Young entrepreneur's maternity and sickness

[Meresjeva]

Dear all,

I can't decide to YEL or not to YEL. I wonder if you can advise.

On 1st of May 2010, I've registered a toiminimi, tourist services on the Archipelago (rent-outs+catering). Registered for VAT payments as well as with YEL (Veritas pension fund), made my first pension contribution.

Got a small renovation credit in the bank, received a decent sum back in VAT on building materials, paid some VAT on sold services (a much smaller one).

Since the renovation of my hotel has not been finished in time, I gained a lovely MINUS 15 699 euros during the first financial year.
I have stated that the 2011 financial year estimated income will be 6896 euros. I've just received the pension premium calculations but haven't paid the bill yet, since I think now the income will be even lower, and here's why:

I have recently found out that I am pregnant with triplets. A total surprise, though not unpleasant at all. Doctors say that I'll have to stop working early: triplet pregnancy is harder than usual and the risks are high, in America they send you on a bed rest straight away:)

Veritas pension fund policy is not to pay any sickness allowance or maternity allowance, if you haven't been with them for over 24 months. I have been with them only for 11 months.

Questions are:

1) will KELA pay the sickness and the maternity allowance, since the real (not estimated) income of a young entrepreneur is very low? Lower than nil? I do have a KELA card, got it a couple of months ago.

2) Can I extract the 2010 income pension %% from Veritas without losing VAT registration for 2010 (as in, will verotoimisto make me pay the VAT deductions back or not)?

3) Maybe I should drop the YEL payments completely due to very low income? Will I stay VAT registered if I do so? Maybe I should just postpone the pension premium payments due to the current financial situation?

4) Maybe I should drop just about everything and become yet another foreigner-on-benefits?:) Seriously, it seems to be more profitable than being a working mother of triplets. But toiminimi means personal (not company) debt responsibility... And I myself prefer to keep the business... if possible. Plus, rental services can be really profitable on the Archipelago. I have land (and permissions) to build much more than now... There's really a lot of possibilities.

Somehow I'm under impression that it's just a tough start... The worst part of the renovation is now finished and Archipelago's a great place to live, especially for kids. So...

I'll appreciate your advice.

Thank you.

Tania.

[Rosamunda]

Those questions are so detailed I think you need to speak directly to someone at your KELA office. You could also try sending an email to www.intofinland.fi with your questions (they don't have a phone line).

As for (4)... which benefits are you referring to? I think there are quite a few people lurking on this forum who would be interested to know the answer to that question.

Anyway, good luck with the pregnancy, and the business... I'd be interested in staying overnight in the archipelago in the summer... maybe you could PM me your address?

[Meresjeva]

Those questions are so detailed I think you need to speak directly to someone at your KELA office. You could also try sending an email to http://www.intofinland.fi with your questions (they don't have a phone line).

As for (4)... which benefits are you referring to? I think there are quite a few people lurking on this forum who would be interested to know the answer to that question.

Anyway, good luck with the pregnancy, and the business... I'd be interested in staying overnight in the archipelago in the summer... maybe you could PM me your address?

Penelope, thanks, and you're most welcome!
I'm going to finish the renovation by 15th of June.

I've sent IntoFinland a letter, and messaged the local KELA too. I'll try to post a sensible reply here if I get one.

As for (4) - I mean the whole unemployment package. This variant was offered to me as one of the options in a local TE-keskus, but I wanted a business and chose it, so don't know the benefits details. I am under impression I won't go for the unemployment really, just need to moan! Maybe I should post in Tea and Sympathy instead:)

[Rosamunda]

Not many foreigners I know can claim the "full" unemployment package. In order to receive a "comfortable" income while unemployed you need to have had a pretty good job at some point in time + paid your union membership. So even foreigners who have been working on full-time permanent contracts (eg with Nokia) won't get big money whilst unemployed if nobody told them to join a union...

Foreigners living on unemployment benefits are something of a rarity up here.

[Rip]

In order to receive a "comfortable" income while unemployed you need to have had a pretty good job at some point in time + paid your union membership.

unemployment fund membership fee, not necessarily union membership fee (which includes fund fee).

[Meresjeva]

So far, so good.

InTo Finland+the pension fund itself clarified the situation with the ALV and YEL payments.

InTo Finland wrote:
>>The earned income is the basis for the insurance (the Self-Employed Persons' Pensions Act YEL). The income should correspond to the work effort of the self-employed person (financial value of the work effort).

Now that's different from what was written in the pension fund explanations which I read before joining. They said that the payments should be the same as, say, the salary you'd pay someone else to do the same job. Reality is, the payments should correspond to the net income you calculate in the end of the year for the tax office. It is obviously hard to calculate it correctlyin the first year, before any work has started, that's why the complications occurred.

The pension fund agreed to this and offered to return me all the money I paid to them, also to drop or freeze further payments until I start earning more.

The VAT (ALV) payments (and returns), as it turns out, are independent of pension insurance contribution.

>>Your pension amount and the insurance contribution do not affect to the value added tax payments
(wrote InTo Finland).

As far as sickness and maternity allowance, no straight answer yet, but I was digging further and found out that I will receive sickness payments anyway (I worked for more than 3 months). Maternity is still unclear, but in the worst case scenario the payments will start 7 months after the KELA cortti was issued. In the best case scenario, they'd start as usual, calculated from the KELA päätos day which is the same as my company set-up date.

[filecore]

InTo Finland wrote:
>>The earned income is the basis for the insurance (the Self-Employed Persons' Pensions Act YEL). The income should correspond to the work effort of the self-employed person (financial value of the work effort).

This is correct. However, I do believe there's a minimum theoretical income level at which you can state your YEL (at least that's what I was told) - something like the payment level based off a basic income of 10,500 euros/year.

The VAT (ALV) payments (and returns), as it turns out, are independent of pension insurance contribution.

>>Your pension amount and the insurance contribution do not affect to the value added tax payments
(wrote InTo Finland).

Also correct - VAT is paid based on estimated real income (in advance) or actual real income (at the end of the year). YEL is a 'voluntary' payment in the sense that you can pay as much or as little as you like (see the caveat above) so long as you meet the minimum. It's a statuatory requirement for all businesses, which is why you have to pay it at all. But you could earn 40,000 per year and still pay the minimum YEL, that's totally legal; all you are doing is reducing your statuatory state pension to its bare minimum return level when you retire. But you'll surely be investing in a decent private pension fund in any case, so it will generally not be a problem.