Losses – business operators and self-employed individuals

If you are a business operator or a self-employed individual and your business makes a loss, the loss can be either

• confirmed as a loss from a business source or
• deducted from capital income. 

Confirmed losses can be deducted in coming years

The Tax Administration confirms the loss as a loss from a business source, unless you have separately requested that the loss should be deducted from capital income.

A confirmed loss can be deducted from business profits within the next 10 tax years. A tax year includes the accounting period or periods that end during the calendar year. If no accounting period ends in a given calendar year, the year is not taken into account in the calculation of the 10-year period.

Do not enter previous years’ losses in the tax return. The Tax Administration will deduct the confirmed losses automatically. The tax decision will show the losses from previous years that have been deducted from your business profits.

A loss can be deducted from the same year’s capital income at your request

You can request that your business loss for the tax year should be deducted in part or in full from your capital income. Claim the deduction before the tax assessment for the tax year is completed. The tax assessment end date varies between taxpayers. You can check your tax assessment end date in MyTax and on your tax decision. The tax assessment can end between May and October.

Losses are deducted from capital income after expenses for the production of income but before interest. If a business loss has been confirmed as a loss from a business source, it cannot be later deducted from capital income. An exception to this is a situation where you terminate your business operations. In that case, confirmed business losses can also be deducted from capital income.

How to file in MyTax

• If the tax year’s business profit is negative, the section Deduction for loss from capital income is shown in MyTax.
• Select Yes if you request that your business loss or part of it should be deducted from the tax year’s capital income.
• In addition, enter the amount of business loss that you want to be deducted from your capital income.

Losses can be divided between spouses

If you are engaged in business operations together with your spouse, you can claim that the business loss for the tax year should be deducted in full or in part from your capital income. You must make a joint claim before the tax assessment end date (spouses always have the same end date). You can make the claim in the business tax return.

How to file in MyTax

• If the tax year’s business profit is negative, the section Deduction for loss from capital income is shown in MyTax.
• Select Yes if you request that the business loss or part of it should be deducted from the tax year’s capital income.
• In addition, enter the amount of business loss that you want to be deducted from capital income.
• Note that if the spouses run a business together, the claim is a joint claim.
• In the Background section, enter your spouse’s share of work in the business under Division of business income between spouses. Enter the information in percentages.

The Tax Administration divides the confirmed loss and deducts it from the spouses’ capital income in relation to their shares of work. In other words, the loss cannot be deducted from the capital income of only one spouse.

You also receive income from a business partnership or your spouse's business operation

If you are a business operator or a self-employed individual and you also have a share in a business partnership, the business income you receive from the partnership is also regarded as income from a business source for tax purposes. Similarly, business income you receive from your spouse is also income from a business source.

If your own business operations generate a loss during the tax year or if you have confirmed losses from previous years, the losses can be deducted from the income you receive from the business partnership. If you receive income from your spouse's business operations, your losses for the tax year or for previous years will also be deducted from that income. 

After the business loss for the tax year has been deducted from the income, the remaining loss is either confirmed as a loss from a business source or deducted, at your request, from capital income. Read more: Business losses at termination of business (available in Finnish and Swedish, link to Finnish).