Difference between toiminimi and freelance

[txell]

Hello everyone!

I have already found some information on this forum about freelance and toiminimi, but I am still not very sure what the difference is between one and the other. I am a translator and I have been planning to start working on my own but I am not sure which is the best option as in my country there is only the freelance option.

Also I would like to know if there is some monthly fee for being a freelancer or toiminimi and if somebody knows how much is it.

Thanks!

[masao]

With the freelancer status (annually renewed tax card) you only pay the income tax, no VAT.

Can you elaborate more on this?

If you're a toiminimi, you will need to calculate what part of your income is taxable and if your annual (again: 1st period can be longer) income exceeds 8.500, then you also need to add VAT to your services. Then, you should declare it & submit it (as in "pay up") to Vero before the expiration of the date (there are some monthly dates to remember).

Hi.
In my case where income is not huge, the pay up date is only once a year and is at the end of February every year. If the income is enoumous, then you pay up every four months. The tax office in Myyrmäki
will guide you.
At the beginning of a year, you do not know how much you will earn in that year, so you start to collect VAT (arvolisävero) anyway. What happens to those accumlated VAT if the total income stays below 8500€ anyway?

t, masao

[txell]

Thanks everyone for the answers!

Does anybody know if as a freelancer I would also have to pay some fee every month? Where I come from it is so that if you are a freelancer you need to pay some kind of fixed fee every month to the administration. Is it the same here?

Thanks!

[txell]

So everything is much more clear now!


thanks

[cors187]

Freelancer is an employee(with normal or tax-at-source taxcard) for a company or cooperative or some other foundation or group that does not require or need to make a profit from its agreeable employees.
The freelancing1 tax-carded employee pays (from their earnings) for all the company/cooperative/foundations legal obligations as an employer(pensions etc)
Someone has to pay those legal obligations.
If the main cooperative is non profit then someone in the cooperative(possibly another freelance2 tax-carded employee) will offer a service to fulfill all the legal obligations.Maybe the paper trail service from freelancer2 is free, maybe not.



I my oppinion if your EU chasing bits of work here and there, why bother with a TMi, you may only work in that country once and never go back.If you dont have an employer then these types of cooperative employers seem to get the job done with the least amount of costs to the "freelancer"

If your a tax resident of Finland , you may as well start the TMi ,learn how to do your side of the book keeping , build up your references and business model , creating the necessary history that will be almost invaluable.
After all , its quite possible that the freelancer will ultimately pay another freelancer to finalize the "books" for that "clean exit".

[odeskit]

Hey guys,

I have a question if someone know about it. If a freelancer works online through different websites and work on small or big projects
for clients in any other countries else than Finland earning more than 10k Euro a year. Does he need to pay any tax as the income is online
coming from abroad, it is not fixed as well as contracts are not stable. Any idea how does the taxation goes along with online freelancing.

Thanks

[tjawatts]

If you have income you have to pay income tax. You would have to register for the prepayment tax register and tell them how much you expect to earn. It doesnt matter where the money comes from, only where you live and work.

Regarding VAT, it says that turnover greater than EUR 8,500. So I would say if you earn more than that then you would need to charge VAT for your clients within the EU (unless they are registered for VAT in their home country and provide you with their VAT number).

T

[Upphew]

One difference that doesn't pop up here often (at all?) is management. Freelancer is an employee that can be managed and supervised and must follow orders. Toiminimi might do a good business decision by following orders.

[laurajbj85]

I have a question because I am interested in the topic...If I am a freelancer and I work for myself without any boss...is it a problem or I need to find an employer?

[masao]

Well, I went to Myyrmäki tax office and sorted the problem out in October.
If you are still interested, here is the question.

Assuming that you have T:mi or such.
You collect salary and ALV from the beginning of year. What happens to the collected ALV if the total turnover is below 8500€?

The answer. You do not pay the collected ALV at all to Tax office. They also showed me how to fullfil the Tax Form in that case.

They returned to me my submitted ALV money back from 2011 and 2013. (They go back two years for
returning the incorrectly paid tax. In 2012 my T:mi was inactive.
Hope this helps someone.
t, masao

[cors187]

I have a question because I am interested in the topic...If I am a freelancer and I work for myself without any boss...is it a problem or I need to find an employer?

Freelancer in finland doesnt appear to be a definable relationship. Its a type of employee tax-card with a few different options compared to a normal tax-card.

For exampl i could see a situation where a company has employees on normal tax-cards and they could also have a few freelancer tax-card workers doing the same work.

VERO shows the main difference between a normal tax-card and freelancer tax -card as- http://www.vero.fi/en-US/Individuals/Ta ... 2832332%29

Normal tax-card shows your normal tax rate and also shows your ceiling reached tax rate.
example you predict a max limit of what you will earn(10K/year) and the taxcard shows the tax% for that max earning limit, Lets say 6%tax. the other tax% is when your earning power or (money earned) goes above the original figure you set(10K/year) then you are taxed at the higher rate, lets say 26%.
You need to give your principle employer the original taxcard and then if you have a second employer you need to give your second employer a revised copy of your tax-card(including new employee estimates),dont forget to give your principle employer the original revised tax-card. Typical Finn thinking right here.


Freelance taxcard has only the nominal tax%( 6%). So by definition you will give a scan copy of your original freelancer tax-card to (all) your various employers.

So in terms of medieval analogy.
Freelancer(little fish in a big pond)
Your a freelance and you wander from army to army , agreeing through contract how long you stay and what you do for what amount. The army still has to pay the law of the land soldier benefits(employer/employee contributions) to the establishment.

Freelancer in freelancer army(associations etc)
Another way is to join an army that is geared up to provide a service for freelancers(army for hire type) but not specifically for hire , maybe they dont have recruitment tools and hire tools , but they do have the necessary documents and official details(employer/employee contributions)(management) to enable you to join at will armies who are hiring.

Freelancer in your own army(TMI,sole trader.)
Being the general in your own army sounds great. You can hire yourself out to any army and you collect a lump sum payment from the main army because they are not responsible for your soldier benifits payments etc etc. You are responsible for paying all of those.


Conclusion-
Finland is a complicated dish, its best served when all ingredients are understood.

[Rosamunda]

Recently Luckan in Kamppi ran an info session in conjunction with www.intofinland.fi so there were folk there from Kela and Vero talking about tax and social security. Quite a few people turned up, mostly students but also quite a few entrepreneurs. It was quite interesting to get an update and reassuring to find out that there was nothing really new to deal with. But... I did learn one thing: in order to have a freelance tax card the holder is supposed to have FIVE employers, concurrently. In other words, not five employers in the same fiscal year but five employers AT THE SAME TIME. I did ask if this was a new prerequisite and was assured that no, that has always the rule. There were a few people there who, like me, had never been aware of that and were - presumably - not complying with the rule.

It is a stupid rule. Very stupid. It just constitutes a cash flow advantage for the tax office since freelancers pay no more nor less tax than anyone else on the same salary. I don't get the logic.

[Pursuivant]

Well no, but if you hadn't a freelancer card, you'd be paying whatever 20% for the first gig, and then handing over 50% cards for the rest.

[betelgeuse]

In other words, not five employers in the same fiscal year but five employers AT THE SAME TIME. I did ask if this was a new prerequisite and was assured that no, that has always the rule. There were a few people there who, like me, had never been aware of that and were - presumably - not complying with the rule.

You supply Vero with the information and they give you a matching tax card. If they have given you a tax card that doesn't match their internal instructions, it's not your problem. One tax year in the past I had two equal employers, as a result when the taxation for that year was used, Vero sent me a side work tax card with a very high limit and no restrictions on employers. Basically a freelance tax card.

It is a stupid rule. Very stupid. It just constitutes a cash flow advantage for the tax office since freelancers pay no more nor less tax than anyone else on the same salary. I don't get the logic.

Legislation says the goal of the system is to make your withholding match the final taxes:

https://www.finlex.fi/fi/laki/ajantasa/ ... 61118#L1P3

If you know you have been paying too much tax, you can just apply for a new tax card during the year. This is a little bit of effort, but the online application is reasonably easy to use. I am pro their goals of setting up a system where you have an account at Vero that salaries need to be paid into and they take care of the withholding and automatically adjust the rates during the year.

[Rosamunda]

Well no, but if you hadn't a freelancer card, you'd be paying whatever 20% for the first gig, and then handing over 50% cards for the rest.

Well, that is the point I am trying to make. If I "only" had FOUR employers at any point in time then I would be paying - as per your example - 20% on one and then 50% on all the others. Also, in terms of revenue, my main employer could become my smallest employer from one month to the next. So to whom do I give the basic rate versus the higher rate? I agree that at any point in time it is possible to get a new tax card but I'm not sure many employers would appreciate having to change my tax rate every other month. And I have no two months the same, my situation changes all through the year. Right now I have three employers lined up for January and might get one more, but in June-July, for example, I am usually only working for myself. So on a monthly basis it can be anything from 0-4 or potentially more.

A freelance tax card is a good idea and it works well, I have been using one for over ten years and I manage it so that I neither owe nor am owed large amounts of tax at the end of the year. But I don't think I have ever had the statutory FIVE employers concurrently partly because I also have a limited company and therefore pay myself a salary for some of the work I do with different companies. Unfortunately some institutions (like the AMKs) don't work with Oys or Toiminimis (yet...) so I have to go on their payroll. OTOH many businesses prefer to work on a B2B basis.