Toiminimi taxation - business case

Useful advice on jobs, careers and entrepreneurship in Finland. Find job postings, job information, work permits and more.
Ohuet
Posts: 12
Joined: Tue Jun 15, 2021 10:12 pm

Re: Toiminimi taxation - business case

Post by Ohuet » Thu Jun 24, 2021 11:36 am

Ohuet wrote:
Thu Jun 24, 2021 9:34 am
I have seen some Finnish youtube blogger and he was writing off even cigarettes as a business expense. So I wonder why are you allowed to buy a meal in a canteen and write it off as a business expense but you are not allowed to buy cucumbers and tomatoes from Prisma and eat them for your lunch instead of buying a meal elsewhere.
For cigarettes used as part of videos, maybe it would work. Otherwise I doubt it would survive an inspection by Vero.
[/quote]

"For cigarettes used as part of videos, maybe it would work. " - can you elaborate? Why smoking whilst making videos is acceptable but eating food is not? I suppose a working human being is more in need of food rather than cigarettes



Re: Toiminimi taxation - business case

Sponsor:

Finland Forum Ad-O-Matic
 

betelgeuse
Posts: 4350
Joined: Thu Aug 29, 2013 1:24 am

Re: Toiminimi taxation - business case

Post by betelgeuse » Thu Jun 24, 2021 12:13 pm

Ohuet wrote:
Thu Jun 24, 2021 11:32 am
FinlandGirl wrote:
Thu Jun 24, 2021 11:02 am
Ohuet wrote:
Thu Jun 24, 2021 9:34 am
So I wonder why are you allowed to buy a meal in a canteen and write it off as a business expense
A normal meal in a canteen is not a business expense.
Why is not a business expense? You are having a meal during your working day in the company's canteen. Not sure how it was in Finland but in some other countries, employers were even feeding the employees for free back then. Canteens were run by enterprises and employees were entitles to free meals from the employer as part of their working day. I cannot understand the logic why you cannot treat it as a business expense.

The definition "a business expense is the cost that has been used to generate an income" is quite applicable here. When you are hungry you cannot really produce any physical or intellectual output.
Company canteen meals are a business expense. However, when free to the employee, they are also a taxable fringe benefit.

betelgeuse
Posts: 4350
Joined: Thu Aug 29, 2013 1:24 am

Re: Toiminimi taxation - business case

Post by betelgeuse » Thu Jun 24, 2021 12:16 pm

Ohuet wrote:
Thu Jun 24, 2021 11:36 am
"For cigarettes used as part of videos, maybe it would work. " - can you elaborate? Why smoking whilst making videos is acceptable but eating food is not? I suppose a working human being is more in need of food rather than cigarettes
I was referring to smoking in the video – not while making it.

SecretCode
Posts: 146
Joined: Fri Dec 27, 2013 8:01 pm

Re: Toiminimi taxation - business case

Post by SecretCode » Thu Jun 24, 2021 1:21 pm

Ohuet wrote:
Thu Jun 24, 2021 11:32 am
The definition "a business expense is the cost that has been used to generate an income" is quite applicable here. When you are hungry you cannot really produce any physical or intellectual output.
In the UK and I'm sure most countries the rule is definitely a cost that has exclusively been used to generate an income. If you can prove that you've never in your life eaten lunch except when working, then yes the cost would be allowed as a business expense.

Companies (including your own company) can reimburse you for anything; all the tax collector cares about it whether it qualifies as a tax deduction. Big companies can operate expense schemes and as long as they convince the authorities that they have policies and controls that (ahem, most) expenses are legitimate, the taxman won't bother investigating too much even if some people get away with expensing whisky. So don't assume what people get away with represents what the law is OK with. As a toiminimi, they can quite happily investigate you.
Image

Ohuet
Posts: 12
Joined: Tue Jun 15, 2021 10:12 pm

Re: Toiminimi taxation - business case

Post by Ohuet » Fri Jun 25, 2021 6:23 am

SecretCode wrote:
Thu Jun 24, 2021 1:21 pm
Ohuet wrote:
Thu Jun 24, 2021 11:32 am
The definition "a business expense is the cost that has been used to generate an income" is quite applicable here. When you are hungry you cannot really produce any physical or intellectual output.
In the UK and I'm sure most countries the rule is definitely a cost that has exclusively been used to generate an income. If you can prove that you've never in your life eaten lunch except when working, then yes the cost would be allowed as a business expense.

Companies (including your own company) can reimburse you for anything; all the tax collector cares about it whether it qualifies as a tax deduction. Big companies can operate expense schemes and as long as they convince the authorities that they have policies and controls that (ahem, most) expenses are legitimate, the taxman won't bother investigating too much even if some people get away with expensing whisky. So don't assume what people get away with represents what the law is OK with. As a toiminimi, they can quite happily investigate you.
The law is never certain but quite often it’s vague. Otherwise, there would be no disputes or substance for litigation. It’s more about how you interpret the law. Even in this thread there are quite a lot of inconsistencies, e.g. business lunch. One says it’s a business expense but if free it’s a tax fringe benefit. Fine. The employer writes it off as a business expense (the main conclusion of this discussion), the tax is charged to the employee as a benefit. Why on earth should I prove anyone that I have never eaten lunch in my life except when working? This question itself is flawed. Rather lunch time is an integral part of a working day hence its expense should qualify as a business expense imho. I’m not claiming weekend meals or fancy restaurants to qualify as a business expense. But business lunch weekdays should be eligible.

I think if you have a business plan which would justify other bigger expenses in advance then it may ease the tax audit.

betelgeuse
Posts: 4350
Joined: Thu Aug 29, 2013 1:24 am

Re: Toiminimi taxation - business case

Post by betelgeuse » Fri Jun 25, 2021 9:03 am

Ohuet wrote:
Fri Jun 25, 2021 6:23 am
SecretCode wrote:
Thu Jun 24, 2021 1:21 pm
Ohuet wrote:
Thu Jun 24, 2021 11:32 am
The definition "a business expense is the cost that has been used to generate an income" is quite applicable here. When you are hungry you cannot really produce any physical or intellectual output.
In the UK and I'm sure most countries the rule is definitely a cost that has exclusively been used to generate an income. If you can prove that you've never in your life eaten lunch except when working, then yes the cost would be allowed as a business expense.

Companies (including your own company) can reimburse you for anything; all the tax collector cares about it whether it qualifies as a tax deduction. Big companies can operate expense schemes and as long as they convince the authorities that they have policies and controls that (ahem, most) expenses are legitimate, the taxman won't bother investigating too much even if some people get away with expensing whisky. So don't assume what people get away with represents what the law is OK with. As a toiminimi, they can quite happily investigate you.
The law is never certain but quite often it’s vague. Otherwise, there would be no disputes or substance for litigation. It’s more about how you interpret the law. Even in this thread there are quite a lot of inconsistencies, e.g. business lunch. One says it’s a business expense but if free it’s a tax fringe benefit. Fine. The employer writes it off as a business expense (the main conclusion of this discussion), the tax is charged to the employee as a benefit. Why on earth should I prove anyone that I have never eaten lunch in my life except when working? This question itself is flawed. Rather lunch time is an integral part of a working day hence its expense should qualify as a business expense imho. I’m not claiming weekend meals or fancy restaurants to qualify as a business expense. But business lunch weekdays should be eligible.

I think if you have a business plan which would justify other bigger expenses in advance then it may ease the tax audit.
Remember that sole traders (toiminimi) and Oy have differences. What is a business expense for a Oy is not automatically for a sole trader since there’s no employment relationship. Your accountant will be able to tell you when you can have meal related deductions. This is, for example, when you are considered to be on a business trip. One can go to a fancy restaurant with a client (special rules apply to edustuskulut so it’s not fully deductable).

https://www.vero.fi/syventavat-vero-ohj ... otuksessa/

FinlandGirl
Posts: 1322
Joined: Sat Nov 09, 2019 10:43 am

Re: Toiminimi taxation - business case

Post by FinlandGirl » Fri Jun 25, 2021 10:19 pm

Ohuet wrote:
Fri Jun 25, 2021 6:23 am
Even in this thread there are quite a lot of inconsistencies, e.g. business lunch. One says it’s a business expense but if free it’s a tax fringe benefit. Fine. The employer writes it off as a business expense (the main conclusion of this discussion), the tax is charged to the employee as a benefit. Why on earth should I prove anyone that I have never eaten lunch in my life except when working? This question itself is flawed. Rather lunch time is an integral part of a working day hence its expense should qualify as a business expense imho. I’m not claiming weekend meals or fancy restaurants to qualify as a business expense. But business lunch weekdays should be eligible.
If you make a "business expense" to pay something that is a taxable benefit, this is from a taxation point of view not necessarily different from paying the same amount as additional salary in cash.

Very simplified, if a business pays 5000 Euro for lunch for an employee this might be a business expense for the business, but then it is a taxable benefit for the employee and the employee has to pay income tax on 5000 Euro income for that.

Actual taxation rules regarding lunch are quite complicated.

Ohuet
Posts: 12
Joined: Tue Jun 15, 2021 10:12 pm

Re: Toiminimi taxation - business case

Post by Ohuet » Sat Jun 26, 2021 10:48 pm

FinlandGirl wrote:
Fri Jun 25, 2021 10:19 pm
Ohuet wrote:
Fri Jun 25, 2021 6:23 am
Even in this thread there are quite a lot of inconsistencies, e.g. business lunch. One says it’s a business expense but if free it’s a tax fringe benefit. Fine. The employer writes it off as a business expense (the main conclusion of this discussion), the tax is charged to the employee as a benefit. Why on earth should I prove anyone that I have never eaten lunch in my life except when working? This question itself is flawed. Rather lunch time is an integral part of a working day hence its expense should qualify as a business expense imho. I’m not claiming weekend meals or fancy restaurants to qualify as a business expense. But business lunch weekdays should be eligible.
If you make a "business expense" to pay something that is a taxable benefit, this is from a taxation point of view not necessarily different from paying the same amount as additional salary in cash.

Very simplified, if a business pays 5000 Euro for lunch for an employee this might be a business expense for the business, but then it is a taxable benefit for the employee and the employee has to pay income tax on 5000 Euro income for that.

Actual taxation rules regarding lunch are quite complicated.
These tax fringe benefits seem to be like transferring a tax from an employer to an employee. The employer writes it off as a business expense then the employee pays a tax on it

FinlandGirl
Posts: 1322
Joined: Sat Nov 09, 2019 10:43 am

Re: Toiminimi taxation - business case

Post by FinlandGirl » Sat Jun 26, 2021 11:55 pm

Ohuet wrote:
Sat Jun 26, 2021 10:48 pm
These tax fringe benefits seem to be like transferring a tax from an employer to an employee. The employer writes it off as a business expense then the employee pays a tax on it
Yes, just like a salary is a business expense for the business and then the employee pays a tax on it.
Except for some special cases of tax-free benefits, a benefit from the employer is in taxation not different from money paid as salary.

betelgeuse
Posts: 4350
Joined: Thu Aug 29, 2013 1:24 am

Re: Toiminimi taxation - business case

Post by betelgeuse » Sun Jun 27, 2021 11:35 am

FinlandGirl wrote:
Sat Jun 26, 2021 11:55 pm
Ohuet wrote:
Sat Jun 26, 2021 10:48 pm
These tax fringe benefits seem to be like transferring a tax from an employer to an employee. The employer writes it off as a business expense then the employee pays a tax on it
Yes, just like a salary is a business expense for the business and then the employee pays a tax on it.
Except for some special cases of tax-free benefits, a benefit from the employer is in taxation not different from money paid as salary.
There’s also benefits that can be valued lower in taxation than their actual value.


Post Reply