5 Business tax return for business operators and self-employed persons, instructions 2019

The term ‘business’ here refers to carrying on a business or a trade. This tax return form is used by business operators and self-employed persons to report business income, expenses, assets and liabilities. Business income is calculated in accordance with the act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968).

If you are making corrections to a previous tax return, you must file a replacement return. Re-submit all the details you filed before. It is not enough that you fix incorrect details or add new information.

General instructions

  • Fill in all the lines of the tax return and attachment forms where you have information to report. The Tax Administration will calculate the deduction for entrepreneurs on your behalf, so you do not need to claim it in the return.
  • If more than one accounting period has ended during the calendar year 2019, use a single tax return and related attachment forms to report the information on all the accounting periods. Report asset details on the basis of the accounting period that ended last.
  • Enter the amounts to the cent.
  • Report the income and expenses attributable to agricultural activities on the tax return form for agricultural activities (Form 2), income and expenses attributable to forest-based activities on the tax return form for forest-based activities (Form 2C), and income and deductions relating to other activities as you check the individual taxpayer's pre-completed tax return.
  • You can file the business tax return and related attachment forms electronically, for example in MyTax. In order to e-file, you will need personal online banking codes, a mobile certificate or a Katso ID.

File your tax return in MyTax

See the instructions: How to file a tax return for business operators and self-employed persons (Form 5) in MyTax 

Contents

1. Personal details and tax year
2. Calculation of taxable income
2.1 Business income
2.2 Tax-exempt income in the income statement
2.3 Business expenses
3. Request for deduction of loss from capital income
4. Division of business income between spouses
5. Depreciation on acquisition cost of movable fixed assets
6. Itemisation of costs of passenger vehicles or vans included in fixed assets or leasing agreements, and other vehicles partly in private use 
7. Cash withdrawals and cash investments as recorded in accounting
8. Itemisation of use of private residence for business purposes
9. Itemisation of increased living expenses due to temporary business travel
10. Itemisation of private car use for business purposes
11. Calculation of non-deductible interest expenses
12. Calculation of net worth
12.1 Business assets
12.2 Business liabilities
12.3 Net worth of the business
13. Type of equity
14. Operating reserve
15. Wages paid
16. Capital gains from securities and real estate included in fixed assets
17. Request for division of business income

1 Personal details and tax year

Name

The name of the business operator or self-employed person.

Business ID or personal identity code

The Business ID or personal ID of the business operator or self-employed person.

Tax year

Enter the tax year for which the tax return is filed.

Accounting period

Enter the accounting period. If you need to change the accounting period, you must submit a ‘Notification on amendments or on termination of business’ to the Business Information System (ytj.fi). You can file the notification electronically or use paper form Y6.

If more than one accounting period has ended during the tax year, use a single tax return and related attachment forms to report the information on all the accounting periods.

Line of business

Enter the line of business based on the Standard Industry Classification of Statistics Finland:

  • code for the line of business 
  • name of the line of business.

If you need to change the line of business, you must submit a ‘Notification on amendments and on termination of business’ to the Business Information System (ytj.fi). You can file the notification electronically or use paper form Y6.

Additional information provided by (name)

Enter the name of a person who can give additional information on the tax return to the Tax Administration.

Telephone number

Also enter the telephone number of that person.

Request for refund of tax paid on foreign income

Check the box if the company has paid taxes in a foreign country during the tax year and you are claiming a refund for the foreign taxes paid. Provide more detailed information on Form 70e (Claim for removal of double taxation).

Double-entry bookkeeping

Check the box if you use double-entry bookkeeping.

2 Calculation of taxable income

Report taxable income and tax-deductible expenses in the Tax assessment column of section ‘Calculation of taxable income’.

Report in the Accounting column any income and expense items in which the amount recorded in the accounts may be different from the taxable amount or the amount to be taken into account in the tax assessment. If the tax return form has both an ‘Accounting’ column and a ‘Tax assessment’ column for an income item or an expense item, fill in both columns even if the amounts are exactly the same.

Report on this form only information relating to the business activities of a business operator or self-employed person.

2.1 Business income

Income from business activities comprises all the income you have received from business activities, either in cash or as a benefit with a monetary value.

Report sales income on a net basis, without VAT.

Net sales

Net sales for the tax year. Net sales comprise the sales income from primary operating activity minus the discounts granted, VAT, and other direct taxes based on sales volumes.

If you use single-entry bookkeeping, report the sales income without VAT and subtract the sales adjustment items from the income.

Grants and subsidies received

Report here only such grants and subsidies relating to business activities (from the Ministry of Economic Affairs and Employment, Ministry of the Environment, Business Finland, etc.) which have been recorded directly as revenue. Grants received from public sector organisations are not reported here. Instead, record them indirectly as an acquisition cost deduction.

If you have been granted a VAT relief, report it here.

Other business income

Other taxable business income, such as

  • capital gains from fixed assets
  • damages you have received
  • other taxable business income not reported as business income elsewhere in the calculation of taxable income.

Use of business assets for private purposes, if expenses are included in business accounting

Private use of a car

Report here the portion of expenses attributable to private use of a car if the expenses for private use are included in the expenses deducted in business accounting.

The private use includes, for example, travel between home and workplace. Report the travel expenses in connection with corrections to your pre-completed tax return.

Itemise business-related car expenses in section 6 (Itemisation of costs of passenger vehicles and vans included in fixed assets or leasing agreements, and other vehicles partly in private use).

Private use of goods

The original acquisition cost, without VAT, of goods taken into private use.

Other private use

The portion attributable to private use of a business-related telephone, real estate unit, holiday home or boat.

If you are using a business-related real estate unit for private purposes, report here the portion of the expenses and depreciation that corresponds to the private use.

Example: 60% of a real estate unit owned by a business operator is used as a workshop and 40% as the business operator's apartment. The interest expenses for the real estate unit are €8,000. The depreciation for the building is €2,000. Other expenses relating to the building are €3,000 in total. The portion added to the company’s business income under 'other private use’ is €5,200, i.e. 40% of the total expenses (€13,000).

Do not report cash withdrawals here. Report cash withdrawals and cash investments in section 7 (Cash withdrawals and cash investments as recorded in accounting).

Dividends and surplus

The taxable portion of dividends and surplus on a business source of income is determined on the basis of whether the payor of the dividends or surplus is a listed corporation.

Read more:

Dividends from listed companies

The total amount of dividends you have received from listed companies.

Taxable portion

85% of the dividends from listed companies are taxable business income and 15% are tax-exempt income. Enter the taxable portion here.

Dividends from non-listed companies

The total amount of dividends you have received from non-listed companies.

Taxable portion

75% of the dividends from non-listed companies are taxable business income and 25% are tax-exempt income. Enter the taxable portion here.

Surplus from listed co-operatives in Finland and other EU/EEA countries, and in non-EEA countries with which Finland has signed a tax treaty

The total amount of surplus you have received from listed co-operatives. A co-operative is a listed co-operative if its stakes or securities are traded in the stock exchange. There are no listed co-operatives in Finland at the moment.

Taxable portion

85% of the surplus distributed by a listed co-operative is treated as taxable business income and 15% as tax-exempt income. Enter the taxable portion here.

Surplus from unlisted co-operatives in Finland and other EU/EEA countries, and in non-EEA countries

The total amount of surplus received from unlisted co-operatives.

Taxable portion

Enter here the taxable portion of surplus received from unlisted co-operatives. To the extent that the surplus from unlisted co-operatives does not exceed €5,000 in total, 25% of the surplus is taxable business income and 75% is tax-exempt income. If the total surplus exceeds €5,000, 75% of the exceeding part is taxable business income and 25% is tax-exempt income.

In other words, surplus from unlisted co-operatives not exceeding €5,000 is taxed more lightly. The €5,000 threshold is specific for the taxpayer and can be applied only once a year. If the business operator or self-employed person has received surplus on several sources of income, a tax relief is applied to them in the following order:

  1. surplus on a personal source of income
  2. surplus on an agricultural source of income
  3. surplus on a business source of income.

If you are running a business with your spouse, you can use the remaining part of your spouse’s €5,000 tax relief in your business tax return. 

However, please note that surplus refunds, which are tax-deductible for co-operatives, are fully taxable income for the surplus recipient when the refunds relate to business activities.

Interest income and other financial income

Report here for example interest income on receivables and exchange rate gains you have received.

Relieved write-offs and reserves

Indicate here if the amount of reserves has decreased from the previous tax year.

Report here, for example, an operating reserve or unused replacement reserve recorded as revenue.

Determine the operating reserve separately for each tax year. The total amount of operating reserves created in the tax year and unreleased operating reserves created in previous years may not exceed 30% of the wages subject to withholding that you have paid during the 12 months preceding the end of the accounting period. The total amount may be exceeded if the amount of wages has decreased. In that case, the exceeding  part of the operating reserves made previously is taxable income for the tax year. Enter the exceeding part here.

Also itemise the reserves entered in the accounts on Form 62 (Itemisation of reserves, revaluations and depreciation). If you only have an operating reserve, report it in section 14 (Operating reserve) of the tax return. In this case you do not need to fill in Form 62.

Other taxable income

Taxable income not recorded in the income statement for the accounting period.

Total taxable business income

The total amount of taxable business income reported in the Tax assessment columns of section 2.1 (Business income).

2.2 Tax-exempt income in the profit and loss account

The total of other tax-exempt income recorded in the income statement.

Other tax-exempt income includes, for example, received refunds of subscription charges for electricity, telecommunication, water, sewage or district heat networks that you have paid to the network provider.

Also report here any interest on deposit accounts to which the act on tax at source on interest income (Laki korkotulon lähdeverosta 1341/1990) applies.

Do not include tax-exempt income in the income items reported in the calculation of taxable income.

2.3 Business expenses

Expenses incurred in acquiring or maintaining business income are deductible. If you are VAT-liable, enter your business expenses in the tax return without VAT. If you are not VAT-liable, enter the expenses with VAT.

Purchases and changes in inventory

Report here the acquisition cost of goods sold during the accounting period.

Calculate the acquisition cost of goods sold by adjusting the purchases of the accounting period with the changes in inventory of finished and unfinished goods (initial inventory + purchases during the accounting period – final inventory).

External services

Expenses arising from external services. External services include services, work and subcontracts for which an external actor has been paid and which relate to the primary operations.

Staff expenses

Wages, salaries and fringe benefits

Wages, salaries and fringe benefits you have paid to people employed in your business activities. You may not, however, deduct wages, salaries, pensions or other benefits paid to your spouse or to your family member born in 2005 or thereafter (under the age of 14 at the beginning of the tax year).

Pension and other staff expenses

Pensions and staff expenses you have paid.

The staff expenses include, for example, insurance contributions and the like arising from provision of pension, sickness and disability benefits and other such benefits and rights for employees and their relatives.

Depreciation

Planned depreciation and change in depreciation differences burdening the result.

If you have only depreciated movable fixed assets, provide an itemisation in section 5 (Depreciation on acquisition cost of movable fixed assets).

If you have also depreciated other types of fixed assets, provide itemisations on Form 62 (Itemisation of reserves, revaluations and depreciation).

Deductible portion

Enter here the deductible portion of depreciation according to § 24, § 30–34 and § 36–41 of the act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968).

The total depreciation may not exceed the maximum depreciation laid down in the act on the taxation of business income.

Property under a leasing contract is not eligible for depreciation.

Also report any depreciation from previous years that has not been deducted in your tax assessment (‘unused depreciation’) and that you want to deduct in tax year 2019. Specify the unused depreciation on Form 12A (Specification of unused tax depreciation).

Read more about depreciation (available in Finnish and Swedish, link to Finnish).

Entertainment expenses

The total amount of entertainment expenses recorded.

Deductible portion 50%

50% of entertainment expenses are deductible. Enter the deductible portion here.

Rental expenses

Rents related to business activities, such as rents for premises or equipment.

Other deductible expenses

Report here such other deductible business expenses that are included in the income statement for the accounting period but are not reported as business expenses elsewhere in section 2.3 of the calculation of taxable income. Such expenses include:

  • travel expenses
  • vehicle expenses
  • leasing fees.

Do not enter here your additional deductions for travel and vehicle expenses but report them at ‘Additional deductions’ in section 2.3 of the tax return. Specify the additional deductions in section 9 (Itemisation of increased living expenses arising from temporary business travel) and section 10 (Itemisation of private car use for business purposes) of the tax return.

Interest expenses

Interest expenses deducted in accounting.

Deductible portion

Enter here the tax deductible portion of interest expenses.

Not all interest expenses are deductible from business income. Interest is not deductible if the entrepreneur’s equity recorded on the balance sheet is negative due to withdrawals for private use and the private withdrawals have been financed with liabilities. In such a case, it is deemed that loans taken for business purposes have been partly used to finance the business operator’s or self-employed person’s cash withdrawals for private use. This part of the interest is not deductible from business income.

If you use double-entry bookkeeping, calculate the non-deductible part of interest, if any, in section 11 (Calculation of non-deductible interest expenses). Subtract this amount from the total amount of interest expenses, i.e. the amount entered in the previous line (Interest expenses). The amount of non-deductible interest expenses can never be higher than the interest expenses in total.

If you use single-entry bookkeeping, enter here the interest expenses for loans relating to business operations that you have deducted in accounting. Do not fill in section 11 (Calculation of non-deductible interest expenses).

Do not enter here any surtax, penalty interest, late penalty charges and late-payment interests or late-payment interests with relief, because they are not deductible.

Other financial costs

Other financial costs as recorded in the accounts.

Such financial costs include:

  • loan management costs
  • bank overdraft facility fees
  • bank guarantee commissions
  • credit insurance expenses
  • mortgage expenses
  • recovery expenses
  • exchange rate losses.

Increases to reserves

Increases in voluntary reserves as recorded in the accounts.

Report increases in reserves only if the amount of reserves has increased from the previous year. Also itemise the reserves entered in the accounts on Form 62 (Itemisation of reserves, revaluations and depreciation).

If the only reserve you have created is an operating reserve, report it in section 14 (Operating reserve) of the tax return. You do not need to fill in Form 62.

You can create an operating reserve if you have paid wages during the accounting period. Determine the operating reserve separately for each tax year. The total amount of operating reserves created in the tax year and unreleased operating reserves created in previous years may not exceed 30% of the wages subject to withholding that you have paid during the 12 months preceding the end of the accounting period.

The maximum amount of the operating reserves may be exceeded if the amount of wages has decreased. In that case, the exceeding part of the operating reserves made previously is taxable income for the tax year. Report the exceeding part at ‘Relieved write-offs and reserves’ in section 2.1.

A replacement reserve according to § 43 and a guarantee reserve according to § 47 of the act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968) are also tax-deductible under certain conditions.

Additional deductions

Additional deductions in total.

Specify the additional deductions in section 9 (Itemisation of increased living expenses arising from temporary business travel) and section 10 (Itemisation of private car use for business purposes) of the tax return. Add together the amount entered in line ‘Total’ in section 9, column 6 (Additional deduction) and the amount entered in section 10, subsection 7 (Additional deduction). Enter the total amount of additional deductions here.

Deductible expenses not entered in the accounts

All business-related tax-deductible expenses that are not included in the income statement for the accounting period.

Report, for example, a home office deduction or a business-related portion of the actual costs of using your own apartment for business purposes, unless you have deducted the costs in the income statement. Itemise the expenses in section 8 (Itemisation of use of private residence for business purposes).

Also report here business-related training deductions (§ 56, act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968)). Provide an itemisation and explain the grounds for the deduction on Form 79 (Training deduction – Business).

Total deductible business expenses

Enter here the total amount of tax-deductible business expenses as reported in the Tax assessment columns of section 2.3 (Business expenses).

Non-deductible expenses

Enter here the items deducted in accounting that are not tax-deductible. These items must not be included in the deductible expense items reported in section ‘Calculation of taxable income’.

Direct taxes

Difference between the income taxes paid and the tax refunds.

This line is not to be used, for example, to report real estate tax for a real estate unit used for business purposes. Real estate taxes are reported as business expenses and entered in ‘Other deductible expenses’ in section 2.3.

Fines and other penalty fees

Fines, financial sanctions and other penalty fees are not tax-deductible.

For example, a punitive tax increase, surtax and penalty interest or late-payment interest relating to taxes cannot be deducted, regardless of the tax they relate to.

Other non-deductible expenses

Other expenses recorded in the accounts that are not deductible from business income. 

Such non-deductible expenses include, for example, voluntary pension insurance contributions paid by the entrepreneur or their spouse. They can be reported as deductions in connection with the individual taxpayer's pre-completed tax return.

Report here mandatory YEL pension insurance contributions if they have been recorded in the accounts but have not been deducted as business expenses and you want to deduct them on your pre-completed tax return.

Note: If the above contributions have not been deducted as business expenses, you also have the option of transferring them as deductions to your spouse’s tax assessment.

Enter here depreciation on shares included in fixed assets, for they are not tax-deductible. Depreciation on securities other than shares and on fixed assets other than land are deductible only when the fair market value of such assets is substantially lower than the undepreciated acquisition cost at the end of the tax year (§ 42, act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968)).

Do not enter here any expenses for which you have made an income-entry for private use at ‘Use of business assets for private purposes’ in section 2.1 of the tax return.

Business profit

Report your positive business result here.

The business result is positive if the taxable income for the tax year is higher than the deductible business expenses.

Business loss

Report your negative business result here.

The business income is negative if the deductible business expenses for the tax year are higher than the taxable income.

3 Request for deduction of the loss from capital income

The negative result for tax year 2019 can either be recognised as business loss or deducted in part or in full from the capital income of the self-employed person.

  • If you want the Tax Administration to treat the negative result for tax year 2019 as business loss, the Tax Administration will deduct the recognised loss from the business income over the next ten years as income accrues.
  • If you want the Tax Administration to deduct the total loss for the tax year from future years’ profits, do not fill in this section 3.
  • If you want the Tax Administration to treat the loss or part of the loss as a deduction from capital income, fill in this section 3.

Amount of business loss deductible from capital income

If you want the loss for the tax year to be deducted from capital income in full, report the total amount of loss here. The loss for the tax year can also be deducted from capital income in part. In such a case, the remaining part of the loss for the tax year will be deducted over the next ten years from the income generated through business activities.

If spouses run the business together, a request for the deduction of loss from capital income is deemed to be a joint request. The Tax Administration divides the allowable loss deducible from capital income between the spouses on the basis of their percentage shares of work as reported at ‘Working at point of service (percentage)’ in section 4 (Division of business income between spouses).

4 Division of business income between spouses

If spouses are running a business together, business income is divided between them and taxed as their income.

The earned-income portion of business income is divided between the spouses according to their percentage shares of work done.

The capital-income portion of business income is divided between the spouses according to their percentage shares of net business assets.

Report the percentage shares of net business assets at ‘Share of net business assets’ and the percentage shares of work done at ‘Working at point of service’. Fill in your own percentage share in the ‘Entrepreneur’ column and your spouse’s in the ‘Spouse’ column.

The Tax Administration calculates the capital-income portion and earned-income portion of business income on the basis of the information you provide and divides the earned income and capital income between you and your spouse.

5 Depreciation on acquisition cost of moveable fixed assets (§ 30, § 31, act on the taxation of business income)

Fill in this section if the only type of fixed assets you have is movable fixed assets. If your fixed assets also include other types of fixed assets, itemise depreciation on Form 62 (Itemisation of reserves, revaluations and depreciation). Also fill in section 2.3 (Business expenses), subsection ‘Depreciation’, line ‘Deductible portion’ of the tax return.

Movable fixed assets are treated as a whole. To the amount reported at ‘Undepreciated acquisition cost at start of tax year’, add the fixed assets you have acquired during the tax year (‘Increase during tax year’) and then subtract the selling prices and insurance indemnities you have received for moveable fixed assets (‘Selling prices and insurance indemnities’). You can depreciate the remaining acquisition cost at 25% for the current tax year.

Report the amount at ‘Depreciation for the tax year’. Report any additional depreciation at ‘Additional depreciation (§ 32, act on the taxation of business income). The maximum amount you can depreciate is the amount that has been recorded in the accounts for the current tax year or previous tax years.

Example: You purchase a van for business use for €30,000. Your company has no other fixed assets. Calculate the depreciation in this section of the tax return. During the tax year, you can depreciate at most 25% of the purchase price, i.e. €7,500. Enter the purchase price of the van, €30,000, in ‘Increase during tax year’ and the depreciation,  €7,500, in ‘Depreciation for the tax year’. When you subtract the depreciation of €7,500 from the purchase price of €30,000, you get the remaining acquisition cost, which is €22,500. Enter the remaining acquisition cost in ‘Undepreciated acquisition cost at end of tax year’.

Remember to report the remaining acquisition cost of €22,500 at ‘Undepreciated acquisition cost at start of tax year’ in the next tax year.

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6 Itemisation of costs of passenger vehicles and vans included in fixed assets or leasing agreements, and other vehicles partly in private use

A vehicle is included in the fixed assets of business operations if the number of kilometres driven for business purposes is more than half of the total number of kilometres driven during the tax year. Report in this section:

  • costs for passenger vehicles and vans included in fixed assets
  • costs for vehicles other than passenger vehicles and vans, if the vehicles were partly in private use during the tax year
  • leased vehicles, if the leasing agreement lasts more than three months.

In this section, do not report the costs and kilometres of company cars in employee use.

Itemise here which types of vehicles are included in fixed assets. Report the total kilometres driven with the vehicles, and the other relevant details:

  • business use
  • private use 
  • total kilometres (= business use + private use)
  • total expenses (= actual costs + depreciation or leasing rent)
  • expenses on average per kilometre (= total expenses divided by total kilometres)
  • proportion of private use in total expenses (= private-use kilometres multiplied by average expenses per kilometre).

Check the appropriate box to indicate whether the car use data is based on a driver's log or other clarification.

Also indicate whether the private-use expenses have been deducted in accounting. If the private-use portion of the expenses has been deducted as an expense in accounting, check the box ‘Private use expenses deducted in accounting (page 1)’ and report the private use expenses in the calculation of taxable income, section 2.1, subsection ‘Use of business assets for private purposes, if included in business accounting’, line ‘Private use of a car’ (specify on page 3, section 6)’. If private use expenses are not included in the items deducted as business expenses, check the box ‘Private use expenses not deducted in accounting’.

Example: The actual vehicle expenses amount to €10,000. For the tax year, the vehicle was depreciated at €3,000. The total vehicle expenses are €13,000 (‘Total expenses’). During the tax year, 35,000 km have been driven with the vehicle. Of this, 20,000 km were attributable to business use and 15,000 km to private use. The average vehicle expenses are €0.37 per km (= €13,000 divided by 35,000 km). When the 15,000 km of private use is multiplied by the average expenses (€0.37 multiplied by 15,000 km), we get €5,500 as the private-use portion of the total expenses (line ‘Private use as a share of total expenses’). If all vehicle expenses have been deducted in accounting, check the box ‘Private use deducted in accounting’ and transfer the €5,500 to page 1 of the tax return, more specifically to section 2.1, subsection ‘Use of business assets for private purposes, if included in business accounting’, line ‘Private use of a car’.

7 Cash withdrawals and cash investments as recorded in accounting

Fill in this section only if you use double-entry bookkeeping.

Report cash withdrawals from business and cash investments to business. Report the information for the calendar year.

8 Itemisation of use of private residence for business purposes

Only fill in this section if you have used your own apartment for business purposes.

An apartment is included in private assets if at least half of the area of the apartment has been used for other than business purposes. Report the following information on such an apartment:

  • total area (m2)
  • area used for own business purposes (m2) 
  • rent, general housing company expenses or operating costs for the real estate unit 
  • portion of the above expenses attributable to your business activities.

On the basis of the area used for business purposes, calculate the portion of expenses attributable to the area in business use.

If the expenses have not been recorded in the accounts, transfer the portion of the expenses attributable to your own business activities to section 2.3, subsection ‘Deductible expenses not entered in the accounts’. If the expenses have been entered in the accounts, report them in section 2.3, subsection ‘Other deductible expenses’.

Example The total area of the apartment is 90 m2. This includes an office room that you use for business purposes. The area of the office room is 9 m2. The rent for the apartment is €1,000 per month, i.e. €12,000 per year. The portion of the expenses attributable to business purposes is 9 m2 / 90 m2 x €12,000 = €1,200. This is entered in ‘Own business activities as a share of the aforementioned expenses’ on the tax return.

An apartment included in private assets is not taken into account in the calculation of the net assets of a business operator or self-employed person (Supreme Administrative Court decision 1998/3248).

Read more about the deduction of home office related costs (available in Finnish and Swedish, link to Finnish).

9 Itemisation of increased living expenses arising from temporary business travel

A business operator or self-employed person is entitled to an additional deduction on the basis of temporary business travel or using a private car for business purposes (§ 55, act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968). The additional deduction based on temporary business travel is itemised in this section of the tax return, and the additional deduction based on the use of a private car is itemised in section 10 (Itemisation of private car use for business purposes).

The maximum amounts for the additional deductions are the same as the maximum amounts for tax-exempt kilometre allowances and per diem allowances. See the limits in the Tax Administration's cost allowance decision (Decision of the Tax Administration on tax-exempt allowances for travel expenses in 2019). Deductions for increased living expenses are granted, where applicable, in accordance with the grounds specified in sections 6 and 10–13 of the decision.

Do not fill in this section if you have deducted increased living expenses attributable to business travel in accounting and the total amount of the expenses exceeds the maximum additional deduction calculated according to the cost allowance decision. The actual expenses are deducted in the tax assessment, so an additional deduction cannot be made.

Increased living expenses can be used as a basis for an additional deduction for a temporary business-related trip outside the primary area of operation. If the destination was a place of business within the primary area of operation, no deduction can be made.

Read more and see examples of additional deductions (available in Finnish and Swedish, link to Finnish).

1 Type of travel

Use the dedicated lines to enter information on travel in Finland lasting more than 10 hours, travel in Finland lasting 6–10 hours, and travel abroad. Travel in Finland lasting more than 10 hours entitles to a deduction that is not higher than the per diem allowance, and travel lasting 6–10 hours entitles to a deduction that is not higher than the partial per diem allowance. Travel abroad entitles to a deduction that is not higher than the foreign per diem allowance.

2 Number of travel days

Enter here the number of travel days.

3 Maximum amount/travel day

Report in this column the maximum deductions for domestic travel per travel day:

  • more than 10 hours: €42.00
  • more than 6 hours: €19.00.

The maximum deduction for travel abroad per travel day is the same as the foreign per diem allowance. As the amount of per diem allowance varies between countries, however, the maximum deduction per travel day is not entered in the form. All you need to do is report the total amount of travel abroad at ‘Total maximum amount’.

4 Total maximum amount

Calculate and report the total maximum amount of deduction for all travel days. Enter the information on each travel type on its own line.

To calculate the maximum amount of deduction for travel abroad, multiply the total travel days in each country by that country's foreign per diem allowance and add together the amounts of all the countries. Check the maximum amounts of per diem allowance abroad in the Tax Administration's cost allowance decision (Decision of the Tax Administration on tax-exempt allowances for travel expenses in 2019).

5 Deducted in accounting

On each line, report the portion of the increased living expenses related to temporary business travel that you have deducted in accounting.

6 Additional deduction

Calculate and enter here the amount of additional deduction: subtract from the maximum amount the expenses that you have deducted in accounting. If you have not deducted any of the increased living expenses in accounting, enter here the same amount that you entered in column 4 (Total maximum amount).

Add the total amount of additional deduction to the amount entered in section 2.3 (Business expenses), line ‘Additional deductions’.

10 Itemisation of private car use for business purposes

Only fill in this section if the car is included in private assets, i.e. at least 50% of the total kilometres driven have been for other than business purposes (e.g. private car use, car use attributable to sources of income other than business, and car use for other income-generating activities). The use of this type of car entitles to an additional deduction (§ 55, act on the taxation of business income (Laki elinkeinotulon verottamisesta 360/1968)).

The maximum amount for the additional deduction is the same as the maximum amount for tax-exempt kilometre allowances payable to wage earners. See the limits in the Tax Administration's cost allowance decision (Decision of the Tax Administration on tax-exempt allowances for travel expenses in 2019).

Do not fill in this section if you have deducted expenses of a car included in private assets in accounting and the total amount of the expenses exceeds the maximum additional deduction calculated according to the cost allowance decision. The actual expenses are deducted in the tax assessment, so an additional deduction cannot be made.

A car is included in business assets if business use accounts for more than half of the kilometres driven. No additional deduction is given for the use of a car included in business assets; the car's actual costs, from which the portion of private use has been subtracted, are deducted as business expenses.

1 Car use data is based on

You are only entitled to an additional deduction if you have kept a driver’s log on all business-related kilometres.

Record in the driver’s log the following information:

  • start and end date and time of the trip
  • starting point and destination
  • odometer reading at the start and end
  • kilometres driven
  • purpose of the trip
  • user of the car
  • total number of kilometres driven with the car during the year.

If you have only made a single trip or not driven much, you can provide another type of clarification in place of the driver’s log. The clarification must contain the same information as is recorded in the driver’s log.

Do not send the driver’s log or the clarification as an attachment to the tax return. The Tax Administration will ask you for them, if necessary.

2 Total kilometres

The total number of kilometres driven with the car during the tax year.

3 Business use

The number of kilometres driven for business purposes during the tax year.

4 Maximum amount/km

In 2019 the maximum deduction is €0.43/km. The amount per kilometre may be increased in certain situations.

For information on special situations, see the Tax Administration's decision (Decision of the Tax Administration on tax-exempt allowances for travel expenses in 2019).

5 Total maximum amount

Enter here the maximum amount of deduction. Calculate the amount by multiplying the number of business-related kilometres by the maximum deduction (€/km).

6 Deducted in accounting

Enter the amount you have deducted in accounting as expenses for a car included in private assets.

7 Additional deduction

Calculate and enter here the amount of additional deduction: subtract from the maximum amount the expenses that you have deducted in accounting. If you have not deducted any expenses for a car included in private assets in accounting, enter here the same amount that you entered in subsection 5 (Total maximum amount).

Add the additional deduction to the amount entered in section 2.3 (Business expenses), line ‘Additional deductions’.

11 Calculation of non-deductible interest expenses

Fill in this section only if you use double-entry bookkeeping.

If the equity of a business operator or self-employed person is negative due to cash withdrawals for private use and if a loan was needed to cover the private withdrawals, part of the loans is allocated to financing the private withdrawals instead of business activities. Interest on such a loan is not deductible as a business expense.

Calculate the portion of interest expenses that you cannot deduct as business expenses due to negative equity. Calculate and report here the non-deductible interest expenses:

  • Enter negative equity as shown in the balance sheet at the end of the accounting period (do not enter the minus sign).
  • Add the revaluation increase included in equity to the negative equity of the closing balance sheet. 
  • Subtract from the amount the loss for the accounting period and any losses from previous accounting periods that cannot be covered by retained earnings.
  • Enter the resultant amount in line ‘Adjusted negative equity’ and transfer the adjusted negative equity to the calculation of net worth, more specifically to section 12.2 (Business liabilities), line ‘Adjusted negative equity’ (not, however, more than the total amount of business liabilities).
  • Multiply the adjusted negative equity by the basic interest rate on the date of financial statements plus one percentage point. Report the resultant amount at ‘Non-deductible interest on business income’. From 1 January 2019 to 30 June 2019, the basic interest rate was 0.25%, and from 1 July 2019 to 31 December 2019, 0.00%.
  • Deduct this non-deductible interest from the total amount of interest on business income in section 2.3, line ‘Interest expenses’. Report the difference in line ‘Deductible portion’. The amount of non-deductible interest cannot exceed the interest expenses in total.

There may also be restrictions for the deductibility of interest if the equity is positive due to a revaluation increase. Read more about restrictions for the deductibility of interest (available in Finnish and Swedish, link to Finnish).

If pursuant to the provisions of the act on income tax (Tuloverolaki 1535/1992) the interest calculated on the basis of residual negative equity is deductible from a personal source of income, you can deduct it from your capital income in connection with completing your pre-completed tax return.

12 Calculation of net worth

Division into capital income and earned income

The net worth of business activities is calculated for purposes of the business operator’s or self-employed person’s tax assessment. The Tax Administration uses the value of net worth when dividing business income into capital-income and earned-income. In the tax assessment of 2019, the value of net worth in 2018 is used. If the business activities were not launched until in tax year 2019, the capital-income portion is exceptionally calculated on the basis of the net worth at the end of tax year 2019.

The capital-income portion comprises an amount corresponding to a 20% return calculated on the net worth of business activities in 2018. The capital-income portion can also be considered to comprise a 10% return or, alternatively, the business income can be taxed in full as earned income. If the business operator or self-employed person wants these calculation methods to be used in their tax assessment, they must request it separately. The request can be made in section 17 (Request for division of business income) of the tax return.

A non-standard accounting period (longer or shorter than 12 months) affects the size of the capital-income portion.

Before the calculation of the capital-income portion, 30% of the wages subject to withholding that you have paid over the 12 months preceding the end of the tax year are added to the net worth. (Report the wages in section 15.)

If the business income includes capital gains on real estate or securities included in fixed assets, the proportion of capital gains in business income is always treated as capital income, regardless of the value of net worth. (Capital gains for securities and real estate included in fixed assets are reported in section 16).

Read more about the income taxation of business operators and self-employed persons (available in Finnish and Swedish, link to Finnish).

Report the information on the net worth of the business in this section 12. Report the assets and liabilities of agricultural activities on the tax return for agricultural activities (Form 2). Other assets and liabilities are found on your pre-completed tax return. If necessary, you can make corrections to the pre-completed tax return either in MyTax or by using Form 50B (Capital income and deductions).

Tax liabilities and tax assets

In the calculation of net worth, deferred tax assets according to the Accounting Act (chapter 5, § 18) are not regarded as assets and deferred tax liabilities are not regarded as liabilities. This means that any income tax liabilities that have not been ordered to be paid will also not be taken into account in the calculation of net worth.

12.1 Business assets

Report asset details on the basis of the accounting period that ended last. Use the undepreciated acquisition cost of the assets when you enter them in the calculation. Exceptions are separately specified in these instructions.

Fixed assets

Real estate, buildings and structures

A real estate unit comprises a land area and the buildings on the land. According to § 6 of the act on income tax (Tuloverolaki 1535/1992), real estate also refers to a building, structure or the like which is located on another owner's land and which can be handed over to a third party without consulting the landowner such that the right of possession of the land is also transferred.

Itemise the real estate, buildings and structures intended for permanent business use on Form 18B (Real estate units included in fixed assets). Enter the value of each real estate unit using the undepreciated acquisition cost or the comparison value for 2019, whichever is higher. Make the comparison and select the value individually for each real estate unit. Transfer the aggregate value for real estate from Form 18B to line ‘Real estate, buildings and structures’ on the tax return.

Machinery and equipment

Report here the value of the machinery and equipment intended for permanent business use. The value of the machinery and equipment is the part of the acquisition cost that is not depreciated in income taxation.

Fixed-asset securities

Itemise the securities included in fixed assets and financial assets on Form 8B (Securities and book-entries relating to business source of income – Business partnership and business operator/self-employed person). The purpose is to determine which is the greater of the two: the aggregate undepreciated acquisition cost of securities included in fixed assets and financial assets or the aggregate comparison value.

Compare the amounts entered in the last line of Form 8B (Fixed assets and financial assets in total). If the undepreciated acquisition cost is greater, transfer the total amount of undepreciated acquisition cost from line ‘Total fixed assets’ of Form 8B to this line (‘Fixed-asset securities’) of the tax return. If the comparison value is greater, report the aggregate comparison value from the same line.

Other fixed assets

The value of assets included in other fixed assets. Other fixed assets include, for example,

  • gravel and sand pits
  • ore and mineral deposits
  • quarries
  • peat bogs
  • railway
  • dams
  • bridges
  • basins.

Current assets

Goods

Goods acquired from an external supplier and intended to be sold as such in the course of business. If you are engaged in wholesale or retail trade, you can include here the packaging materials acquired for the purpose of selling the goods.

Other current assets

Assets included in other current assets. Other current assets include, for example, raw materials and supplies, and self-manufactured products.

Financial assets

Accounts receivable

Long-term and short-term accounts receivable, instalment accounts receivable, etc.

Cash (in hand, no bank deposits)

Cash in hand related to the business activities of a business operator or self-employed person. Deposits that are tax-exempt or subject to tax-at-source are not reported as assets on the tax return, so do not include them in the amount reported here.

Financial-asset securities

Itemise the securities included in fixed assets and financial assets on Form 8B (Securities and book-entries relating to business source of income – Business partnership and business operator/self-employed person). The purpose is to determine which is the greater of the two: the aggregate undepreciated acquisition cost of securities included in fixed assets and financial assets or the aggregate comparison value.

Compare the amounts entered in the last line of Form 8B (Fixed assets and financial assets in total). If the undepreciated acquisition cost is greater, report here (‘Fixed-asset securities’) the total amount of undepreciated acquisition cost as indicated in line ‘Total financial assets’ of Form 8B. If the comparison value is greater, report the aggregate comparison value from the same line.

Other financial assets (no bank deposits)

Report here all the items included in financial assets that you have not reported above. Enter here, for example, business-related receivables that are not based on the selling of goods or services. Deposits that are tax-exempt or subject to tax-at-source are not reported as assets on the tax return, so do not include them in the amount reported here.

Total business assets

The total amount of business assets in section 12.1.

12.2 Business liabilities

Report liabilities on the basis of the accounting period that ended last.

Current liabilities

Report here current liabilities. A liability is regarded as current (short-term) if it is due for payment within a year or less.

In the calculation of net worth, deferred tax liabilities according to the Accounting Act (chapter 5, § 18) are not regarded as liabilities.

Non-current liabilities

Report here non-current liabilities. A liability is regarded as non-current (long-term) if it is due for payment after a year or more.

Subtract adjusted negative equity from total liabilities

Adjusted negative equity

Report here the amount of adjusted negative equity that you calculated in section 11 (Calculation of non-deductible interest expenses) of the tax return; not, however, more than the total amount of business liabilities.

Total business liabilities

Add together the current and non-current liabilities and subtract from the resulting amount the amount of adjusted negative equity.

12.3 Net worth of the business

Positive net worth of the business

Subtract from the total amount of business assets (line ‘Total business assets’) the total amount of business liabilities (line ‘Total business liabilities’). If the resulting amount is positive, report it here.

Negative net worth of the business

Subtract from the total amount of business assets (line ‘Total business assets’) the total amount of business liabilities (line ‘Total business liabilities’). If the resulting amount is negative, report it here.

13 Type of equity

Only fill in this section if you use double-entry bookkeeping. If the amount of equity is negative, enter a minus sign (–).

Equity, start of year

Report here, for example, the profit or loss from previous accounting periods. If the amount of equity was negative at the start of the accounting period, enter a minus sign (–).

Cash withdrawals and cash investments (for private use)

Difference between the cash withdrawals and cash investments for private use made during the accounting period. Enter the difference with a minus sign (–) if the amount of cash withdrawals during the accounting period is higher than the amount of cash investments.

Profit/loss for the year (as shown by accounting)

Report here the profit/loss for the accounting period as recorded in the income statement: Enter the profit for the accounting period with a plus sign (+) and the loss for the accounting period with a minus sign (–).

Equity, end of year

Positive or negative amount of equity at the end of the accounting period. Enter the negative equity with a minus sign (–).

14 Operating reserve

Report here the amount of operating reserve for tax year 2019. If you have not made any other reserves, report the operating reserve only in this section. You do not need to fill in Form 62.

You can create an operating reserve if you have paid wages during the accounting period. The total of the operating reserves created in the tax year and the unreleased operating reserves created in previous years may not exceed 30% of the wages paid during the 12 months preceding the end of the accounting period. If the reserve was created for the maximum amount but less than the estimated amount of wages was paid, part of the reserve may be recorded as income. Report relieved reserves in the calculation of taxable income, section 2.1 (Business income), line ‘Relieved write-offs and reserves’.

Example: The operating reserve for 2018 was €30,000. In total, €80,000 of wages subject to withholding tax were paid during the 12 months preceding the end of the accounting period 2019. 30% of this amount is €24,000. In 2019, operating reserves are relieved in the amount of €6,000 (€30,000 – €24,000) and reported as income in section 2.1 (Business income), line ‘Relieved write-offs and reserves’. The remaining €24,000 is entered in section 14 (Operating reserve).

15 Wages paid

Report here all the wages subject to withholding tax that you paid during the 12 months preceding the end of tax year 2019.

In the Tax Administration's calculation of the divisible capital-income portion of business income, 30% of the amount of wages you report here are added to the net worth of business.

Example: The business operator’s accounting period is 1 July to 30 June. The total amount of wages paid during the period of 1 July 2018 to 30 June 2019 (= tax year 2019) is €20,000. Since the accounting period is 12 months, the total amount of wages paid during the accounting period – €20,000 – is reported in section 15.

16 Capital gains for securities and real estate included in fixed assets

Report here capital gains on securities and real estate included in fixed assets. Capital gain means the positive difference between the selling price and the undepreciated acquisition cost. Add the amount of capital gains to the income that you report in the calculation of taxable income, in section 2.1 of the tax return.

At the least, an amount equivalent to the amount of capital gains on fixed-asset real estate and securities is deemed as capital income. A separate itemisation must therefore be provided on the above-mentioned capital gains.

Do not enter here the portion of capital gains from which a replacement reserve has been created.

17 Request for division of business income

Business income is capital income up to the amount corresponding to a 20% annual return on the net worth of the business in the previous tax year.

If you request that the limit on the amount of capital income should be at an annual return of 10%  on the net worth rather than at 20%, check the box for the first option: ‘Request for maximum amount of capital income to be set at 10% of net worth’.

If you request that the business income should be treated fully as earned income, check the box for ‘Request for jointly taxable income to be fully treated as earned income’.

In this section, only one of the boxes can be checked. From a tax assessment perspective, the best option depends on the earned income of both the business operator and their spouse and the deductions made from the income.

Please note that if the spouses are running the business together, the request for division of business income (box checked in section 17) is regarded as their joint request.

Date, signature and telephone number

If you are filing your tax return on paper, remember to sign the tax return form. Also enter the date of signature. You can also give your telephone number.