tax on Oy

[Upphew]

But if my expenses are more than income, I am literally in lose, so, do I have to pay extra burden of 26% corporate tax ? I might be missing something here

You don't pay corporate tax as it is paid from profit. You can deduct your loss this year from profits for the next ten years.

[cors187]

should I pay tax ?

Thats the Russian business model

[Upphew]

should I pay tax ?

Thats the Russian business model

Totally missed that! I'm glad I didn't have tea ready... I'm quite fond of my Key Tronic.

[Rosamunda]

It depends how you did your accounting.

You said you didn't make a profit but... are you sure you didn't make a profit? For example, you cannot deduct capital purchases (eg machines, equipment etc) from your current year's revenue if they will continue to generate revenue in the future. In other words, if you bought a car for your business, you have to depreciate it over several years, you can't deduct it all at once.

Do you have a bookkeeper?

And, VAT has nothing to do with profits. When you calculate your net profit before tax, you should not include any VAT (in the revenue, costs or expenses).

[tjawatts]

No profit, no corporation tax (if you do make a profit it is 24.5% these days)

T

[tjawatts]

And remember the money you put in at the beginning was not an expense. That was an investment.

T

[Rosamunda]

Er... no.

I don't think you will find any company that covers businesses for making a loss.

But as an entrepreneur, you are able to join an unemployment fund (for entrepreneurs) - I'm not sure how/when they pay out but it might be worth investigating for future reference.


Have you done a budget for next year? Will you make a loss? It is quite normal for a start-up company to make a loss in the first year (or two or even more: Amazon didn't make any profits for years and I doubt if Facebook is making any either). But your long term business plan should show profits eventually or your business model is all wrong (eg your pricing, your marketing whatever) and you will almost certainly face cash flow issues so you need to get some advice (do you have a bookkeeper?) - you could try these people : http://www.yrityssuomi.fi/web/enterprise-finland They have centres all over Finland.

[cors187]

Roger the whole premise of your questions really depends on how you distribute the income that the OY gets paid.I think you should go back to "income" first as "tax" is a secondary element according to income.
There is 2 main ways you can get money from your OY
Save this link,and study it.It offers some answers to questions when you go through the link farm.
http://portal.vero.fi/public/default.as ... ntentlan=2

1.Earned income-This means you create a salary earned system in business for yourself.
We can build a link farm with quotes to cover every part of this.
Including or excluding details to create an easy to understand picture.Its not so easy to create the link farm and quotes.Sometimes when i read English translated documents i get the impression that Article3 should have been first, then article2, then article1.
What i read from you is your looking at understanding the bare minimum situations, and when i read those bare minimums in the documents they are often interpreted in Article3.
I often try to build the minimal details for myself because when i study i understand but because of the link farm system the information gets a bit cloudy and i find myself going through documents online, from link to link 3 months later.

2.Capital income-Its basically the money you can take out as a shareholder of the OY.

3. Legal maneuvering for all deductions,step by step guide.Every situation revealed. I guess the more you have control of the OY books(daily book keeping the more a person needs to know).

Your question about employment insurance directly relates to money you take out of the OY as "earned income", because with earned income you will have "obligations", whether they are partial or statutory(another linkfarm), and we know from experience that when an individual contributes into a "specific system ", then they can receive "specific Coverage"

[cors187]

Your first post
I set up a firm as Oy- #Note that reference to the word "firm" is "sole trader"
I am sole trader- I think you should call yourself "self employed OY",note that this link has reference to the sole trader as "private entrepreneur" http://www.yrityssuomi.fi/web/guest/aih ... he=1000008
I put my own money for establishment- Majority Shareholder.
I don't have any other employee and I am the only employee-self employed OY
I don't take salary-links need to be added for clarity
The profit is all mine-Depending on how you pay yourself.http://www.yrityssuomi.fi/web/guest/aih ... he=1000010
But my business haven't made any profit-#non conclusive

[cors187]

LLC=OY
Sole trader/sole trading is not adaptive into LLC companies management or shareholder portfolios...I would not use it in the LLC framework as you are not trading by yourself ever, even if you hold all the shares.
As the shareholder and board member you employed yourself

[cors187]

Part of your aggressive business plan is not to listen to a Finnish-English translated syn·o·nym
It might be retarded in nature.In this instance sole trader is water and LLC management is Oil.They just dont mix.

syn·o·nym
Noun

A word or phrase that means exactly or nearly the same as another word or phrase in the same language,.
A person or thing so closely associated with a particular quality or idea that the mention of their name calls it to mind.

[cors187]

I'm going to add some examples that i may or may not understand ,that's not the point of the post.What I've discovered is that often the general example can be either correct or not correct due to bylaws or exceptions to the rules ,that if those bylaws/exceptions are not presented in the answer then it can be a bit misleading.Exceptions can be added or changed according to legislation.

If we change the Topic heading to Tax on Business
There is 2 identities that are not changeable even though legislation involving those identities can change.
1.A registered Business Identity= Business identity number= BIN
2.General population identity= A living Person= ALP

The ALP is you and I, its everyone, for this example its your grandmother who is fixing her hobby garden.
The BIN can be a Sole Trader an OY,LLC,PTY LTD,Public Company, Private Company, Partnership,Non Profit,whatever type of business it is ,it has been registered and now it is a Business Identity.

BIN1 takes dirt from the ground and makes it available for sale @10euro per unit.BIN1 will sell to anyone even at the smallest unit.
THe point of the post is to show the VAT and how its affected all the way to the Final customer.
All BIN are VAT registered.

Example1-BIN1 sells 10 units@10e to BIN2 who sells 5 units@20e to BIN3 who sells 1 unit@30 euro to ALP=show VAT in formula
Example2-BIN2 sells 1 unit@20e to ALP=show VAT in formula
Example3-BIN1 sells 1 unit @10e to ALP=show VAT in formula

Roger i think this is one of your important questions.Any takers on expressing the VAT?

[Rosamunda]

If A Living Person (ie who has no business ID) is buying and selling goods (even secondhand) in order to make a living then this can be considered as a business and the person should declare the profit as income and pay tax on it. If the revenue exceeds 8500€ p.a. then VAT accounting is required.

There are rules for calculating VAT on secondhand goods (it's called the Margin Scheme - section 79 of the VAT Act), but they are quite complicated. There is probably something on the VERO webpages:

13) If certain goods are being supplied and the supply is governed by § 79 a of the VAT Act, a reference to the application of this procedure or to the relevant Article of the Sixth Directive should be included in the invoice:
If seller is supplying second-hand goods, works of art, antiquities or collectibles and the margin scheme is being applied, the invoice must contain a reference to the margin scheme. Moreover, no amounts of VAT are to be spelled out on the invoice.

For more information on the margin scheme, see the bulletin tavaroiden sekä taide-, keräily- ja antiikkiesineiden marginaaliverotus / Marginalbeskattning av begagnade varor samt konstverk, samlarföremål och antikviteter som tillämpas i momsbeskattningen.

Please note that if seller is applying the procedure of § 79a of the VAT Act, buyer is under no circumstances entitled to deduct the VAT that seller pays because of his margin.

[Mook]

car dealers don't charge vat on second hand cars.

[Rosamunda]

Because there is no added value. I guess any profit they make on selling second-hand cars can be off-set against the labour costs spent on cleaning, repairs, maintenance etc. But my understanding is that if the resale cost is higher than what the dealer paid for the car (plus the costs of any repairs, admin etc etc) then VAT is payable on the margin. But the purchaser won't see this because it is VAT-payable not sales VAT. The dealer has to pay it.

13) If certain goods are being supplied and the supply is governed by § 79 a of the VAT Act, a reference to the application of this procedure or to the relevant Article of the Sixth Directive should be included in the invoice:
If seller is supplying second-hand goods, works of art, antiquities or collectibles and the margin scheme is being applied, the invoice must contain a reference to the margin scheme. Moreover, no amounts of VAT are to be spelled out on the invoice.

But many people who work in the secondhand business do mark up their products (eg antique dealers, art dealers etc). Like I said, section 79 is complicated...

And I know from my student days working in the tax office (not in this country) that "they" do scour the small ads in the newspapers looking for "Living Persons" who are trading without a business ID. I guess they do the same nowadays on eBay and Huuto etc.