All Finnish entrepreneurs are liable to pay taxes starting from the date on which their company is established. Entrepreneurs must provide the Tax Administration with all the requested information and also report any changes to previously provided information. An entrepreneur is liable to pay different forms of tax.

Value-added tax (VAT)

  • Finnish VAT rates are 10%, 14% and 24%; only a few industries are exempt and apply a VAT rate of 0%.
  • VAT must be paid by every company, no matter what its form.
  • VAT must be collected from customers and delivered to the Tax Administration.
  • If the company has been entered in the VAT register, the VAT it has paid for its purchases can be deducted from the VAT it is liable to pay based on its sales.
  • A company is not liable to pay VAT if its annual turnover is €10,000 or less (2017). However, once this figure has been surpassed, VAT must be paid on all annual sales, not only those that are in excess of this figure.

Income tax (earnings-based)

Depending on the form of enterprise you have, you can possibly draw a salary for yourself from the company. This salary is earned income and therefore subject to (earnings-based) income tax. Earned income is taxed at progressive rates, which means the more you earn, the higher the rate will be. Once you start drawing a salary, request a tax card from your local Tax Office and pay taxes in accordance with the tax rate marked on your tax card.

Advance tax (on projected annual profit)

Companies are required to pay advance tax on projected annual profit. Tax rate depends on the form of company. During the first accounting period, the amount of advance tax to be paid is calculated based on the profit estimate provided by the entrepreneur. Taxes for further accounting periods are estimated based on the previous accounting period. The Tax Authority sends tax invoices for the estimated amounts. If your company’s turnover and profit projection change during the year, report this to the Tax Authority so the advance tax can be readjusted.

Capital income tax

If you wish to draw profits from the company for your personal use, all such amounts are subject to a capital income tax. The rate of this tax varies, depending on the amount that is drawn out.

Final taxation/back taxes

At the close of an accounting period, file a tax return in which you report the full turnover and profit of the accounting period in question. Final taxes are always calculated and charged based on this information. As a result, you may receive a tax refund or be liable to pay back tax.

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