Is a Finnish company taxed on income or profit?

[rob34]

Let's say you have an LLC (limited liability company) and you make 1000€ net income in one year.

Then let's say you roll all of that 1000€ back into your LLC.

The "profit" for your company is essentially zero, because it made no money.

So the first question. Do you pay zero tax because the company made no money?

Also to complicate that matter, let's say that 100€ of your business expenses were tax deductible. What now? If you paid zero tax, can you still claim this 100€ from the government... or are you taxed on income, but you will be taxed for 900€ instead of 1000€?

Thanks.

[raamv]

Taxed on Income, ( Taxable income minus deductions)
Corporate tax on income is 26%
Capital Gains ( or tax on profit) is 28%

[rob34]

Taxed on Income, ( Taxable income minus deductions)
Then its 22% capital gains on profit..

22% capital gains no matter what the profit is?


Do you have a link for these, by the way?

Thanks for the info.

[Charles Monk]

[quote="rob34"]
Then let's say you roll all of that 1000€ back into your LLC.
quote]

What do you mean by "rolling it all back in"?

CM

[raamv]

Taxed on Income, ( Taxable income minus deductions)
Then its 22% capital gains on profit..

22% capital gains no matter what the profit is?


Do you have a link for these, by the way?

Thanks for the info.

Apologize, its Corporate income tax of 26%. ( I confused the VAT %)
( Reference section 2.1.4 of http://www.vero.fi/nc/doc/download.asp?id=4151;1035296 )

Tax guide to doing business in Finland starts here :
http://www.vero.fi/nc/viewarticle.asp?p ... nguage=ENG
( Click on above top links for more info
e.g. corporate taxation is here:
http://www.vero.fi/nc/viewarticle.asp?p ... nguage=ENG)


If you going to start-up a business here is some info:
http://www.ytj.fi/english/
Check this link about obligations of a foreign employer ( Tax depends on whether your company is permenant or not in Finland:
http://www.vero.fi/nc/doc/download.asp?id=914;37844)

Also check the VAT if you are going to sell goods/services here:http://www.vero.fi/nc/doc/download.asp?id=3516;67701

[cressers]

So what if you are selling a service rather than a product?

Would that be classed as domestic sales?

Then it would depend on income-expenses??

[raamv]

So what if you are selling a service rather than a product?

Would that be classed as domestic sales?

Then it would depend on income-expenses??

From what I read, the VAT on product or service are the same ( Some exceptions of services has vat of 13% but not sure which ones are )
Corporate tax is tax on income whether you are selling a product or a service..so dont matter..
Company Expenses are tax deductible according tot he expense deductions anyways..
so what was your question ?

[cressers]

ok pretty much what you answered

Yearly income selling service- yearly expenses = yearly taxable income paid once per year

[raamv]

ok pretty much what you answered

Yearly income selling service- yearly expenses = yearly taxable income paid once per year

Yes, but if you are a company, you ne4ed to file taxes monthly!!

[Rosamunda]

If you are talking about a limited company Oy then....

Corporate tax is due on your PROFITS @ 26% as stated in the accounts at the end of the fiscal year (this is corporate taxation).
In reality it is slightly more complicated than that as there are differences in deductibles between the Accounting Act and the Corporate Tax Act so ask your accountant or the tax office for a full explanation, or buy a book.

The tax rate of capital income is a flat 28% (this is personal taxation). However you would have to ask the tax office for more info as taxation depends also on the company's net property and the number of dividends distributed.

So you are, in effect, hit twice.

If you chose to put the retained earnings (ie profit after tax) back into the business rather than distribute them to the shareholders (ie yourself) then you would only pay the corporation tax, not the personal tax.

Understanding all this is easier if you separate corporate taxation and personal taxation which are two different things (even though as an entrepreneur they both hit you).


raamv: only VAT is filed/due monthly, ie the 15th of the second month following the business operation. The final company accounts ( (GB) Profit & Loss or (US) income statement) for the calculation of corporation tax are due within two months after the end of the company's fiscal year end. Mine is June 30th (so I file at the end of August) but most companies close their books on 31st December. You can chose any date.

[Upphew]

The tax rate of capital income is a flat 28% (this is personal taxation). However you would have to ask the tax office for more info as taxation depends also on the company's net property and the number of dividends distributed.

Tax rate is 28% from 70% of the capital income from Oyj. From "normal" Oy its tax free for up to 90 000, if that 90k is 9% or less from a mathematical value of the stock. After that it is 28% of the 70% over the 90k... clear ain't it

And I am not a tax expert, I just read that from vero.fi and might be wrong!

[raamv]

Thanx for that info Penny and Upphew!!

[Rosamunda]

The tax rate of capital income is a flat 28% (this is personal taxation). However you would have to ask the tax office for more info as taxation depends also on the company's net property and the number of dividends distributed.

Tax rate is 28% from 70% of the capital income from Oyj. From "normal" Oy its tax free for up to 90 000, if that 90k is 9% or less from a mathematical value of the stock. After that it is 28% of the 70% over the 90k... clear ain't it

And I am not a tax expert, I just read that from vero.fi and might be wrong!

I don't think you are wrong, that sounds about right to me. I just couldn't be bothered to explain it.

[Keplerinvaimo]

If your income is large enough then there is a tax payment due each month (on the 23rd). The amount is based on your previous years' trading. You can apply to change the monthly installments (up or down) if your trading is significantly different to the previous year. Once your income is finalised, and your annual tax bill calculated, the prepaid tax is deducted. Either you pay the difference or get a refund...

Heather

[olaadewale]

What about Partnership. How did Finnish government tax their income or net profit. How can one go about the registration as a foreigner, what are the don't and does.
Thanks