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Claiming tax deductions for pension premiums (YEL)
Because you are a business owner, the party responsible for paying for your pension insurance is yourself. Under the YEL laws, you need to have a special insurance contract for this purpose. The YEL insurance is mandatory when you meet the conditions for it – in other words, when you are covered by the Pensions Act (Yrittäjän eläkelaki in Finnish). Being a business owner, entrepreneur, self-employed professional, etc., you can sign the insurance contract with a pension insurance company or alternatively, with a pension fund.
Claim deductions for the premiums you had paid into a “YEL” pension plan
Because you are a business owner, the party responsible for paying for your pension insurance is yourself. Under the YEL laws, you need to have a special insurance contract for this purpose.
The YEL insurance is mandatory when you meet the conditions for it – in other words, when you are covered by the Pensions Act (Yrittäjän eläkelaki in Finnish). Being a business owner, entrepreneur, self-employed professional, etc., you can sign the insurance contract with a pension insurance company or alternatively, with a pension fund.
How to claim the paid contributions or premiums and get the deductions
You can write the claim amounts into your company’s business tax return, or into your personal tax return, or into your spouse’s tax return. The tax rules only allow you to claim the mandatory pension insurance contributions against the business profits of your company or enterprise.
If you enter the paid-in YEL contributions as business expenses, the effective result is a subtraction of their amount from the company’s profits for the year. If, instead, you claim them when you complete your personal pre-completed tax return, the benefit resulting from the claim is the same as your percentage rate of income tax on earnings. Still another alternative is to claim your YEL contributions by writing their amount into the pre-completed tax return of your spouse.
Please note that no double claims in conjunction with the tax year’s YEL contribution payments can be made: you cannot write them into your business tax return if you claim them on your personal pre-completed return.
How to file in MyTax
Select one of the options given below.
Include the paid-in amount in the Business tax return (Form 5) of your company as a deductible business expense. Deduct the sums either in the section Wage or staff expenses or Other deductible expenses not recorded in the accounts, depending on how the payments were recorded in accounting.
Read the instructions for completing the tax return (Form 5).
- This alternative involves filling in the Other deductions section of your personal pre-completed tax return for the year, and writing the sum into the YEL or MYEL contributions or other mandatory pension insurance contributions line.
- If the YEL contributions are recorded as expenses in your business accounting, you will also need to include them in the Expenses section under Other non-deductible expenses on the Business tax return (Form 5), because otherwise, the deduction would be claimed twice.
See the instructions:
- It is permissible to include the pension insurance contributions in the Other deductions section of your spouse’s personal pre-completed tax return for the year – YEL or MYEL contributions or other mandatory pension insurance contributions.
- If the YEL contributions are recorded as expenses in your business accounting, you will also need to include them in the Expenses section under Other non-deductible expenses on the Business tax return (Form 5), because otherwise, the deduction would be claimed twice.
See the instructions:
What is the definition, for tax purposes, of ‘spouse’?
The pre-completed tax return and its yearly time plan
Checking and making corrections to the pre-completed tax return
Other resources
You can look up the pension rules to verify whether you have to pay YEL contributions. You can contact a pension insurance company or the pension fund of your own sector of business (if applicable). For more information, visit https://www.tyoelake.fi/en/.