The reduced car tax for taxicabs and full exemption from tax
Changes to Car Tax Act came into force on 1 July 2018:
- Reduced car tax for taxicabs will be abolished gradually.
- Minivans that accommodate passengers in wheelchairs are fully exempted.
- Full exemption may be granted to a minivan if it is operated for taking children to school or daycare.
What does operating a taxi service business require?
Under the new rules, you must have
- a permit (issued to your business enterprise) that entitles you to operate a taxi service
- the appropriate licence for the person who drives the taxi
- a vehicle with an appropriate vehicle registration, designating it for licensed operation in taxi transport.
More information on the taxation and operation of taxi services:
- What you need to know when starting up (Bulletin of the Tax Administration – 18 June 2018)
- Setting up a business enterprise (Tax Administration)
- Further information on taxi transport (Finnish Transport and Communications Agency Traficom).
When does the reduced car tax for taxicabs become available?
The Tax Administration grants the taxpayer a reduction of car tax if the following requirements are fulfilled:
- Your vehicle is registered expressly for operation in taxi service when you obtain Finnish vehicle registration for it for the first time.
- Your vehicle is primarily operated as a taxi.
The amounts by which car tax is reduced are:
- max. €3,000 for vehicles registered 30 June 2019 or earlier
- max. €2,400 for vehicles registered 30 June 2020 or earlier
- max. €1,200 for vehicles registered 30 June 2022 or earlier.
Car tax will not be reduced for vehicles that get their registration after 1 July 2022.
The reduction is adjusted downwards for every calendar month, and part of a calendar month, when the vehicle had been operated in other countries before its Finnish registration and Finnish designation for licensed operation in taxi transport. This way, one thirty-sixth part (1/36) per month is subtracted.
A motor vehicle was first registered in a foreign country, registration date 1 August 2018. It is entered in the Finnish register and designated for operation in taxi service on 15 September 2018. The amount by which car tax is reduced is max. €2,833.33 (€3,000 - 2/36 × €3,000).
When can a taxicab be completely exempted?
The vehicle you drive as a taxi may be completely exempted from car tax if the following requirements are met:
- Your vehicle is registered expressly for licensed operation in taxi transport (= “luvanvarainen käyttö”) when you obtain Finnish vehicle registration for it for the first time.
- Your vehicle is primarily operated as a taxi.
- It is also adapted for disabled passengers, or approved for transporting children to school or daycare.
- Additionally, it is approved for transporting at least six passengers (plus the driver), and one or more of the passengers can travel in a wheelchair.
Remember to keep a driver’s log
The taxi company must keep a logbook, either by driving shifts or by 24-hour periods if no shifts are scheduled. You can have a paper logbook or an electronic logbook. If the taxicab has a taximeter that prints out receipts, the logbook can be created by printed reports from the meter.
The driver’s log must contain the following information:
- Total kilometres for every calendar month, with separate entries for taxi rides with passengers and for other driving.
- School and daycare rides itemised by dates and by kilometres.
Please ensure that your driver’s logs are stored for at least 6 years from the end of each tax year. If requested, you are expected to retrieve your driver’s logs from storage and present them to the Tax Administration.
If you fail to comply with the above rules, you may have to pay a negligence penalty. Read more about consequences for non-compliance (in Finnish and Swedish only, link to Finnish).
The Tax Administration oversees the way taxpayers use the reduced car tax
Even after the assessment process of car tax is completed, the Tax Administration can still send you a letter to ask for further information in order to make sure the requirements for the reduced tax continue to be fulfilled.
If the vehicle has not primarily been driven as a taxi or if some other requirements are not fulfilled, the Tax Administration can perform a tax adjustment, i.e. impose car tax to be paid in full. The tax is imposed on the party liable to pay it, but in cases where a registered tax representative is responsible for fiscal obligations, the tax is imposed on the agent.
If the vehicle or the way it is operated no longer fulfils the requirements for reduced tax, and if less than 3 years have elapsed from the date of registration, the owner of the vehicle must inform Traficom of the changed circumstances. You must do so within one month. If the circumstances have changed, part of the reduced tax must be repaid. Traficom will collect the relevant amount after the report has been made.
Frequently asked questions about the reduced car tax for taxicabs
If you buy a new car, the dealer may handle the registration on your behalf and enter the appropriate clause in the registration document (= “luvanvarainen käyttö”). Alternatively, when you register the car for the first time, you can use the e-services of Traficom – or your insurance company’s e-service – to enter the clause in the registration document.
If more than half of the kilometres are driven for taxi transport purposes, your vehicle is treated as being operated primarily as a taxi.
The Tax Administration may ask you to provide further information to clear up the primary purpose of use. To provide such information, you can present the same driver’s log that you keep for purposes of income tax and VAT.
A business enterprise offers services to its customers in goods transport and taxi transport. It owns a passenger car. The car is driven both for goods and for taxi transport. The employees of the enterprise use the car for private driving as well. Transportation of goods takes up more than half of the car’s mileage, its operation as a taxi stands for one quarter, and the rest is private driving. In these circumstances, the car is not primarily operated as a taxi. For this reason, the requirements are not fulfilled for reduced car tax or for the full exemption.
Vehicles are considered adapted for the disabled if they are built and specially equipped for transporting passengers who sit in a wheelchair. The requirements are based on the rules set out by the Finnish Transport Safety Agency. Read more about taxis for the disabled (in Finnish or Swedish, Trafi).
Taxi vehicles can be exempted from car tax only if they have at least 6 approved passenger seats in addition to the driver’s seat. A space to accommodate a wheelchair counts as a passenger seat. To ascertain the exact number of seats, see the vehicle’s registration certificate.
The vehicle must fulfil the requirements set out in the Ordinance of the Ministry of Traffic and Communications and a set of relevant rules must be followed when the vehicle is driven.
Exemption is only available in cases where a local municipal council or joint council, a school or comparable institution has pre-ordered the transportation service of children and pupils, public financial support is received for the operation, and the passengers are:
- Children who go to a daycare centre
- Pupils of schools including pre-school, elementary school and additional tuition
- Pupils of secondary school