Working through an invoicing service company
If you are self-employed but do not have your own company, you are considered a light entrepreneur.
As a light entrepreneur, you invoice the customer through an invoicing service company. Your customer pays the invoice to the invoicing service company, which in turn pays you. However, you are responsible for marketing your services and acquiring customers. You agree with the customer on the terms and conditions of your work assignment and on the payment for the work.
Instructions for light entrepreneurs, such as food couriers
Do you work as a light entrepreneur or do you use a mobile application to get job assignments, such as food delivery?
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How does the invoicing service work?
Invoicing service companies have different ways of operating. An invoicing service company can
- make a formal employment contract with you – you are a wage earner and the company pays wages to you.
- make an invoicing contract with you – you are an individual (without a Business ID) or an entrepreneur (with a Business ID) engaged in the production of income and the company pays trade income to you or your company.
In employment and social insurance legislation, individuals using an invoicing service company are usually regarded as entrepreneurs. This means that as a light entrepreneur you must take out insurance in accordance with the legislation on entrepreneur’s pension, provided that certain conditions are met. For more information, go to tyoelake.fi/en.
If you do not enter into a formal employment relationship with your invoicing service company but instead operate under a business name or other form of self-employment, you may have to file and pay VAT.
The invoicing service company also handles different taxation-related entrepreneur and employer obligations on your behalf. The company charges you for their services.
You can read more about how invoicing service companies operate on their websites.
If you have signed a formal employment contract with an invoicing service company, the company will pay your income as wages.
The invoicing service company will use the tax rate on your tax card to withhold tax from your wages. The company will report the wages paid and the tax withheld to the Incomes Register.
Guidance on how to apply for a tax card in MyTax
In addition, the employee’s health insurance contribution (daily allowance contribution and health care contribution) is withheld from the wages. If you are a wage earner, the employee’s health insurance contribution is included in your withholding rate.
Invoicing service companies do not withhold pension insurance contributions and unemployment insurance contributions from wages, because pension insurance providers treat light entrepreneurs as entrepreneurs.
The invoicing service company pays the employer's health insurance contribution based on your wage amount. This contribution is usually collected from you.
Reimbursement for travel expenses
Invoicing service companies can pay different types of reimbursement for travel expenses, such as kilometre allowances and daily allowances.
Reimbursement for travel expenses in addition to payment for work
Reimbursement for travel expenses is governed by the same rules as in a conventional employment relationship.
Tax-exempt reimbursement types only include reimbursement for travel expenses, daily allowance, meal allowance, and accommodation allowance paid in addition to agreed wages. In addition, the reimbursement and its basis must be in line with the Tax Administration decision on tax-exempt reimbursement for travel expenses.
Reimbursement for travel expenses is exempt from tax if you have agreed with your customer that, in addition to paying you for your work, they will also reimburse your travel expenses, and the invoice includes a specification of the expenses.
Reimbursement for travel expenses included in total remuneration
If you have agreed with your customer on a total payment for your work that includes a reimbursement for travel expenses, the reimbursement is subject to tax. The invoicing service company can reimburse the expenses to you without withholding tax against a travel expenses statement if the reimbursement and its basis are in line with the Tax Administration decision on tax-exempt reimbursement for travel expenses. You can deduct your work-related expenses in your taxation as expenses for the production of income.
Reimbursement for actual travel expenses
The invoicing service company can pay you tax-exempt reimbursement for your actual travel-related expenses if you can present them tickets or other receipts. In this case, the reimbursement is exempt from tax regardless of whether you as the light entrepreneur have agreed with the customer on a total remuneration or whether the customer reimburses travel expenses in addition to paying you for your work.
Submit a travel expenses statement to the invoicing service company
The travel expenses statement must include the following information:
- purpose of the trip
- destination
- method of travel
- start and end date of the trip
- kilometres and unit prices used in the calculation of kilometre allowances.
If you have signed an invoicing contract with an invoicing service company, the company payment you receive from the company is trade income.
If you are not in the prepayment register, you will need a tax card for the trade income. In this case, the invoicing service company withholds tax from the trade income and reports the amounts to the Incomes Register.
Guidance on how to apply for a tax card in MyTax
An invoicing service company cannot pay you tax-exempt reimbursement for travel expenses. Reimbursement for actual travel expenses paid against a receipt, such as a ticket, is also subject to tax.
However, the invoicing service company can reimburse travel expenses to you without withholding tax if the reimbursement and its basis are in line with the Tax Administration decision on tax-exempt reimbursement for travel expenses.
Send the invoicing service company a travel expenses statement including the following information:
- purpose of the trip
- destination
- method of travel
- start and end date of the trip
- kilometres and unit prices used in the calculation of kilometre allowances.
You can deduct your work-related expenses in your taxation as expenses for the production of income.