If I'm self-employed do I need to setup a business?

[AndyBell]

Hi all,

Basically I have started working for a company in Scotland, but I'm living in Finland.
I'm self-employed, I will be invoicing the company every month with my time sheet and they will pay me as per our contract.
If I was living in the UK, normally I would setup a business for VAT purposes, I would then be able to charge the company I'm working for the VAT.
I visited the tax office and the lady told me that this is not necessary in Finland, I simply tell them my estimated annual salary and they will tax me accordingly.

Does anybody else have experiance in this, because if I simply accept the way the lady told me, I would not be paying VAT and I don't want to be wacked with a huge VAT bill at the end of the year!

Thanks in advance
Andy

[Beep_Boop]

Either you didn't explain correctly to the Vero lady, or she misunderstood you.
Anyway, read this https://www.vero.fi/en-US/Olkiluoto_3/F ... oto(15241)

[Rosamunda]

It depends. She is right insofar as billing only one client means that you are effectively employed and will be taxed as such. Creating a limited company, for example, could be seen as tax avoidance if you have only one customer.

But, the issue here is that you are not being paid a salary, you are invoicing. You still need to declare your income so that you make full pension contributions here. I guess a toiminimi (sole trader) would work for you and you can also contribute to (voluntary) unemployment funds for entrepreneurs if you wish.

I'm not sure about the VAT issue. I think it might depend on what you are doing (IT?) Normally you MUST register for VAT when your estimated annual revenue is over €8500. BUT, since you are "exporting" I don't think you have to charge VAT (but there are special rules for some IT sales). In that case you need to make a special mention on your invoices that they are tax exempt (the precise wording is on the vero website).

I think she is wrong. It's definitely not as easy as giving them a number at the end of the year. I would call again and ask someone else or, better still, send an email to www.intofinland.fi (they are vero + Kela so can give you info on tax and social security).

[cors187]

I don't want to be wacked with a huge

You would not be the first to get bills based on good intentions but the prepayments systems is a way to keep you in check. I would opt for those systems which requires you to register for them.

I simply tell them my estimated annual salary and they will tax me accordingly.

If its the same system the 2 other EU professionals i know worked with, dont use it, They got sent rather big bills with deadlines to pay.

The only thing i can tell you about VAT is the final customer pays VAT. The real concern is personal tax and other obligation payments you were supposed to be responsible for.

[cors187]

Either you didn't explain correctly to the Vero lady, or she misunderstood you.
Anyway, read this https://www.vero.fi/en-US/Olkiluoto_3/F ... oto(15241)

The finnish system is based on slackness, the woman may have understood perfectly and offered the solution that doesnt create workload for them.
Plus they dont offer business solutions, which is kind of what the OP needs to then figure out how he will pay to VERO.