Hairstylist Tax Reduction

[gurmukh]

Hey Guys

I remember reading somewhere that the income tax for hair dressers would be reduced to 8% in January but now I cannot seem to find it anywhere. Most people I have spoken to have mentioned that they are all registered as self employed, but im sure I read the government was going to assess this ?

G

[EP]

Income tax % depends on how much you earn, not what you do for work.

[Upphew]

VAT, not income.

[Rosamunda]

And it is an interim measure until the end of 2010. Doesn't matter whether the hairdresser is self-employed (toiminimi) or if it is a salon (limited company).

http://www.vero.fi/nc/doc/download.asp?id=4151;1035296

section 6.9

6.9 Tax rates

The standard rate of VAT is 22 per cent (of the price excluding tax).
A reduced tax rate of 8 per cent is applied to the following commodities:

• books;
• medicines;
• passenger transport services;
• accommodation services;
• services enabling sporting activities;
• admissions to commercial sporting, cultural and entertainment performances, events and facilities;
• subsidies based on the licence fees from the radio and television fund to the Finnish Broadcasting Company and similar subsidies to Åland Radio and TV;
• the sale of a work of art by the artist and the importation of works of art;
• hairdressing (as an interim measure until the end of 2010);
• minor repairing of bicycles, shoes and leather goods and clothing and household linen (as an interim measure until the end of 2010).
• copyright payments received by copyright organisations.

[gurmukh]

Thanks Penelope, that's what I was looking for!

So for 1 year only if the person is not self employed but actually an employee of the salon, their VAT would be decreased dramatically?

[Upphew]

And it is an interim measure until the end of 2010. Doesn't matter whether the hairdresser is self-employed (toiminimi) or if it is a salon (limited company).

So for 1 year only if the person is not self employed but actually an employee of the salon, their VAT would be decreased dramatically?

[Mook]

VAT is charged on the amount the customer pays for a haircut.

So, if it's now 8% it means that the business will get more money per haircut (so could reduce the price).

It has nothing to do with what the employee gets paid.

[gurmukh]

VAT is charged on the amount the customer pays for a haircut.

So, if it's now 8% it means that the business will get more money per haircut (so could reduce the price).

It has nothing to do with what the employee gets paid.

thanks Mook! Its perfectly clear now. Thanks guys!

[Rosamunda]

Thanks Penelope, that's what I was looking for!

So for 1 year only if the person is not self employed but actually an employee of the salon, their VAT would be decreased dramatically?

My impression is that you do not understand what VAT is. VAT (called ALV in Finnish) is added to goods and services when they are billed to the customer. In order to charge VAT the company (or toiminimi) must be VAT registered. There are some examples in this thread: viewtopic.php?f=37&t=41596

Most goods are services charge 22% VAT. For example, I charge 22% VAT on English language tuition. If you buy a sofa from Ikea you pay 22% VAT on that.

Companies and registered sole traders charge VAT. Consumers pay VAT. A hairdressing salon will charge for example 90 euro for a cut and colour plus 8% VAT or 7,20€ ie 97,29 € is what the customer pays.


The hairdresser if he/she is employed by the salon will be paid an hourly or a monthly wage. As an individual taxpayer the hairdresser pays INCOME TAX on his/her annual estimated earnings. This can be calculated on the Vero tax calculator: http://prosentti.vero.fi/veropros_aloit ... nguage=ENG
Employees do not pay VAT. They pay INCOME TAX and the rate depends on how much they earn in total. I guess a young hairdresser working more or less full-time would be paying at least 15% income tax and possibly more depending on their total income.

If you want someone to explain this to you in detail and you live in Helsinki, then go to http://www.intofinland.fi offices in Kamppi and ask for more information.

[JimmyBang]

the sale of a work of art by the artist and the importation of works of art;

would this include Musicians selling recordings, I wonder

[EP]

8% it means that the business will get more money per haircut (so could reduce the price).

That is a nice thought. BUT in August I payed 37 € for a haircut. In October it was suddenly 48 €. My guess is that after ALV cut it will be 45 €. So yes, the price will go down.)