Toiminimi: taking a side job in the UK

[filecore]

First off, let me just say that I've read many of the threads by andycheeseman and others, so I'm aware of similar discussions on this forum. However, those didn't match my exact circumstances, and didn't provide quite enough enlightenment to resolve my question.

Backstory: I used to have a toiminimi, I paid YEL and ALV. Then things started becoming unprofitable, I got a full-time job in the private sector, and I let my toiminimi wind down, although I didn't actually close it. It's sort of idling along, and every year around April I submit a tax return for it stating my incomes and outgoings as zero. That's fine.

Current problem: recently I've had an offer from a UK company to do a relatively small freelance job. It's in an area that I'm interested in from my hobbies (the advert was actually placed on the Facebook pages of a magazine I subscribe to). It would pay at most 1000 euros and that would be my only toiminimi income of the year, leaving me way below the minimum income levels requiring YEL and ALV. Now, I know that you can have a side income to a regular job, and it's taxed at something like 60%. However...

The complication: not only do I have an idle toiminimi, but from the days before my toiminimi, I still have a freelancer tax card. (I queried this with my previous private sector employer, asking if I needed to change to a normal one, but their HR people said that the type of tax card doesn't matter, so long as Vero was happy with my tax level compared to my aggregate income.)

So now I have this situation:

• I am fully employed in the private sector, but on a freelance tax card
• I would like to take the UK job mostly out of interest, but a little extra cash wouldn't hurt either
• I have both a toiminimi and a freelance tax card that I can use

My question is how to best approach this. If I charge it on my toiminimi, but don't charge ALV to the end customer (due to earning under the ALV limit for the toiminimi), can I just invoice the lump sum to the UK customer and be done with it?

Any helpful input would be greatly appreciated

[filecore]

Hmm, I may have found my answer in this post from Rosamunda, which notes that:

If you are doing this on an ad-hoc basis and your revenues are under 8500€ per year, you do NOT have to register your business, you do not have to register for VAT. As a physical person you can invoice someone for something and all you have to do is declare the extra income to Vero when you file your personal tax return. However, this extra revenue will not entitle you to any additional pension etc as it is outside the social security regime.

and apparently I just have to state on the invoice that I am tax-exempt (which is not the same as 0% VAT), with something along the lines of:

"The seller is tax-exempt - annual business turnover is less than 8500e"

So in short, I invoice the customer without any added VAT, and then declare the earned sum on my personal tax return, where it is income taxed without social benefits.

Hopefully this helps others in the same situation!

[Rosamunda]

Maybe you should check with Vero that the information is still valid. But as far as I know nothing has changed.

By the way, mysteriously Vero did NOT send me a freelance tax card this year, I got a regular one, even though I did have multiple employers last year (only 2 or 3) and anyway got a tax rebate last year of several hundred € ! I was thinking of calling them to find out why they unilaterally decided to change our previous arrangement... But then I thought I would let it go as I only have two employers at the moment and anyway I can order a new tax card if and when I am sick of paying extra tax.

Would be interested to know if anyone else was surprised to lose their freelance status though...

[betelgeuse]

Current problem: recently I've had an offer from a UK company to do a relatively small freelance job. It's in an area that I'm interested in from my hobbies (the advert was actually placed on the Facebook pages of a magazine I subscribe to). It would pay at most 1000 euros and that would be my only toiminimi income of the year, leaving me way below the minimum income levels requiring YEL and ALV. Now, I know that you can have a side income to a regular job, and it's taxed at something like 60%. However...

The comment about 60% is wrong. Your withholding percentage might be high but in the end you will be taxed with exactly the same percentage on your main and side jobs. The more you do side jobs, the more you get tax returns later. If you don't want to loan money to Vero, you will apply for a new tax card towards the end of the year that accounts for all the side jobs already done.

Hmm, I may have found my answer in this post from Rosamunda, which notes that:

If you are doing this on an ad-hoc basis and your revenues are under 8500€ per year, you do NOT have to register your business, you do not have to register for VAT. As a physical person you can invoice someone for something and all you have to do is declare the extra income to Vero when you file your personal tax return. However, this extra revenue will not entitle you to any additional pension etc as it is outside the social security regime.

There's a small mistake in the information here. A physical person can invoice someone but the payer must withhold taxes unless the physical person is in "ennakkoperintärekisteri". Ennakkoperintärekisteri is what makes a physical person receive business tax returns. Then you are "ammatinharjoittaja". Toiminimi means you have registered a separate name to the trade register. Personally I don't care about paying the fees for the latter.

[LostOzzie]

Betelgeuse, you seem to know about this a lot, I'm struggling with the ennakkoperintä registration option on the Y3 form; I don't know if I should register or not. We'll invoice around 5000€ this year. Have registered for VAT. On the Vero page I found the below:

https://www.vero.fi/en-US/Companies_and ... t_register

What does prepayment registration mean?
The prepayment registration has effect in prepayment of taxes. A valid registration shows that the payer of the taxpayer's invoice don’t have to withhold tax and pay it forward to the Tax Administration, because taxpayer independently pays prepayment of taxes

and

If nonwage compensation is being paid
If the payment made to the taxpayer is nonwage compensation or compensation for the use of an object, and he or she is prepayment-registered, there will be no obligation for the payer to withhold tax. Taxpayers with valid registration are expected to make regular prepayments of income tax to the Tax Administration. The amounts to be prepaid are separately calculated and formally decided by the Tax Administration.

However, if the payment made to the taxpayer is nonwage compensation or royalties, who is not prepayment-registered, the payer have to withhold tax.

What I'm getting is certainly non-wage. So it sounds like I should register for this or else the company I am invoicing is going to have to withhold some sort of tax (not even sure what it would be or does it even matter when a toiminimi is being established). Is this the normal option for toiminimis working on a simple invoicing-another-business basis?

Sorry if this post isn't very well worded, brains aren't so sharp after wrestling with the Y3...

[betelgeuse]

What I'm getting is certainly non-wage. So it sounds like I should register for this or else the company I am invoicing is going to have to withhold some sort of tax (not even sure what it would be or does it even matter when a toiminimi is being established). Is this the normal option for toiminimis working on a simple invoicing-another-business basis?

For sole trader the withholding is 60% or according to tax card:

https://www.vero.fi/fi-FI/Yritys_ja_yht ... arekisteri

Is this the normal option for toiminimis working on a simple invoicing-another-business basis?

I haven't seen any statistics on what people choose. The consideration also depends on circumstances (for example few vs. many customers).

[LostOzzie]

Thanks for the reply. I called Vero and asked them the same; their opinion was that almost all tmis are registering for prepayment. So I did too. It's just not worded clearly on the Vero site, especially in English, what its true purpose is.