Toiminimi (sole trader) tax in Finland 2026: worked example

How the tax is calculated: from revenue to taxable income

A toiminimi’s profit is taxed as the entrepreneur’s personal income. Business expenses are deducted from business income. If you have confirmed losses from earlier years, they are deducted first. From the remaining profit the Finnish Tax Administration (Vero) automatically makes a 5% entrepreneur deduction (yrittäjävähennys) — you do not need to claim it. The rest is divided into capital income and earned income.

Example: €60,000 income, €20,000 expenses

An illustrative full year. The entrepreneur is VAT-registered, figures exclude VAT, and there are no earlier losses and no employees. The net assets of the business at the end of the previous year were €10,000.

1. 1Income €60,000 − expenses €20,000 = profit €40,000.
2. 2Entrepreneur deduction: €40,000 × 5% = €2,000. That leaves €38,000 to be divided.
3. 3Capital-income part: €10,000 × 20% = €2,000. Tax on it at 30% is €600.
4. 4Earned-income part: €38,000 − €2,000 = €36,000. It is added to your other earned income, such as wages, and taxed on the progressive scale.

The final rate on the earned-income part depends on your total income, municipality and personal deductions, so there is no single figure for “tax on €60,000”. Vero’s tax percentage calculator gives an estimate; the final amount is shown in your tax decision.

Capital and earned income: what the 20% is calculated on

The capital-income part is not 20% of profit. It is a calculated annual 20% return on a base made up of the net assets of the business (assets minus debts) plus 30% of the wages paid during the 12 months before the end of the tax year. Net assets are taken from the end of the previous tax year — or, in your first year, from the end of that year. If the business has few assets — for example, you provide services with a laptop — almost all of the income is earned income.

In the business tax return you can request that only a 10% return is treated as capital income, or that all of the business income is taxed as earned income. Capital income is taxed at 30%, and the part above €30,000 a year at 34%. Which option is best depends on your income and deductions, so it is worth calculating with your accountant before filing.

Transferring money to yourself is not a salary

In a toiminimi you do not pay yourself a salary. A transfer from the business account to your personal account is a private withdrawal (yksityisotto). It is not a business expense and does not reduce profit: if you withdraw €10,000 in the example above, tax is still calculated on the €40,000 profit. Equally, there is no separate tax on the transfer itself. Your bank balance and your taxable profit are different figures.

YEL — self-employed pension insurance

YEL is not a tax but compulsory pension insurance. You must take it out if you are at least 18 (the upper age limit is 68–70 depending on your year of birth), you live in Finland and work in your business, your self-employment continues for at least four months without interruption, and your YEL income (YEL-työtulo) is at least €9,423.09 a year (2026). The insurance must be taken out within six months of starting.

The contribution is based not on revenue or profit but on your YEL income. That is an estimate of the value of your work: roughly the wage that would be paid to an equally skilled outsider for doing the same work. In 2026 the contribution is 24.4% of YEL income, and a new entrepreneur gets a 22% discount for the first 48 months. Your YEL income determines your future pension and your sickness and parental allowances, so underestimating it does not pay.

Prepayments (ennakkovero)

An entrepreneur pays income tax in advance, in instalments, based on the estimated profit for the whole year. The amount and due dates are shown in the prepayment decision. You can request and change prepayments in MyTax (OmaVero), more than once a year. Update the estimate if sales grow or expenses change — otherwise you will have back taxes (jäännösvero) to pay, with interest, after the year. After the tax year has ended, you can still pay the missing amount as an additional prepayment (lisäennakko) and reduce the interest. You must request it in MyTax before paying; if it is paid by the end of January, no interest is charged.

VAT is calculated separately

VAT (ALV) is not part of income tax: it is calculated and reported separately. You do not need to register for VAT if your turnover is no more than €20,000 in both the current and the preceding calendar year. If the threshold is exceeded during the year, you must register from the date it is exceeded. Below the threshold you can register voluntarily — for example, to deduct VAT on purchases. Some lines of business, such as financial and insurance services, are exempt from VAT by law.

What can you deduct?

• Purchases and supplies related to the business.
• Tools and software.
• Travel and car costs for business trips, based on a trip log.
• Phone and internet, to the extent used for work.
• A workroom or part of your home (työhuonevähennys).
• Business insurance. YEL contributions are deducted only once: either in the business or in your own or your spouse’s personal taxation.

What to prepare for your accountant

• What you do, when you started and whether you are registered for VAT.
• Expected income and expenses for the year, the latest reports and your current prepayment decision.
• Other income, such as wages, and your YEL details.
• Expense documents, and car and business-trip records.
• Business assets and debts, and wages paid if you have employees.

How Debit Credit helps

Debit Credit handles bookkeeping and reporting for sole traders: VAT returns, prepayments and the annual tax return. We explain in Finnish or Russian what amount the tax is calculated on, what counts as an expense and how to estimate YEL income. The Vaavo client portal is included in every service package with no separate subscription: you can send and receive invoices, submit documents, see bank transactions and keep an electronic trip log. Reports in the portal reflect data processed by the accountant. The portal interface is available in English.

Our clients’ routine bookkeeping and tax questions are included in the service at no extra charge and with no time limit. Assignments that require separate research, information gathering or contacting the authorities are charged as additional work.

Official sources

• Vero: dividing business income into capital and earned income — net assets (in Finnish)
• Vero: how net assets are calculated (in Finnish)
• Vero: deduction for entrepreneurs
• Vero: deducting YEL contributions
• Vero: tax prepayment
• Vero: how to register for VAT
• Finnish Centre for Pensions: FAQs on YEL insurance
• Finnish Centre for Pensions: pension contributions of the self-employed

Figures are for 2026 and were checked against vero.fi and etk.fi on 18 September 2026. This article is general in nature; confirm your own situation with an accountant.