Freelancing in Finland

The ultimate resource for transitioning to freelancing for software developers 👩‍💻🇫🇮

• Introduction
  • What problem will you face without this guide?
  • How can this guide solve the problem?
  • I have questions specific to my case. Do you offer personal consultation?
• Preparation - what to do before you establish your company
  • Know how to handle your upcoming new immigration status
  • Network with freelance brokers and organizations
  • Wait until you find a project you like
  • Apply for startup grant
  • Quit your job
  • Establish your company
• Foundation - what to do after you establish your company
  • Apply for general housing allowance
  • Open a business bank account
  • Find an accountant
  • Buy social security insurance YEL
  • Understand your new personal taxation situation
  • Consider buying corporate liability insurance
  • Consider joining a union
  • Consider joining an unemployment fund
  • Consider arranging statutory preventive occupational healthcare (SPOH)
  • Consider buying health insurance
  • Consider buying voluntary pension insurance
  • Consider selling your personal work-related tools to your company
• Operation - what to do to run your company
  • Offer yourself benefits that you like
  • Offer yourself daily allowance when you travel for business
  • Send your invoices carefully
  • Take out money from your company in the most tax optimal way
  • Ensure that your obligations are fulfilled continuously
  • References
• Contributors
• Final words

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eAccounting Finland Oy is the exclusive sponsor of Freelancing-in-Finland guide 🧡

For 5+ years, I've been using their accounting services for my own company.

So, I'm recommending what I use myself, with proper skin in the game. Here's why:

• I’m extremely sensitive to fulfilling my company’s obligations and they haven't missed a deadline in 5+ years.
• Every time I had a question in 5+ years, I got a reply to my email within 1-2 days. They’re extremely responsive and helpful.
• Their advice on tax planning has saved my company money. That's helpful when starting as a new entrepreneur.

If you decided to use them for your company because of this introduction:

• Please 🧡, tell them you decided to use their services because of this guide.
• That'd increase the chance of them continuing to sponsor this guide.
• Please 🧡, don't forget that, thank you! 💐

---

Introduction

What problem will you face without this guide?

Losing an estimated 200 hours figuring out how to do everything on your own. I know this because that's how much time I had to spend myself.

In Finland, there are many extensive guides by authorities which have precise information about everything you need to know. The problem is, however, that the target audience of those guides are the general population and out of every 100 pages, maybe 10 pages are relevant to your situation.

For myself, I had questions like:

• How to get freelance projects without any network of my own?
• What you need to do before you establish your company to be eligible for government grants?
• When you set up your company, what are your recurring obligations?

Figuring those questions out was tiring and very time consuming.

How can this guide solve the problem?

By narrowing down the target audience to the person reading this guide on GitHub, you wouldn't lose the time I lost.

You are the target audience of this guide if:

• You are already living in Finland for more than 3 months
• You are already working as a software developer
• You want to work as an independent freelance software developer
• You want to establish a limited liability company to offer your freelance services through it

This guide is under MIT license which means use it at your own risk, I'm not a lawyer and no statement here should be thought of as legal advice.

I have questions specific to my case. Do you offer personal consultation?

Yes, I do.

What's your background?

• I started working as a software developer in 2015 and established my company in 2019.
• I published this guide in 2020 and have kept it up to date ever since.
• Since 2019, I've spent over 1000 hours researching everything. 40 hours on this commit, for example.

What can you help me with? I can help with every stage of your freelancing journey because I've been through it all.

• If you haven't started yet and are thinking about whether to make the jump:
  • I can tell you what it's like, what you should expect, etc.
• If you've just established your company and don't have the time or energy to read the guide:
  • I can give you specific help quickly so you can set a good foundation and move on.
• If you've been running your company for some years and need feedback on your setup or costs:
  • I can look at your situation and offer suggestions for optimizing your fixed costs, YEL, taxes, etc.

How much? €100 per hour, plus VAT.

OK. How can I book? You can book a time here. Afterwards:

• I'll review your booking and email you an invoice.
• Once the payment is received, I'll confirm the meeting.
• We'll meet at your selected time via video call.

Can't find a time that works? No problem. Email me at sam@hosseini.io and we'll figure something out.

Testimonials

Preparation - what to do before you establish your company

Know how to handle your upcoming new immigration status

Source of truth: Finnish Immigration Service

What is it? Once you start working as a self-employed person, you may need to apply for a different type of residence permit.

If you're a Finnish citizen, this is not applicable to you.

If you're a EU citizen, as the target audience of this guide is people who are already living in Finland for more than 3 months, given that you have already registered your right of residence, you don't need to apply for another permit.

If you're a non-EU citizen, depending on your current permit, you may need to apply for another permit.

• If you have a permanent residence permit, you don't need to apply for another permit.
• If you have any other type of permit, please contact Migri to get specific advise for your case.

Network with freelance brokers and organizations

What is it? To find a project that you like, there are companies that can help you with that. Most require a meeting before they let you in their network. It's always a relaxed meeting, though, as you will be partners who will help each other.

How does it work? They find you a project. They add around 5-20% to your hourly rate. You invoice them. They invoice the end client.

What happens in the meeting?

• They ask if you know their company and depending on that, they introduce you accordingly.
• They ask about your story.
• They ask if there's an industry that you particularly like/dislike to work in.
• They ask about your hourly rate.
• You can ask about their principles and priorities for the possible partnership with you.
• You can ask if they offer any other services than finding a project.
• You can ask about their terms of payment, i.e. how many days until they pay your sales invoice.
• You can ask if there are any restrictions in place if you take a project from them in the form of NDAs or non-competition.

What about hourly rate? In Helsinki, if we put aside particular situations in which the client has become dependent on a single-point-of-failure-developer, or other extraordinary situations, in an average project with an average client with an average developer, I've heard companies charging their clients between 90-130€ per hour depending on the strength of their brand, the experience of the developers in the team, and the particular relationship with that client. In extraordinary situations, I've heard of 150-200€ per hour.

However, the ranges above are for direct company-to-client sales. If you get connected to a client using an intermediary broker company, the ranges will be cut by 5-20%, which would be their cut of the hourly rate. This means that, with one intermediary company, you're looking at 65-105€ per hour in non-extraordinary situations.

List of brokers:

• Fika ☕️ with Witted and get into their network.
• Fika ☕️ with Thriv and get into their network.
• Fika ☕️ with Finitec and get into their network.
• Fika ☕️ with Siili One and get into their network.
• Fika ☕️ with HiQ and get into their network.
• Fika ☕️ with 7n and get into their network.
• Fika ☕️ with Consid and get into their network.
• Register a profile with Ework Group to be able to apply to their projects.
• Register a profile with Digia Hub to be able to apply to their projects.
• Register a profile with Vahvistus.fi, a network run by Sysart, to be able to apply to their projects.
• Apply for an account at Tingent to see their remote projects in Sweden.
• Keep an eye on Gofore Gigs and apply to interesting projects.
• Keep an eye on Signify and apply to interesting projects.
• Register as a partner company at Experis to be able to apply to their projects.

List of aggregate sites:

• Create a job alert on LinkedIn with:
  • Your location
  • Your most important skill (Python, for example)
  • Job type as Contract
• Create a profile on Nordgigs which aggregates freelance projects across Nordic countries and email you on a match with your skill tags.
• Check the Hub for freelance job types.

Other channels:

• Join the Koodiklinikka Slack and keep an eye on the #rekry channel for interesting opportunities.
• Join the Ohjelmistofriikit Slack and keep an eye on the #gigs channel for interesting opportunities.

Wait until you find a project you like

What is it? Finding a freelance project is like finding a job. A lot has to be in order for you to find the right project.

It took me ~6 months from the time I got into the networks to find my first project that I liked. I've heard of couple of weeks from my peers too. It really varies, patience is necessary.

Steps:

• Once you find the right project, check the terms and conditions of the client's contract and run it by a lawyer if you have that available to you either through a union or elsewhere.
  • If the client asks you to draft a contract, you can use Software Freelancers Contract Template by Ohjelmistofriikit (Finnish software freelancers co-op).
• If you're planning to apply for startup grant, before you sign any contract, ask them to give you two weeks so that you can apply for startup grant and receive a decision. Even though the official estimation is 2 weeks, decision comes much faster in reality (2-4 working days). Once you receive the decision, you can proceed.
• As you don't have a company yet, and you need to accept the contract, you can sign it as a temporary solution under your own name.
• The contract will be between a natural person (you) and a legal entity (the client's company or the freelance broker's company).
• You will sign a new contract once you establish your company. It will be between a legal entity (your company) and another legal entity (the client's company or the freelance broker's company).
• Your company would be selling freelance services by sending its representative (you).

Apply for startup grant

Source of truth: Job Market Finland startup grant page

What is it? Startup grant is a program to support you to become an entrepreneur. You will receive the monthly payment for a total of 6 months (if you apply once) or a total of 12 months (if you apply for extension as well).

How much? ~740€ per month, as personal income. If your income tax is 10%, for example, you will get ~665€. You must deliver a revised tax card for benefits to TE-services for them to use your real income tax percentage, otherwise they withhold 25% income tax by default and you'll get ~555€.

Steps for first application:

• You will be disqualified from startup grant if you have established your company and started full-time entrepreneurship already.

  • What TE-services considers establishment of company is different from what we discuss in establish your company section.
  • TE-services considers your company as established if your company has joined any of the registeries maintained by Tax Administration (Prepayment, VAT, Employer).
  • This means that if you only join Trade register to get the unique Business ID when establishing your company, TE-services won't consider your company as established.
  • You can do this if you're in a hurry to set up things that depend on Business ID like opening a business bank account, applying for insurance offers, etc and you can't wait for startup grant decision to come first.

• You need a business plan and certain financial calculations as an attachment to your application. You can use Job Market Finland and complete the steps for Business plan to draw up your business plan which includes all the necessary financial calculations as well.

• Once you have your business plan ready, as an optional step, you can send an email with your business plan attached to the Enterprise Agency in your city and ask them for an appointment with a Business Advisor. In Helsinki, Business Helsinki (Helsingin Uusyrityskeskus ry) is the Enterprise Agency to go to. Although it is not mandatory to go to this appointment for getting startup grant, the Business Advisor has seen hundreds of business plans and can guide you to correct your mistakes in the business plan and therefore increase your chances for a successful application.

• You need an updated Resumé as an attachment to your application.

• You need a tax debt certificate as an attachment to your application.

• In your business plan, you have specified how much own funding you have available to you. You need to provide a proof of your claimed own funding as an attachment to your application. This proof doesn't have to be official. I personally printed a pdf from my netbank account overview and that was enough for a successful application.

• The amount of own funding available to you, no matter how high, does not influence the decision of TE-services negatively. In addition, when applying for startup grant payments later once startup grant is granted, the salary you've taken from your own company does not affect the payment application negatively either.

• Apply for startup grant electronically and you will get an electronic decision within 2 weeks (official estimation). Official decision letter should arrive by post soon after the decision is served (~1 week).

Steps for application extension:

• Apply five months after the starting date of previous grant but also before it expires.

• You need a short explanation of how the business has started.

• You need a short explanation of why the extension is being applied for.

• You need a summary report of your business actions during the startup grant period and plans for the near future.

• You need an income statement, self-made or verified by an accountant, of a 5-month-period, as an attachment to your application.

• You need a balance sheet, self-made or verified by an accountant, of a 5-month-period, as an attachment to your application.

• To determine whether to award the grant extension:

  • TE-services will consider whether the business has started more or less according to the original business plan.
  • TE-services will consider whether the already acquired income is enough to support the entrepreneur.

• Apply for the grant extension electronically and you will get an electronic decision within 2-4 weeks. Official decision letter should arrive by post soon after the decision is served (~1 week).

Quit your job

What is it? The positive decision to your startup grant is on the condition that you will quit your job and become a full-time entrepreneur.

Steps:

• Terminology: employee and self-employed are two different terms and they cannot be used interchangeably.
• As an employee, deliver your binding resignation in written form to your employer.
• After that, and from the first day of your startup grant decision, you are self-employed.

Establish your company

Source of truth: Business Information System

What is it? You need to establish a limited liability company (Oy) to be able to offer your freelance services and protect your personal assets from a legal perspective.

This limited liability is such an extremely important concept that I encourage you to watch Khan Academy video on corporations and limited liability to become fully aware of its implications.

TL;DR of video: Working under your own name as a private trader (toiminimi) gives you unlimited liability and all your personal assets like your home, car, and personal savings are up for grabs if worst happens. In case of a limited liability company, the liability is limited, and in the absence of intentional fraud, the company can declare bankruptcy if worst happens, and your personal assets are immune from the liability of the company.

How much? €280. If the standard articles of association is not enough or you don't meet some unlikely requirements, you can customize it, but you have to pay €370 instead (prh.fi). It's a business cost. Later, when your company is registered and accounting and bank account are set up, you can claim this 280/370€ back from the company as you paid this money from your personal bank account even though it was a business cost.

What is the role of Business Information System?

• What Finnish Digital Agency (Digi- ja väestötietovirasto) is to you, Business Information System (ytj) is to your company.
• This means that in the same manner that you came to life, in the eye of Finnish authorities, by getting a personal ID (henkilötunnus) from Finnish Digital Agency, your company will come to life by getting a company ID (Y-tunnus) from Business Information System.
• Similarly, in the same way that you update your personal information like your address after you move apartments in Finnish Digital Agency, you'll update your company's information in Business Information System if there are changes.
• Business Information System is also the single place in which you can communicate with and join/exit various registries by Tax Administration (Vero) and Finnish Patent and Registration Office (PRH).
  • Tax Administration maintains:
    • Prepayment register (Ennakkoperintärekisteri), which allows your company to take care of its own taxes.
    • VAT register (Arvonlisäverovelvollisuus), which allows your company to report VAT related matters.
    • Employer register (Työnantajarekisteri), which allows your company to report employee-related matters.
  • Finnish Patent and Registration Office maintains:
    • Trade register (Kaupparekisteri), which stores your company's information.

Steps:

• Choose a company name.

  • Search for your chosen name in Name Checking Service for Companies
  • If no exact match or very-similar names were found for your chosen name, then probably it will be accepted in the application process.
  • You will be given 3 fields for company name, so prepare 2 backup names as well in case your primary name cannot be registered.

• Choose your main line of business.

  • Source of truth: Statistics Finland
  • Required by Tax Administration.
  • For freelancing, you can choose any from Information and communication > Computer programming, consultancy and related activities that you feel is most relevant.
  • 62010 Computer programming activities is common as several freelancing agencies like Futurice and Reaktor have chosen that, so you can go with that as well.

• Choose your company's potential lines of business.

  • You should declare all the business areas you think your company will engage in within your Articles of Association (yhtiöjärjestys).
  • This is important, because any changes to Articles of Association requires an amendment, which you have to file and pay €280 for.
  • You probably want to add investing activities to your Articles of Association.
    • This does not obligate you to do any investments.
    • However, by adding it, if you decide to set up investments within your company later on, you don't have to file an amendment.
    • Also, some stockbrokers, like Nordnet, may refuse to open an investment account for your company if they don't see investing activities in your Articles of Association.
    • Here's the text: Yhtiö voi harjoittaa sijoitustoimintaa. Yhtiö voi omistaa ja hallita arvopapereita ja kiinteistöjä ja virtuaalivaluuttoja ja käydä niillä kauppaa.

• Choose your company's fiscal year ending.

  • Fiscal year is the 12-month period in which your company operates.
  • First fiscal year is always an exception and it can be less than 12 months or up to a maximum of 18 months. Due to practical and tax reasons, you probably want to avoid short fiscal years (e.g. instead of choosing 2-month fiscal year, choose 14 months).
  • Fiscal year can be the same as calendar year and finish at the end of December.
  • Fiscal year can also end at other times, like end of September, March, etc.
    • A lot of companies have their fiscal year the same as calendar year and this makes accounting offices really busy during the turn of the year. To avoid this busy season, you can choose a fiscal year that ends well before or after the turn of the year, like September or April.
    • Please note that this affects when you can withdraw dividends. Dividends can be withdrawn based on the balance sheet of the fiscal year that ended during the previous calendar year. For example, if the fiscal year ends on 30.09.2026, you can only withdraw dividends based on its result starting from 01.01.2027.
    • Based on these, I recommend October or November. This gives your accountant 1-2 months to close the fiscal year. Then you can withdraw dividends in the beginning of January.

• Choose your company's number of shares.

  • I recommend 10,000 shares for the target audience of this guide based on my own accountant's advice.

• Get another person's consent to be your Deputy Member of the Board of Directors.

  • According to Limited Liability Companies Act in Chapter 6, Section 8.1:

    There shall be between one and five regular Members of the Board of Directors, unless it is otherwise provided in the Articles of Association. If there are fewer than three Members, there shall be at least one Deputy Member of the Board of Directors.

  • This means that, for your company to be legally compliant, it must have a Deputy Member of the Board of Directors when you are going to be the only regular member of Board of Directors as the CEO.

  • Deputy Member of the Board of Directors would be held liable only for decisions they make in board meetings. In practice, unless you die or you are permanently unable to act as the CEO, Deputy Member of the Board of Directors won't have to make any decision so you can communicate this fact to them to help them with their decision making.

  • Once you get the person's consent, get his/her personal ID (henkilötunnus) as you'll need it for establishing the company.

• Decide the registries you'd like your company to be part of:

  • Trade register ✅, as the company cannot come into life without it.
  • Prepayment register ✅, as without it, other companies have to withhold taxes on the amounts they pay you.
  • VAT register ✅, as you can start deducting VAT from things or services you purchase for your main line of business. For example, if you buy a laptop for 2,000€, you'll get ~400€ back (VAT 25.5%).
  • Employer register ❌, because you don't need it if you're not employing anyone else. The fact that you're employing yourself is irrelevant as you're considered self-employed, not an employee. You can join later, once and if you start employing others.

• Establish your company online by filing a startup notification at Business Information System

  • I recommend doing this step together with an accountant. It's faster, easier and ensures that the choices you have made from the steps above makes sense in your very particular case and your potential ambitions for the near-future of your company.
  • Alternatively, you can give power of attorney in Business Information System to an accountant so that they can establish the company on your behalf.
  • Do not add your email, phone number, or any other information in the public information section of the startup notification application. This would prevent scammers calling you and selling you a "service", in which you might say "Ok, yes, that's fine" to get rid of them, and they'd start sending you invoices which you have to jump over dozens of obstacles to remove yourself from the so called "service" they offered you. They can do that because in Finland, verbal agreement is as binding as writing, which the scammers take advantage of inappropriately.

• Once your company is established, you must file a notification of beneficial owners in Business Information System

  • The only beneficial owner will be you (natural person) since you're the only owner of the company.
  • You can do this by clicking on "Tosiasialliset edunsaajat (omistajat)" in Business Information System once you login and following the instructions.

• Remember that the legal purpose of your company is to generate profits.

  • This is based on Limited Liability Companies Act:

    Section 5 - Purpose

    The purpose of a company is to generate profits for the shareholders, unless otherwise provided in the Articles of Association.

  • That is why, for example, you cannot give a loan with 0% interest from your company to other natural persons or legal entities, as that wouldn't generate profits for your company.

Foundation - what to do after you establish your company

Apply for general housing allowance

Source of truth: Kela general housing allowance page

What is it? General housing allowance supports you with housing costs. Based on Suomi.fi:

As an entrepreneur, you are entitled to the general housing allowance under the same conditions as anyone else.

How much? Based on the simplified assumption that your only source of personal income is startup grant and you don't live with another person in the same household, general housing allowance is ~395€ per month, tax free, for a studio in Helsinki. You can use source of truth calculator for exact figures.

What counts as a self-employed person's income from Kela's perspective?

• Your company:
  • is a legal entity with a business ID (Y-tunnus)
  • can act like a natural person from the perspective of law
  • pays taxes on its profits in the form of corporate taxation, 20%, once a year
• You:
  • are a natural person with a personal ID (Henkilötunnus)
  • are a natural person from the perspective of law
  • pay taxes on your income in the form of personal taxation, at progressive rates, whenever you receive income
• For the purpose of answering what counts as a self-employed person's income from Kela's perspective, your company's income is irrelevant.
• Your income is relevant. If you have YEL:
  • Your YEL income is counted as your income, nothing else.
  • You do not need to apply for general housing allowance review unless you change your YEL income.
• If you don't have YEL:
  • All your income (salary, benefits, dividends, etc) counts as your income.
  • You need to apply for general housing allowance review if your income increases by 400€ per month.

Steps:

• Apply for general housing allowance electronically.
• Mention in application that you have received a positive decision to your startup grant application and you have quit your job.
• Attach your startup grant official decision letter which has come via post to the application.
• Attach your employment certificate which mentions the final date of your employment to the application.
• If you don't have the attachments ready, you can still attach them to the application for ~10 days after sending the application.
• You will receive a decision in ~3 weeks (official estimation).

Open a business bank account

What is it? A business account for your company's business activities.

How much? ~40€ per month. Base prices might start from ~10€ but in business accounts, unlike personal accounts, almost anything that happens in the eco-system of your business will cost you something and will drive the total cost to around ~40€. Revolut for Business and some other foreign fintech companies also provide free alternatives, which may be suitable if you only have a few transactions a month.

Comparison of services:

1. Revolut for Business provides customer service through an online chat instead. There is a phone number for closing a lost or stolen card.

Steps:

• Open a business account in your desired bank.
• Once your business account is set up, you can give a 1,000€ loan from your personal account to your company so that you can immediately start paying business costs from your business account.
• Later when your client pays your first sales invoice, you can return the 1,000€ loan to your personal bank account.

Find an accountant

What is it? Having an accountant isn't mandatory by law. Having an accountant doesn't mean you can hide behind them in tax inspections by the Tax Administration. As the CEO of your company, the ultimate and absolute responsibility for having everything related to your company correct is on you and only you. That is why it's important to have a reliable accountant who can correct your mistakes and fulfill your company's obligations on your behalf. Because when the law comes to you in the form of random tax inspections, you can't go back in time and fix your mistakes.

In addition to that, your accountant can help you do legal tax planning. Tax planning means using legal mechanisms to reduce the total tax liability of your company. Your accountant has the best understanding of your company and is in the best position to advise you on taxation matters.

How much? Varies. Accountants will either charge you hourly or a fixed price, which is based on their estimation of how much time they'll spend per month on your business. A freelancing company for the target audience of this guide with no other activities will take at least an hour or two of their time, and if we take a 75€/hour rate, you should expect to pay at least 75-150€ per month.

List of accountants who offer English services as well:

• eAccounting Finland -> They all speak English
• Firmally
• KT Kirjanpito Outi & Viivu speak English and specialize in micro businesses
• Valjas
• Lemontree offers English services even though their website is only in Finnish

Steps:

• Investigate to find a reliable accountant for your company. Your accountant assumes responsibility for obligations which are ultimately yours, so this is an important step.
• Contact your accountant in mind:
  • Explain that your business is about IT freelancing
  • Tell if you have a client already, or expecting one soon
  • Mention your estimated amount of monthly business activity and purchase receipts that they have to process.
    • If you don't know, for the target audience of this guide, ~15 receipts per month is a rough estimation.
  • Mention your bank account provider
• Accountant will take it from there.

Buy social security insurance YEL

Source of truth: ETK Finnish Center for Pensions

What is it? YEL (sv: FöPL) is a mandatory social security insurance for self-employed persons. YEL official name is very misleading (Self-Employed Person’s Pensions Act), because YEL determines your entire social security benefits, not just your pension.

For example, if you get sick, your daily sickness allowance is calculated based on your YEL. The more you pay for YEL, the more daily sickness allowance you get.

Similarly, when you want to buy a health insurance, no insurance company will sell you one without YEL. Because YEL is the foundation and a private health insurance builds on top of YEL.

What is YEL income and YEL contribution?

• YEL income:
  • Has absolutely nothing to do with your real world income (salary, benefits, dividends, etc).
  • Is how much coverage you will have in social security benefits.
  • Has a minimum of ~9,300€ and a maximum of ~204,500€ per year.
  • Before 2023, you had complete freedom to choose the minimum.
  • From 2023, you must estimate the correct level of YEL income and select it accordingly.
• YEL contribution:
  • Is how much you pay for your coverage.
  • Is ~19% of your YEL income, which means you pay ~1,750€ up to ~37,800€ per year as a business cost.

* Taken from Varma's YEL calculator

Steps:

• You have 6 months from starting self-employment to buy YEL.

  • If, however, your company has not had income equal to minimum YEL income, i.e. ~9,300€, you do not need to buy YEL yet.
  • When your company gets income above the level of minimum YEL income, you'll have to buy YEL within the 6 months mentioned above.
  • Even though you have 6 months to buy YEL, if e.g. you had to buy YEL from the 3rd month because that's when your company had more than ~9,300€ of income, even if you buy YEL in the 5th month, you'll have to select the starting date of YEL to be from the 3rd month as that's the date when you were obligated to buy YEL anyway.

• Buy YEL from an YEL insurance provider:

  • elo
  • varma
  • ilmarinen
  • veritas

Understand your new personal taxation situation

Source of truth: Tax Administration

What is it? As a self-employed person, your payslip is going to be different than what you used to have as an employee and practically speaking, you only pay income tax and nothing else.

How is the payslip for an employee? Imagine a basic example, in which an employee receives 1,000€ salary, and his/her tax card says their tax is 35%.

From the employee's perspective:

1. The employer withholds 35% of 1,000€ as income tax => 350€
2. The employer withholds 7.30% of 1,000€ as TyEL pension insurance contribution => 73€
3. The employer withholds 0.89% of 1,000€ as unemployment insurance contribution => 8.9€
4. The employer pays withheld amount of 431.90€ to Tax Administration and other insurance providers.
5. The employee receives the rest which is 568.1€.

From the employer's perspective:

1. The employer has to pay 17.10% of 1,000€ as Employee's pension insurance contribution => 171€
2. The employer has to pay 1.23% of 1,000€ as Employer’s unemployment insurance contribution => 12.3€
3. The employer has to pay 0.54% of 1,000€ as Occupational accident and disease insurance contribution => 5.4€
4. The employer has to pay 0.06% of 1,000€ as Group life insurance contribution => 0.6€
5. The employer has to pay 1.91% of 1,000€ as Employers’ health insurance contribution => 19.10€
6. The employer pays 208.4€ to Tax Administration and other insurance providers.

How is the payslip for a self-employed? Imagine a basic example, in which a self-employed person receives 1,000€ salary from their own company, and his/her tax card says their tax is 35%.

From the self-employed's perspective:

1. Their company withholds 35% of 1,000€ as income tax => 350€
2. Their company pays withheld amount of 350€ to Tax Administration.
3. The self-employed receives the rest which is 650€.

From the company's perspective:

1. The company has to pay 1.91% of 1,000€ as Employers’ health insurance contribution => 19.10€
2. The company pays 19.10€ to Tax Administration.

What's the practical conclusion? Because Employers’ health insurance contribution is such a small percentage, in the rest of this guide, I will intentionally assume that the self-employed people only pay income tax and nothing else.

Consider buying corporate liability insurance

What is it? An insurance to cover the potential damages you may cause to your client while freelancing. For example, if you drop the production database and it would take 5 hours to recover from that mistake, and your client claims 100,000€ in damages for those 5 hours, corporate liability insurance may cover it.

When is it necessary? Even though it's not mandatory by law, it may be mandatory by the contract you'll sign with freelance brokers or the client itself.

Some components of a corporate liability insurance, like legal expenses insurance, require you to have signed the corporate liability insurance before signing your project contract in order for the insurance cover to be valid. If that is the case and you have already signed the project contract, discuss with the insurance agent to find a solution to the problem.

How much? Insurance companies decide the price based on a number of factors including but not limited to your main line of business and your estimated annual revenue. I have received offers from ~200€ up to ~500€ per year from different insurance providers.

Corporate liability insurance providers:

• if corporate liability insurance
  • Insurance offer available in Finnish, Swedish, and English.
• OP corporate liability insurance
  • Insurance offer available in Finnish and Swedish.
• Lähitapiola corporate liability insurance
  • Insurance offer available in ?
  • Online service available in ?

Consider joining a union

What is it? A union is an organization which can offer its members certain services at a much lower price and lobby the interests of its members with relevant authorities.

How much? ~185€ per year.

When is it necessary? Given the union membership fee, and the 400€+ average hourly rate of lawyers in Finland, if you have 2-4 questions about running your business per year, the membership fee will pay itself back.

For example, I had a question about corporate law, and wanted to know what happens if my Deputy Member of the Board of Directors leaves the company. I called the union and within 5 minutes, I was talking with a lawyer who knew about corporate law and got my answer.

In addition to that, unions negotiate the self-employed interests, i.e. your interests. For example, from July 2019, you no longer have to put 2,500€ initial capital into the company when establishing a limited liability company. This was one of the agenda points from Suomen Yrittäjät union which turned into reality in the end.

Unions:

• Suomen Yrittäjät - Finnish Entrepreneurs
• Kauppakamari - Finland chamber of commerce
  • Helsinki chamber of commerce

Consider joining an unemployment fund

Source of truth: Kela unemployment page and Unemployment Fund for the self-employed

What is it? There are two types of unemployment benefits:

1. Basic unemployment allowance, which is paid by Kela and the amount is the same for everyone, ~700€ per month.
2. Earnings-related unemployment allowance, which is paid by unemployment funds and the amount for the self-employed people depends on their YEL income.

You can only apply for earnings-related unemployment allowance if you're part of an unemployment fund.

How much? Depends on your YEL income. Unemployment law enforces a higher minimum YEL income if you wish to be part of an unemployment fund. In 2025, the minimum level is ~15,200€ per year of YEL income, and with that, the membership fee is ~95€ per year.

When is it necessary? If you wish to get earnings-related unemployment allowance in case of unemployment.

Note that receiving any kind of unemployment allowance requires permanent closure of your company and registering as a job-seeker to be a full-time employee again, among other things.

* Taken from an old brochure of Unemployment Fund for the self-employed

Steps:

• According to Federation of Unemployment Funds in Finland (TYJ), there's only one unemployment fund for the self-employed.
• Join Unemployment Fund for the self-employed.

Consider arranging statutory preventive occupational healthcare (SPOH)

Source of truth: Vero's guidelines on occupational healthcare

What is it? SPOH is a system designed to prevent work-related illnesses and accidents.

Kela's quick guide on SPOH is exceptionally well-written and gives you an excellent overview of the whole process.

• Statutory means it's required by law. That's the case for all companies with at least one employee. However, as a self-employed person, you are not required to arrange SPOH for yourself as you're not employing anyone.

• Preventive means it's meant to prevent problems, not deal with problems after they happen.

  • Preventing problems means, for example, conducting a workplace survey and compiling an action plan (explained below).
  • Dealing with problems means getting medical care (from nurses, doctors, etc), which is outside the scope of SPOH.

• Occupational healthcare means it's work-related. Therefore, it's arranged and paid for by the company.

What is a workplace survey? It's when an occupational healthcare professional visits your workplace to assess health risks and propose measures to improve your working conditions and your work ability. The workplace survey results in an action plan.

What is an action plan? It's a free-form document, based on workplace survey, that specifies the general objectives of your SPOH. Some SPOH providers artificially cap the validity period of an action plan to 5 years, even though there's no legal requirement to do so. Action plan must be reviewed annually together with the provider.

When should I arrange SPOH for myself? Using healthcare services (doctors, dentists, etc) costs money (healthcare fees, insurance premiums, etc). These costs, from the taxation perspective, are your personal costs. If you want your company to offer healthcare services to you, tax-free, it is only possible if those healthcare services are included in the action plan of your SPOH.

How much?

• Workplace survey costs ~200€
• Annual review of action plan costs from ~100€ to ~200€
• If you have YEL, Kela would reimburse 60% of these costs to your company.

Steps:

• Request a quote from SPOH providers.
  • From your local health station.
  • Terveystalo
  • Mehiläinen
  • Heltti
  • Pihlajalinna
  • Aava
• Evaluate each quote.
  • What are the start-up costs (workplace survey, action plan, etc)?
  • What are the annual costs (action plan review, etc)?
  • Do they apply for Kela reimbursements on your behalf, or should you do it yourself?
• Purchase SPOH from the best provider.

Consider buying health insurance

Source of truth: Vero's guidelines on health insurance and voluntary insurances

What is it? Your company can buy a health insurance that covers your medical expenses. This allows you to get private medical care, instead of public, so you can get back to work as soon as possible.

What kind of an expense is a health insurance?

• If your company follows Vero's conditions for tax-exemption, it's a personnel benefit.
• If your company fails to follow Vero's conditions for tax-exemption, it's taxable income for you.

What are Vero's conditions for tax-exemption?

• Health insurance must meet the general requirements that apply to all personnel benefits.
• Health insurance must be part of the action plan of your statutory preventive occupational healthcare.
• Health insurance premium should not be more than 1000€ under any circumstances.
• Health insurance maximum compensation per individual illness/accident should not be more than 10,000€.

How do public and private compare?

• In public:
  • You can only go to your local health station.
  • You can only book an appointment online after a healthcare professional has assessed your situation.
  • You cannot jump the [Nurse -> Doctor -> Specialist] rule.
  • Finnish law protects you from paying more than ~765€/year for medical expenses or ~635€/year for medicine.
• In private:
  • You can go to any health station you like.
  • You can book an appointment online, usually for the same day or the day after.
  • You can book directly with a specialist if you like.
  • It's expensive.

Steps:

• Prepare the information that providers will most likely ask for.
  • Your company's main line of business.
  • Your company's estimated annual revenue.
  • Your YEL income.
• Request a quote from health insurance providers.
  • OP
  • If
  • Turva
  • Fennia
  • LähiTapiola
• Evaluate each quote.
  • Do you need to fill a health declaration form?
  • Do they support direct billing so you don't have to apply for reimbursements yourself?
  • Who's responsible for paying the deductible (if any)? Your company, or yourself?
  • Does it comply with Vero's conditions for tax-exemption?
• Purchase health insurance from the best provider.

Consider buying voluntary pension insurance

Source of truth: Tax Administration

What is it? On top of YEL, which is mandatory, you can buy voluntary pension insurance. Payouts can start at the age of ~70 and have to be paid out during at least 10 years of time. Depending on the provider, you can typically choose what to do with the money in the insurance (invest in stocks/bonds/etc).

How much? Depends on the coverage you choose. The higher the coverage, the more you pay in premiums. Premiums are a business expense and fully tax-deductible up to 8,500€/year. Above this limit, premiums will be taxed as personal income for you, the self-employed.

How does it differ from YEL? If you die before reaching the pension age, what you've accumulated and paid for YEL goes to /dev/null and disappears. With voluntary pension insurance, you can include a life insurance, so that your spouse or some other beneficiary can inherit the full value of the voluntary pension insurance you have accumulated and paid for.

Voluntary pension insurance providers:

• LähiTapiola (LokalTapiola)
• Mandatum, formerly part of the Sampo Group
• OP (Osuuspankki/Andelsbanken)

Consider selling your personal work-related tools to your company

Source of truth: Tax Administration

What is it? When you were an employee, your employer gave you work-related tools like laptop, phone, desk and a chair to do your work. Now, your company (legal entity) can buy from you (natural person) work-related tools in a similar fashion.

When is it useful? If you didn't have work-related tools when you started your company, you would have bought them from company's money as business costs. Now, by selling what you already have to the company, it's as if you're retroactively turning what used to be a personal cost into a business cost.

How much? Their current fair market value. If you bought an iPhone for 1,000€ two years ago, and you sell it to your company for 500€ because in most 2nd hand stores you see that the market price is ~500€ nowadays, that's a fair market value. If you sell it for 950€, tax administration might consider that a disguised dividend to the owner.

Steps:

• List all work-related items you'd like to sell to your company. Here are some items you might have had before you started your company:
  • Laptop
  • Phone
  • Desk
  • Chair
  • Printer
  • Offline storage devices
• Take a picture of the item and its receipt if you still have it to prove the item actually exists as an attachment to the invoice you'll be sending to your company.
• Take a picture of a 2nd hand store advertisement for an item similar to yours to prove that you were in the ballpark of their fair market value as an attachment to the invoice you'll be sending to your company.
• Create a contract which includes the followings as an attachment to the invoice you'll be sending to your company:
  • Who is buying
  • Who is selling
  • What is being sold and their fair market value price
  • Signature, place, and date
• Send an invoice to your company with all the attachments above.
• Your company won't get any VAT refunds from the items it buys from you. This is because you, as the natural person, are not registered in VAT-register. It doesn't matter if you mention the price of the laptop for example includes 25.5% VAT; in your company's accounting, it'll be VAT 0% anyway.

Operation - what to do to run your company

Offer yourself benefits that you like

Source of truth: Vero's guidelines on Fringe Benefits and Personnel Benefits

What is it? Remember when you were an employee and your employer gave you benefits (lunch, phone, etc)? As a self-employed person, your company can offer you any benefit that you like too.

How many types of benefits are there? There are 2 types of benefits:

• Fringe benefits are just like salary but in another form than money. And just like salary, fringe benefits must be reported to the Incomes Register, even if the offered benefit is within the tax-free limits. Generally, fringe benefits are reported on a monthly basis, unless otherwise specified.

• Personnel benefits are reasonable benefits provided to all staff, which means only you, the self-employed. Personnel benefits are not supposed to be compensation for work performed; therefore, you don't need to report them to the Incomes Register.

What are the most common benefits?

• Commuting benefit (fringe benefit): Tax-free up to 3,400€ per year. If the value of the benefit is more than 900€, you need to prove to your company how much does it actually cost you to travel between home and workplace. You don't need to do this, however, if you offer yourself this benefit up to 900€. This benefit can be reported to the Incomes Register annually.
• Accommodation benefit (fringe benefit): Taxable value of the accomodation benefit is calculated every year according to Vero's decision. In Helsinki inner city, it's ~300€ + ~13€ per square metre. So, a 50m² apartment's taxable value is ~950€. If unlimited electricity is included in the accomodation benefit, ~1€/m² should be added to the taxable value.
• Car benefit (fringe benefit): Taxable value of the car benefit is calculated every year according to Vero's decision. You can use Vero's calculator to get an estimate.
• Bicycle benefit (fringe benefit): Tax-free up to 1,200€ per year. This benefit can be reported to the Incomes Register annually.
• Lunch benefit (fringe benefit): Taxable value of the lunch benefit is 75% of the maximum amount (~14€/working day).
• Phone benefit (fringe benefit): If you use separate phone subscriptions for business and personal life, you can pay the business subscription directly from the company, as it's a business cost. However, if you want to use a single subscription for both business and personal life, then you must offer it as a phone benefit. Taxable value of the phone benefit is 20€. In certain situations, you can report the phone benefit once a year in advance.
• Wellbeing benefit (personnel benefit): Tax-free up to 3,000€ per year. Using this benefit, you can only pay for services that promote your work ability, not your aesthetics. These include dental care (check-ups, fillings, removing tartar), medical care (doctors, specialists, etc), and physiotherapy, among others. Additionally, each service and its scope has to be part of the action plan of your statutory preventive occupational healthcare.
• Massage benefit (personnel benefit): Tax-free up to 400€ per year.
• Sports and cultural activities benefit (personnel benefit): Tax-free up to 400€ per year.
• Internet subscription benefit (personnel benefit): Tax-free up to 1 subscription per personnel. You cannot attach entertainment services (Netflix, HBO, etc) to the internet subscription if you want the benefit to remain tax-free.

Can you offer yourself only fringe benefits? Yes you can, but you must take a big enough salary to cover the income tax of the fringe benefits you're offering yourself.

For example, let's say in March, your company paid your phone bill and therefore you must offer yourself a 20€-phone-benefit. You want no additional salary and your tax rate is 10%.

10% of 20€-phone-benefit is 2€. This means that you must take a big enough salary in March to cover this 2€ tax that you have to pay. Therefore, in March, your salary must be 2.22€. When you deduct your 10% tax from 2.22€ salary, 2€ is left, which will cover the 2€ tax that you have to pay for 20€-phone-benefit.

Should you offer yourself benefits above the tax-free limits? You can, but it will be just like taking a salary.

As seen in understanding your new personal taxation situation, the self-employed only pay income tax on their income and nothing else. Therefore:

• If you offer yourself 1,000€ as salary, and your tax rate is 35%, you pay 350€ in taxes.
• If you offer yourself 1,000€ as benefit (above the limit), and your tax rate is 35%, you pay 350€ in taxes.

Who ensures that you don't go above the tax-free limits? Your company, the legal entity, must ensure that its owner, you as the natural person, is not offered benefits above the tax-free limits, because if you are offered, it must be reported and taxed. This is important, because you as the representative of the company can order even 10,000€ of Sports and cultural activities benefit. But the moment you make that 10,000€ benefit available to yourself, 400€ will be tax-free and the rest (9,600€) is counted as salary for you, which you must report and pay tax on.

Steps:

• Choose the benefits you'd like to offer yourself.
• Educate yourself on each of the benefits you're gonna offer yourself.
  • This is necessary because each benefit has many rules you must follow for it to remain tax-free.
  • Therefore, it's wise to invest this time upfront to prevent potential complications with Vero.
  • You can do this by reading the benefit's specific section in Vero's guidelines on fringe benefits and personnel benefits.
• Choose the provider you'd like to offer yourself benefits with.
  • You can offer yourself all available benefits through any of these 3 providers: Edenred — Smartum — ePassi
  • You can use other providers too. For example, in Helsinki, you can offer yourself commuting benefit with HSL.
• Register with the provider and offer yourself the benefits that you'd like.

Offer yourself daily allowance when you travel for business

Source of truth: Tax Administration

What is it? When you travel for business, from the taxation perspective, there are 3 different types of expenses:

• Travel expenses such as flight/train tickets, taxis to-and-from the airport, etc. These are business costs.
• Accommodation expenses such as hotel, Airbnb, etc. These are business costs.
• Increased living expenses for your daily life such as meals, laundry, etc. These are not business costs.

The idea behind daily allowance is to cover the increase in your living expenses, so that your living expenses while travelling would become comparable to your ordinary living expenses.

How much? Between ~30€ and ~120€ per day, tax-free, depending on the destination country.

For example, let's say you travel to a 5-day Python conference in Spain (75€/day). Once you come back to Finland, you are eligible for 5 days of daily allowance (375€).

Steps:

• You need to document your business actions in a daily journal.
• After each day, write down the business actions you took.
  • For example, if you're traveling to Spain to network with freelance developers, write down who you met and what you discussed on a high level.
  • For example, if you're going to a 5-day Python conference, write down what happened in the conference on that day on a high level.
• If you don't take business actions during a particular day, you don't need to document it, and you won't get daily allowance for that day.
• After the trip, send your company a travel invoice.
  • Choose the destination country in your company's accounting software to get the exact daily allowance fee.
  • Write down the number of days in your daily journal in the travel invoice.
  • Attach the daily journal.

Send your invoices carefully

Source of truth: Tax Administration

In general:

• When invoicing individuals, at the very minimum you should include their full name and address in the invoice.

If you're invoicing a company or an individual residing outside EU:

• You do not need to add VAT to your invoice for your freelance services.

If you're invoicing a company or an individual residing in Finland:

• You must add 25.5% VAT to the total amount you're charging them for your freelance services.

If you're invoicing a company or an individual residing within EU:

• You must add 25.5% VAT to the total amount you're charging them for your freelance services.
• You can, however, use reverse-charge mechanism and not add VAT only when you're invoicing a company residing within EU. To do it:
  • You must state the EU company's VAT ID in your invoice.
  • You must ensure that your EU company's VAT ID is valid by checking it in VIES
  • You must mention the exact Reverse Charge words in your invoice.
  • You must state that VAT is to be accounted for by the EU company. However, you must not mention the VAT rate nor the VAT amount to be accounted for by the EU company. This is explained in details in VAT invoice requirements.
  • reverse-charge mechanism works in the other way around too. In some checkout pages, the seller asks for your VAT ID to remove the VAT amount from your purchase invoice. Without this mechanism, the seller could not do that.

Take out money from your company in the most tax optimal way

What is it? Taking money from the company in the most tax optimal way is a million-dollar question. Only a team of competent accountants and competent lawyers specializing in corporate tax law could answer that question. This guide could not be reasonably expected to be of much help to answer that question, as the circumstances for every company are specific. However, an overview of fundamentals can be illustrated.

Can I take out a salary while I'm without a project? If you're without a project, and therefore with little to no revenue, for an extended amount of time (e.g. 2 years), and you're not doing marketing/sales/other things in your company that would justify the salary you'd like to take out, then it's wise to consult with a tax lawyer to see if you can do it. Without consultation with a lawyer and being certain, you have the risk of Vero categorizing the salaries as disguised dividends. So it's not as simple as "I can take out whatever salary I want, whenever I want".

What are the fundamentals in taxation of income in a limited liability company?

* Taken from Finnish Enterprise Agencies guide to becoming an Entrepreneur in Finland

Ensure that your obligations are fulfilled continuously

Tax administration office (Vero):

• Pay your corporate income tax on time using prepayment register, non-recurring obligation: if your company fiscal year ends and you have paid no corporate income tax during the fiscal year, and it turns out you must pay thousands of euros of corporate income tax, then the Tax Administration will add interest on this corporate tax you owe them. To avoid paying interest, pay your corporate income tax before the company fiscal year ends, or within 1 month after it.

• Send VAT reports, recurring obligation: strictly speaking, as the owner of the company, you are responsible to ensure that VAT reports are done every month, not your accountant. Practically, your accountant assumes responsibility for it and will do it herself/himself, but remember that if your accountant fails to do so, you yourself are responsible. Therefore, check before the deadlines if the VAT reports have been done.

• Send EU VAT Recapitulative Statement reports, recurring obligation: if you're invoicing an EU company, you need to report its details. This obligation is similar to VAT reports in the sense that it's fully your responsibility that this report is done correctly and on time, even though your accountant will do this for you.

• Send payroll reports, recurring obligation: if you're taking out salary, Employer Contribution report and Incomes Register report must be done. If you're taking out dividends, specific Dividend report must be done. Your accountant can do these for you.

• Perform monthly bookkeeping, recurring activity: If your reporting cycle for anything is monthly (such as VAT), then it's necessary to perform monthly bookkeeping. In addition, accountants recommend monthly bookkeeping, and I trust their judgement on this. If in a typical software project we regularly do backlog grooming so that the backlog wouldn't become a mess, it is understandable for me why accountants would want to resolve all transactions every month when it's fresh in everyone's mind.

• Submit financial statement and corporate income tax return, recurring obligation: after the fiscal year ends, within 4 months you must submit a financial statement and corporate income tax return. Your accountant can do this for you.

• Share the receipts with your accountant, recurring obligation: Primarily because Tax Administration must know what the purchase was for and whether it was related to your main line of business, although it would also allow you to get the VAT back on eligible purchases.

Business Information System (ytj):

• File notification of changes to company information, non-recurring obligation: any changes to company information has to be notified to Business Information System. For example, if your company's address changes, file a notification of change.

TE-services:

• Apply for startup grant payment, recurring obligation: you must apply for startup grant payment retroactively within 2 months after the month you're applying for. For example, if you're applying for the month of March, you have until end of May to apply.

Kela:

• Apply for statutory preventive occupational healthcare compensation, recurring obligation: you must apply for SPOH compensation, with one application, within 6 months of the end of your company's fiscal year.

References

Calculators:

• Salary vs Dividend ratio optimizer

Guides:

• Suomi.fi
• Finnish Enterprise Agencies guide to becoming an Entrepreneur in Finland

Governmental organizations to provide support for you:

• International House Helsinki

Contributors

Thanks goes to these wonderful people (emoji key):

Final words

Now that you've reached the end, I can tell you that I wrote this guide with both selfish and selfless reasons.

• Selfish reasons:

  • I wanted to make money, and I managed to do it with a few sponsorship deals. I'm happy I've reached this goal 😊

  • I wanted to get more LinkedIn connections, and 100+ people did connect with me because of this guide 😊 That's more than I could have asked for. Many thanks to each and every one of you 🙌🏼

• Selfless reasons:

  • Software developers and the community are extremely generous and having been mostly taking, I wanted to give back as well.
  • From the bottom of my heart, I wanted to help you start your freelance journey and that this guide would save you the headache of having to read so many pages of different guides to do things correctly and in the right order.
  • I like it that when you have your own company, the profits generated get distributed more proportionally to those involved compared to being an employee, and so I was hoping by providing some exact figures on revenues and costs, I'd inspire you to take a bigger risk and be proportionally compensated for it.