Taxation of dog breeders – file your income and deduct expenses
The money you make from selling dogs is taxable income. You need to pay tax on the money you make from selling an individual dog and on income you receive from activities as a dog breeder, e.g. when you sell puppies. Stud fees are also taxable income.
Income and expenses related to dog breeding are treated in taxation either as a hobby activity, an income-generating activity or a business activity, depending on the nature of the operation. The differences between the activities affect the accounting and recordkeeping obligations, the processing of income and expenses, and the right to deduct losses. In borderline cases, the situation is evaluated as a whole and the nature of the activity is determined based on an overall assessment.
Read more about hobby activities, income-generating activities and business activities (in Finnish and Swedish, link to Finnish).
You can deduct expenses related to breeding a litter of puppies for sale
If you breed puppies for sale, you can deduct the expenses incurred from the generation of income. Expenses that are directly related to breeding puppies include the stud fee, the cost of feeding the puppies, mandatory health examinations for the puppies of the litter in question veterinary expenses, microchipping costs, or the expenses related to the cost of supplies given to puppy buyers.
Instead, you cannot deduct expenses related to the dam, such as the acquisition cost of the dam, feeding costs, entry and participation fees for dog shows and other activities, general health examination costs, extra housing costs, or any other expenses related to having dogs.
If you breed dogs as a hobby
Frequent selling and breeding of dogs is considered a hobby when the actual purpose of the operation is not the production of income, i.e. when you are not selling and breeding dogs with a firm intention to earn income. If your hobby expenses exceed the amount of income generated, i.e. you incur a loss, you cannot deduct the loss in taxation.
If you sell an individual dog, the sale does not constitute a dog breeding operation. The profit you make is taxed according to the provisions on capital gains.
Read more about the taxation of capital gains (in Finnish and Swedish, link to Finnish).
How to report the income and expenses on your tax return
How to file in MyTax:
- If you breed dogs as a hobby or occasionally:
- Enter the amount of income in the section Other earned income.
- Report the expenses that relate to the income under the section Production of income – Expenses for the production of other income than wage income – Expenses for the production of income relating to benefits and other earned income.
The amount of expenses you can report cannot be higher than the amount of income you have received.
- If you are breeding dogs in order to produce income:
- report your income and expenses on the tax return under Other income – Production of income.
- If you sell an individual dog, e.g. your own pet dog:
- If you make a profit, report it on your tax return under Capital gains.
Remember to keep notes of your income and the expenses related to the income. Do not enclose receipts with your tax return.
How to file on paper forms
Select a correct form:
- Form 50A: Hobby activities and occasional earned income (Earned income and deductions)
- Form 11: Activities for the production of income
- Form 9: Occasional sales of individual dogs (Capital gain or capital loss)
When is dog breeding considered a business operation?
Large-scale dog breeding can also be a business operation. In this case, dog breeding is your main source of income or a significant source of secondary income. File these types of business income and expenses on the business tax return (Form 5).
Read more about how to start up a business and manage its taxes.
Dog breeding and VAT
If you operate a dog breeding business and your company’s turnover exceeds €15,000 in an accounting period, you must also register for VAT.
- Registering for VAT or voluntarily applying for VAT registration
- VAT liability for small-scale businesses
Frequently asked questions
- Yes, but note that the maximum amount of deductible expenses is the amount of income you receive from dog breeding. Remember to report the total amount of income.
- If you incur a loss from your hobby activity, you cannot deduct the loss in taxation.
Report the income you receive from selling the puppies in the sale year’s taxation. In the sale year’s taxation, you can deduct the expenses incurred from breeding and rearing the puppies in the year of birth and in the year of sale.
No, you cannot. Any hobby activities involving the dam or the sire of the litter are not directly related to puppy breeding, and neither are the expenses arising from such activities. Therefore, these expenses are not tax-deductible.
- If the mandatory health examination for breeding purposes is directly related to the income you receive from dog breeding, the expenses can be deducted in taxation. The maximum amount of deductible expenses is the amount of income you receive from dog breeding.
- Please note that there are different types of health examinations and not all of them are directly related to income from dog breeding. General health examination costs cannot be deducted from the income you receive from dog breeding.
When the dam is pregnant, any costs arising from examinations related to the pregnancy are tax-deductible. The maximum amount of deductible expenses is the amount of income you receive from dog breeding.
Any expenses related to problems arising during labour are directly related to the breeding of puppies. Therefore, you may claim a deduction on these expenses in your taxation. The maximum amount of deductible expenses is the amount of income you receive from dog breeding.
The deposit is considered income only if you do not return it to the carer or buyer. Report the deposit on the tax return of the year in which it is clear that you will not pay the deposit amount back.
Income from dog grooming may be considered income from a hobby activity, an income-generating activity, or a business operation. See the instructions on how to report income and expenses on your tax return.
No, you cannot deduct the expenses in your taxation because you receive no income from the activity.