VERO link needed

[cors187]

I need a link to the vero pages that list all "itemized" deductions OY and TMI entities can claim.
Thanks in advance for your Finnish powers.

[betelgeuse]

I need a link to the vero pages that list all "itemized" deductions OY and TMI entities can claim.
Thanks in advance for your Finnish powers.

I am not sure what you are looking for. The default here for business is that all business expenses can be deducted from income. Thus, it's hard to make a listing of everything possible. The related guides are listed here:

http://www.vero.fi/fi-FI/Syventavat_ver ... kelpoisuus

[betelgeuse]

Here's a link to legislation on what can't be deducted:

http://www.finlex.fi/fi/laki/ajantasa/1 ... 0360#L2P16

[tjawatts]

Generally you dont actually need to itemize them to Vero (unless they ask you).

Of course it has to be in your own accounts.

But generally anything that is for business can be deducted. You can try the new tv for your home etc, but if there is doubt an expense is for business and you are investigated you could get in trouble.

T

[cors187]

My question refers to spending company money in a way to reduce the taxable company capital and increase the companies ability(through smart purchasing) to make more money.
Its not an easy system in Finland at all.
Links good.

[Upphew]

My question refers to spending company money in a way to reduce the taxable company capital and increase the companies ability(through smart purchasing) to make more money.
Its not an easy system in Finland at all.
Links good.

Capitals aren't taxed. Capital gains are. More capital, more the stock is worth -> dividends up to 8% of stock's worth have 75% of them tax free.

[tjawatts]

As said the capital of the company is not taxed in fact it is good to have a high net assets as the taxation of dividends is based on that.

To reduce your tax you surely want to reduce your profit / net income?

Surely buying things for the purpose of improving your business is the very definition of a business expense/investment. Of course larger investments you may have to depreciate over time rather than expensing them off all at the beginning

T

[cors187]

capital1
ˈkapɪt(ə)l/
noun
2.
wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

I used the term capital in a raw form.
example- the company has 100,000 capital.

Lets start this with a example game, to help me see what your words are explaining

FINCORP has 100,000 in its company bank coming into the end of year
Its paid shareholders already and owes no money

example1
Now what?wheres the exact link showing whats going to happen to this 100,000 if the board just leaves it there for next years money,

[betelgeuse]

capital1
ˈkapɪt(ə)l/
noun
2.
wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

I used the term capital in a raw form.
example- the company has 100,000 capital.

For the rest of the post I assume capital means the Finnish term pääoma. Profit does not become capital before the fiscal year is over and the shareholder meeting has decided to put it into capital (instead of distributing it).

Lets start this with a example game, to help me see what your words are explaining

FINCORP has 100,000 in its company bank coming into the end of year
Its paid shareholders already and owes no money

example1
Now what?wheres the exact link showing whats going to happen to this 100,000 if the board just leaves it there for next years money,

Nothing is going to happen to the capital because there's no net wealth tax [1]. Vero does not provide links for taxes that do not exist so I don't think one can be provided.

[1] http://en.wikipedia.org/wiki/Wealth_tax

[tjawatts]

When we come to accounting we need to use the right terms

Case 1:

The company generates income of EUR 200,000 and expenses of EUR 100,000 leaving a profit of EUR 100,000 (whether that is in cash, receivables or other assets is not really relevant).

If that is the companies "capital" then the year in which that profit was made the company will be taxed corporation tax on the EUR 100,000 (currently 20%) so you would have EUR 80,000 left after tax which would be the company "capital".

Case 2:

The start of the year the company has EUR 100,000 in assets (from previous years when they have paid tax or from investment by shareholders etc).

During the year the company has income of EUR 100,000 and expenses of EUR 100,000, so a profit of zero. The company still has the EUR 100,000 in assets they had at the beginning of the year. Those will not be taxed.

If we are talking you want to increase you expenses to reduce your profit that makes perfect sense if those expenses are relevant for your business you should just go ahead.

T

[betelgeuse]

If we are talking you want to increase you expenses to reduce your profit that makes perfect sense if those expenses are relevant for your business you should just go ahead.

Merely being relevant for business is not enough for the expenses to make sense. If the expenses don't generate any future profit, you have just wasted money to save on taxes instead of paying some taxes and distributing the rest to the shareholders. There are some categories of expenses that often make automatic sense. For example, a sole owner should pay enough salary to match parity in income taxes to capital taxes (this depends on what kind of value the owner puts to pensions contributions).

[cors187]

I guess then the 100,000 should be called revenue profit and not Capital profit.good work
So its a simple formula, 20% tax on the remaining profit at the end of the financial year. Every commenter agreed?

http://www.vero.fi/en-US/Precise_inform ... 2814848%29
Page doesn't seem to be updated to a 2014 in english or i am finding it hard to locate the info.

next is dividends.

[cors187]

FINCORP has 100,000 in its company bank coming into the end of year
Its paid shareholders already and owes no money

So fincorp has evaluated its company increase, or to be exact what it wants the company to keep as usable capital.

Its paid or paying more a dividends

vero
Paying dividend to individuals

The tax consequences of paying dividend to individuals depend on the type of the company that pays the dividend. The taxes are different in the case of a public, stock-exchange listed company compared to a non-listed company.

If a listed company pays dividends, then 70% of the amount is considered capital income in the hands of the individual and 30% of the amount is exempt from tax.

For non-listed companies, receipts of dividend are exempt in the hands of the individual up to the amount equaling 9% of net corporate assets owned by the individual. This amount corresponds to a 9-percent yield of his share of the company. The maximum exemption is €90,000 per year. If more than €90,000 is distributed as dividends, then 70% of the excess is taxable capital income and 30% of the excess is exempt from tax.

Furthermore, if the amount of dividend exceeds the limit of 9% of corporate assets, then 70% of the amount in excess of the 9%-limit is considered taxable earned income and 30% of the amount in excess of the 9%-limit is exempt.

There are some shareholders that work in the company full time, some that work part-time and other that have not worked for salary all year.

Betel mentioned something about atleast taking salary closer to the dividend tax%
https://www.nordisketax.net/main.asp?ur ... ng/i07.asp

How would the commenters go forward, what formula can be shown.

[betelgeuse]

I guess then the 100,000 should be called revenue profit and not Capital profit.good work
So its a simple formula, 20% tax on the remaining profit at the end of the financial year. Every commenter agreed?

Close enough. There are actually three revenue / expense sources that are taxed separately (for example you can't mix agriculture and other business).

http://www.vero.fi/en-US/Precise_inform ... 2814848%29
Page doesn't seem to be updated to a 2014 in english or i am finding it hard to locate the info.

You are looking for this page but it's not translated to English.

http://www.vero.fi/fi-FI/Yritys_ja_yhte ... uloverotus

There are some shareholders that work in the company full time, some that work part-time and other that have not worked for salary all year.

This complicates things. If you pay a salary to people who have not worked at all in order to pay less taxes, you risk not giving "true form" to the transaction and are at risk with the tax authority. Consulting an expert is necessary. With multiple shareholders, the expected way to operate is that you pay people who work according to their employment contracts and then the shareholder meeting decides what to do with the profit according the articles of association.

How would the commenters go forward, what formula can be shown.

Dividend taxation is a mess. The rules are spelled in your post from which you can see that the formula is not trivial. What is best for your situation requires more information, and goes too deep into professional consulting for me.