Taxi entrepreneur - how to start up your taxi service
In order to operate as an independent taxi driver, you must first be registered as a self-employed individual and get the necessary licences that entitle you to drive a taxi. The form of a company can be one of various legal forms, but taxi drivers are typically self-employed individuals operating under a business name (T:mi).
You must always report your fare income on a business tax return, regardless of whether the taxi ride was arranged by an outside intermediary or not.
When you start your business as an independent taxi driver, do as follows
Register as a self-employed business operator
Submit a start-up notification at ytj.fi. You will get your own Business ID and can sign up for the Tax Administration’s registers that include the VAT register, the prepayment register and the register of employers.
You need to enter your business name into the trade register because being a taxi entrepreneur requires an operating licence.
Read more about setting up a new business.
Apply for the necessary licences
In order to operate a taxi service, you must have a taxi service licence. In addition, the driver must have a taxi driving licence.
Visit the Traficom website for more information about applying for licences (available in Finnish and Swedish, link to Finnish).
Register your car for licensed use
If you drive a car as a taxi even part-time, you must register it for licensed use. The register entry may affect vehicle inspections and insurances.
Car tax can be reduced or the car can be exempted from car tax entirely if the car is designated for operation as a taxi when it is registered in Finland for the first time. You can request reduced car tax or exemption from car tax if the requirements are fulfilled.
Keep a driver's log
As a professional driver, you need to keep a driver’s log. If your vehicle has a taximeter that prints out receipts, your driver’s log can consist of the meter’s reports.
Keep the driver’s log by driving shifts or, if no shifts are scheduled, by 24-hour periods. The driver’s log must contain the following information:
- the fare income you receive, divided into cash amounts, credit payments and other income.
- the kilometres driven during the tax year, divided into taxi-service kilometres against payment, kilometres necessary for your operation but not paid for by your customers, and kilometres driven for private and other purposes.
If you have been granted reduced car tax or your car is exempt from car tax, your driver’s log must also include
- total kilometres for every calendar month, with separate entries for professional driving and for other driving
- school and daycare rides itemised by date and by kilometre, if the car has been exempted from car tax for this reason.
Make sure to store your driver’s logs for at least 6 years from the end of each tax year. If requested, you must present the logs to the Tax Administration.
Offer a receipt to your passengers
You must always offer a receipt to your paying customers. You can also send the receipt electronically, for example via email. Enter all the payment transactions in your company’s bookkeeping system.
Read more about the obligation to give a receipt: Play fair – don’t forget the receipt!
Register for VAT
You must register as a VAT taxpayer if you estimate that your annual turnover exceeds the threshold of €15,000 per accounting period (normally the calendar year). Even if your turnover is lower, you can still register if you want.
When you have been registered for VAT, you need to add VAT to all your taxi fare prices and transport fees. VAT is
- 10% in passenger transport
- 24% in other transport services (e.g. food deliveries or transport of goods).
Registration for VAT also entitles you to deduct the VAT that is included in the purchases you make for your taxi business. For example, you can deduct the VAT included in your fuel, repair or car wash expenses.
If the vehicle is used for other taxable business activities in addition to passenger transport and the vehicle is also in private use, VAT deductions can be made only with regards to passenger transport.
- Read more about VAT on a vehicle and its operating costs
- Read more about VAT for small companies
- See other guidance for VAT
File your income and deductions on the business tax return
Any income you receive from your taxi service is taxable income that you must file on the business tax return. The tax return for business operators and self-employed persons, for example, is filed in the spring, at the start of April.
For purposes of taxation, you can deduct the expenses that relate to your operation and that you have paid in order to generate business income. Examples of deductible expenses include fuel, car repair and car wash expenses. You can only make deductions based on the percentage of expenses that was used for your taxi operation.
Claim a deduction for the vehicle you use as a taxicab
You are entitled to a depreciation on the vehicle if the vehicle is part of the assets of your business enterprise. Motor vehicles are regarded as being part of your business assets if more than half of the kilometres driven during the year are business-related.
If your taxicab is not a business asset, you are allowed to claim an additional tax deduction based on the number of business kilometres driven.
Your driver’s log helps you to provide evidence regarding business-related driving.
- depreciation on fixed assets (available in Finnish and Swedish, link to Finnish)
- deductions for a self-employed person’s travel expenses (available in Finnish and Swedish, link to Finnish).
Note that, for the purposes of tax control, the Tax Administration receives information on the payments made to you from the intermediaries of passenger transport services. So please remember your filing obligation.