

prepayments after the end of the tax year. Request additional prepayments in

MyTax

Tax return

Tax return forms and due dates vary with the type of business.

e.g. entrepreneurs, or self-employed persons (5), partnerships (6A)

Tax returns must be filed by the due date, see: important dates

Study carefully the instructions for filling in the appropriate tax return (tax.fi)

Tax return

E-filing recommended: fewer mistakes and step-by-step guidance

– corporate entities (Oy, etc.), associations and foundations: return must be filed

electronically for example in MyTax

– partnerships and entrepreneurs, or self-employed persons can file

in MyTax starting mid-January 2019

via Ilmoitin.fi

via the Tyvi service

by filling in an online form on lomake.fi (only entrepreneurs, or self-employed)

Example: Tax on entrepreneurs’ business income

BUSINESS INCOME

DIVISIBLE BUSINESS INCOME

PART TREATED AS CAPITAL INCOME

(20% of net assets or,

at the taxpayer’s request, 10%)

PART TREATED AS EARNED INCOME

(the remaining part or, at the taxpayer’s

request, whole business income)

-

=

BUSINESS EXPENSES

- 5% DEDUCTION FOR

ENTREPRENEURS5% DEDUCTION FOR

ENTREPRENEURS

Company form and taxation

Read more about differences and

details of income taxation for different

company forms on tax.fi.

Different types of companies are taxed in

different ways.

Tax payments and refunds

Paying taxes

Whenever you pay taxes, you must

have the following information at

hand:

– amount of tax

– Tax Administration's bank account number:

– taxpayer- and tax-type-specific reference

number

– due date

You can pay your taxes

– in MyTax

– In your online banking service

– as an e-invoice or direct payment (real

estate tax and income tax)

– in cash, for example in a bank.

You will find the payment details on

the tax decision and in MyTax.

Other taxes, such as VAT and

employer's contributions, are self-

assessed taxes and you must pay

them on your own initiative. You must

calculate the amounts and check the

due dates.

If you have financial difficulties, you

get more time to pay if you wait for

payment reminders or apply for a

payment arrangement in MyTax.

Payments are allocated based on the reference number

Different tax types have different reference numbers. The reference number

determines which tax a specific payment is used for. Tax types that have their own

reference numbers include:

– income taxes (e.g. prepayments, additional prepayments and back taxes)

– self-assessed taxes (e.g. employer's contributions and VAT)

In different situations, other reference numbers may also be used, such as a

reference for overdue taxes or for a payment plan.

You can check the reference numbers in MyTax or in the payment instructions

printed in the tax decision. If you receive a tax summary containing a payment

reminder, you can also find the reference number there.

You will not receive a tax decision on self-assessed taxes, such as employer's

contributions. You can find the reference number for self-assessed taxes in MyTax.

Tax refunds are used for taxes

Tax refunds to individual taxpayers and

entrepreneurs are paid between July and

December. You can check the date of

payment and the amount of refund in the tax

decision or in MyTax.

Your refund is used for the payment of your

taxes starting from your assessment end date

until the 4th day of the following month.

– Your tax refund is used for your existing unpaid

taxes immediately on the tax assessment end

date.

– During this period, the refund is also used for

upcoming taxes on their due dates.

If the refund covers all the taxes in this

period, you do not have to pay the tax. If, on

the other hand, the refund covers your taxes

only in part, you must pay the difference

between the taxes and the refund on the due

date. Real estate tax is an exception: refunds

are not used for real estate tax this year.

A self-employed individual’s personal tax

refunds are used for the payment of their

business’s taxes. Tax refunds are also used

for taxes included in a payment arrangement.

Submit a bank account number

In order to pay tax refunds, we need the bank account number of your business.

Submit a bank account number or report any change of bank account number in

MyTax.

Note that an individual taxpayer may only have one bank account number in the

Tax Administration records. If you are a self-employed person, this applies to

you. So you cannot have a different bank account number for your business in

our records.

If you do not submit a bank account number, the refund will be paid through a

money order via the OP Bank. When you are cashing a money order, OP

collects a service charge according to their price list, which is why we do not

pay refunds of €15 or less as a money order.

Summary of tax payment status

A payment reminder is included in your tax summary, if your information for the

past month shows that you have unpaid

– income taxes (back taxes, prepayments or additional prepayments)

– self-assessed taxes (e.g. VAT or employer’s contributions)

– inheritance tax

– gift tax.

The payment reminder included in the summary contains payment details and

late-payment interest calculated up until the date of the summary. If you pay

taxes after the due date, check the amount of late-payment interest in MyTax.

You will receive 1 to 3 payment reminders for unpaid taxes in your tax

summaries. You will always be notified in your tax summary before we transfer

your overdue taxes to enforcement.

Summary of tax payment status

You will also receive a tax summary when your tax refund has been used to pay

your taxes. MyTax gives you more detailed information on how your tax refund

has been used.

Businesses and corporations also receive a summary when their payments are

used for taxes.

The tax summary for the previous month is available in MyTax at the beginning

of the following month.

Note that the tax summary, generated at the end of the month, is a summary of

the payment transactions of the past month. More up-to-date information is

available in MyTax.

And further ...

Play fair – don’t forget the receipt!

When your business sells goods or services, you must give the buyer a

receipt or invoice indicating the amount of VAT.

The buyer may need it, for example, in order to deduct VAT.

What information must a receipt include?

entrepreneur’s name, contact details and Business ID

date of issue, and identification number

number or amount and type of goods / type of services

amount received, including VAT and VAT rate

Further information and a receipt template are available on tax.fi: Don’t

forget the receipt!

Tax debt certificate?

When you conclude agreements in your business’s name, you may

need a statement of taxes paid / a tax debt certificate.

– The tax debt certificate shows whether the business has fulfilled its

obligation to file and pay taxes.

You can order a certificate online in MyTax

– You can also make a standing order for the whole year and receive a

certificate once a month.

Don’t forget you can also check companies’ register entries in

Business Information System BIS (at ytj.fi)

In the event of financial difficulties

Businesses may have financial difficulties from time to time.

If they meet certain conditions, they can apply for a payment

arrangement.

A payment arrangement must be requested before unpaid taxes are

transferred to the enforcement authority for recovery.

A request for payment arrangement can be submitted in MyTax.

Read more at tax.fi: Payment arrangement

Suomi.fi messages

Suomi.fi messages is a service maintained by the Population

Register Centre. Suomi.fi messages is designed for

communication between citizens and public authorities. It has

replaced previous official messaging services.

The Tax Administration adopted Suomi.fi messages on 1

November 2018.

If you activate Suomi.fi messages, the Tax Administration will no

longer send you letters on paper. Your tax mail will be

transmitted to MyTax instead. The Suomi.fi service sends you a

message whenever you have new tax mail in MyTax.

TAXATION CHANGES

E-filing

You must log in to be able to take care of your tax matters in our e-services.

Individual taxpayers can usually log in with their online banking codes.

You can also authorise an accountant to take care of your company’s tax

matters.

You can grant an authorisation in the Suomi.fi e-Authorisation service.

How to grant authorisation

Brief summary

Brief summary: starting business operations

Tax Administration’s registers

Star-up notification to BIS (ytj.fi)

Business ID

to Trade Register(Finnish Patent and Registration Office)

to the Tax Administration’s registers

Start-up notification

Corporate income taxation

• Prepayment of tax based on estimated

income

• Tax return after the end of the accounting

period

refund of prepayment or back taxes

Filing and paying taxes

• Prepayment register

• VAT Register

• Employer Register

If your business

activities change,

submit a notification of

changes on ytj.fi

VAT

• according to the business’s tax period,

which is usually one month

• general due date the 12th of the month

Employer’s contributions

report to the Incomes Register within 5

days of payment

general due date the 12th of the month

Start using MyTax for your business

You can use MyTax to file and pay self-assessed taxes, and to

keep track of your business’s status. MyTax also reminds you of

due dates.

When you have activated Suomi.fi messages provided by the

Population Register Centre, you will receive an e-mail whenever

you have a new message waiting for you in MyTax.

How we support new entrepreneurs

We will help you!

We want to support new entrepreneurs

to make sure they can handle their tax

matters correctly right from the beginning.

Because of this, we provide guidance on

multiple channels.

tax.fi/newbusiness

Set of newsletters for new entrepreneurs

A tax information package

directly to your e-mail

– three newsletters within a couple of weeks,

the first one upon subscription

– includes useful tips for finding more detailed

instructions on tax.fi

– also in Swedish and English

Subscribe at: tax.fi/newbusiness or tax.fi/newsletter

Webinars

Videos

Tax Administration’s YouTube channel

e.g. for new entrepreneurs

registration, basic information about VAT,

acting as an employer

recorded webinars

several webinars

on different topics

You can find all our future webinars at:

Events and webinars

Webinar slides & material: Tax.fi

Don’t hesitate to contact us!

Service numbers

Tax.fi

> Chat

Business as an employer

Employer Register

Regular or temporary employer? Regular employers must register with the

Employer Register.

Regular employer

When you pay wages

• regularly to at least two people or

• simultaneously to at least six people with

temporary or short-term employment

contracts

Temporary employer

When you pay wages

• regularly to only one person and

• to no more than five employees whose

employments last less than a calendar year

Guidance:

Business as an

employer

Being an employer Employers have obligations related to wage payment. Tax must be withheld

from wages, and the employer’s health insurance contribution must be paid on

the basis of the wages.

Employer’s contributions are self-assessed taxes.

– Report to the Incomes Register within five days from the payment.

– Pay to the Tax Administration by the 12th day of the month following the month of wage

payment.

Reports to the Incomes Register must be submitted electronically.

Check the video:How to file employer's

contributions

Check the video:New entrepreneur – Acting

as an employer

Filing and paying employer’s contributions

Regular employer

– Earnings payment report on every wage earner to the Incomes Register by the 5th day after

wage payment

– The employer's separate report to the Incomes Register by the 5th day of the calendar month

following wage payment (employer-specific summary)

– Separate report also in the case of no wages payable

Temporary employer

– Earnings payment report on every wage earner to the Incomes Register by the 5th day after

wage payment

– Separate report to the Incomes Register only when wages have been paid

Due date on the 12th of the month following wage payment

Start using Palkka.fi

Palkka.fi is free payroll software for small businesses. You can use it to

calculate your employees' wages, including personnel expenses.

The service generates payslips and other accounting vouchers and saves

them in an archive.

Palkka.fi also has a feature that automatically sends information on employer

contributions to the Incomes Register.

Learn more at Palkka.fi »