I own two rental apartments in Finland. I used to rent them out as a private individual and paid a 34% tax on the rental income. My monthly pre-tax income is 1,500 euros. Now, I am considering creating a company to reduce my tax liability. So far, I have learned that there are three popular types of entrepreneurship: toiminimi, OY, and kevytyrittäjyys.
If anyone has experience with this, I would appreciate your insights.
Creating a company as a landlord
-
X6InhEswsi7lLAQ
- Posts: 27
- Joined: Wed Mar 30, 2022 10:28 am
Re: Creating a company as a landlord
You'll get better advice from an accountant, but I'll bite. At 1500 pre tax, you should be being taxed 30%, 34% kicks in after 30k/year.
I have a toiminimi (an actual business), and one feature of it is I fill out a different form, but the profits of the company are essentially my personal profits. The difference is there is a 5% deduction for freelancers, but being a landlord is not really a job and doesn't seem to match the description they have (you can only be sure if you check the law). Also, as a toiminimi, you will _probably_ need to pay for YEL insurance, which is 361/month for someone making 1500/month, though you get some of it back when you declare taxes.
I believe the situation would be similar for a kevytyrittäjä (but with more fixed costs), so that leaves you with an OY, which is taxed flat at 20%. However, once you transfer what's left to yourself, you will be liable to pay capital gains tax. So it's more expensive in the end.
Also, if you check the verokone, you will see no one is paying less than 30%.
I'll say it again, I am not an accountant, so this could be wrong.
I have a toiminimi (an actual business), and one feature of it is I fill out a different form, but the profits of the company are essentially my personal profits. The difference is there is a 5% deduction for freelancers, but being a landlord is not really a job and doesn't seem to match the description they have (you can only be sure if you check the law). Also, as a toiminimi, you will _probably_ need to pay for YEL insurance, which is 361/month for someone making 1500/month, though you get some of it back when you declare taxes.
I believe the situation would be similar for a kevytyrittäjä (but with more fixed costs), so that leaves you with an OY, which is taxed flat at 20%. However, once you transfer what's left to yourself, you will be liable to pay capital gains tax. So it's more expensive in the end.
Also, if you check the verokone, you will see no one is paying less than 30%.
I'll say it again, I am not an accountant, so this could be wrong.
-
X6InhEswsi7lLAQ
- Posts: 27
- Joined: Wed Mar 30, 2022 10:28 am
Re: Creating a company as a landlord
There is some discount, but at the end it costs you more than not paying it.marystockholm wrote: ↑Tue Dec 10, 2024 7:06 pmIf you pay for YEL insurance, will you get any discount? And is it true that the insurance fees change based on your age?
https://www.vero.fi/yritykset-ja-yhteis ... el-maksut/
The insurance fees change based on the age of you entrepreneurship, there's a discount for the first 4 years (25% iirc).
Re: Creating a company as a landlord
I would suggest that you join landlord groups. There is one discussion forum on Facebook
https://www.facebook.com/groups/825293360888410
There there are some older discussions on this matter, in general they say you need to have quite many properties. There are different aspects you need to consider if you want to refurbish your property, for instance. If you need mortgage, do you need to think about heritage...
In addition, you have different options; to establish a company abroad or also to establish a real estate company.
I strongly suggest you join there, search and read the discussions (in Finnish...).
One link I found there:
https://asuntosalkunrakentaja.fi/asunto ... hRhXFl7mXg
Then there is a formal association which supports and advises landlords, not a bad idea to join there in any case.
https://vuokranantajat.fi/
https://www.facebook.com/groups/825293360888410
There there are some older discussions on this matter, in general they say you need to have quite many properties. There are different aspects you need to consider if you want to refurbish your property, for instance. If you need mortgage, do you need to think about heritage...
In addition, you have different options; to establish a company abroad or also to establish a real estate company.
I strongly suggest you join there, search and read the discussions (in Finnish...).
One link I found there:
https://asuntosalkunrakentaja.fi/asunto ... hRhXFl7mXg
Then there is a formal association which supports and advises landlords, not a bad idea to join there in any case.
https://vuokranantajat.fi/