Light entrepreneur or toiminimi in Finland 2026: what the difference costs
A light entrepreneur (kevytyrittäjä) works for their own customers but sends the invoices through an invoicing service, which collects the payment and pays them on. A toiminimi is a sole trader with a business ID. The light entrepreneur pays the service a fee and has fewer deductions; the toiminimi keeps books and deducts its actual business costs. Both may need VAT registration and YEL insurance.
How the invoicing service pays you
The service can pay you either wages or trade income, depending on your agreement with it, and you need the matching tax card. Since the Supreme Administrative Court's decision KHO 2023:42, your taxable pay is the customer's payment less the service's fee, and less the employer's health insurance contribution when that is charged. The fee is therefore not taxed, but you can no longer deduct it separately either. For someone with a business ID, the whole payment from the customer is business income, and the costs are deducted instead.
What each route costs
| Light entrepreneur | Toiminimi | |
|---|---|---|
| Starting | no registration | free with the Tax Administration only; 75 euros with the Trade Register too |
| Running | the service's fee, often a percentage of what you invoice | bookkeeping, done yourself or by an accountant |
| Health insurance charge | 1.91 % of wages in 2026, charged by the service when you are paid wages and must have YEL | none on your own income |
| Car used for work | a deduction of 0.27 euros a kilometre | the business share of actual costs; for a private car, topped up to 0.55 euros a kilometre |
In the Tax Administration's own example, the service's fee is 5 %. On 30 000 euros of invoicing, that is 1 500 euros a year; your service's price list gives the real figure. Against it, a toiminimi pays for its bookkeeping and its time. Which is cheaper depends on your volume and your costs, so compare the two with your own numbers.
Deductions
- Light entrepreneur. You deduct costs of earning the income on your personal tax return: travel, tools and the work share of your phone. For a car the deduction is 0.27 euros a kilometre, for a bicycle 100 euros a year in 2025. If you are paid wages, the first 750 euros of such costs are covered by the automatic deduction, so only costs above that make a difference; for trade income there is no such threshold.
- Toiminimi. You deduct all your business costs in the business's books, depreciate or expense equipment, and add the travel deductions on the business tax return. How the car deduction works is in our article on mileage and per diems.
VAT and YEL: the same rules for both
- VAT. A light entrepreneur paid trade income must register for VAT once that income passes 20 000 euros in a calendar year, just as a toiminimi must once its turnover does. Wages carry no VAT. See our article on the VAT registration limit.
- YEL. In pension and social insurance law, a light entrepreneur is usually treated as an entrepreneur, so YEL insurance is compulsory when its conditions are met. What it costs is in our article on YEL.
When you switch to a toiminimi
Close your account with the invoicing service. In a 2026 case (KHO 2026:48), an entrepreneur forgot to, and the service filed a nil VAT return for the same period as the entrepreneur's own return. The contradictory returns led to a tax increase, which the court reduced to 3 %.
A toiminimi gets a business ID, usually joins the prepayment register so that customers do not withhold tax from its invoices, and joins the VAT register when turnover requires it. Every business operator must keep books under the Accounting Act. Differences between a toiminimi and an Oy are in our article on toiminimi or Oy.
Where we fit in
We keep the books of sole traders every month and file their VAT returns, so switching from an invoicing service does not mean doing the bookkeeping yourself. See our services and prices.
Sources
- Tax Administration: light entrepreneur
- Tax Administration: the Supreme Administrative Court's decision changes the tax treatment of light entrepreneurs
- Tax Administration: travel expenses and other deductions, light entrepreneurship
- Tax Administration: employer's social security contributions 2026 (in Finnish)
- Finnish Patent and Registration Office: start-up notification of a sole trader (in Finnish)
- Tax Administration: working via a digital platform
- Supreme Administrative Court: KHO:2026:48 (in Finnish)
- Finlex: Accounting Act 1336/1997, chapter 1 (in Finnish)
Please note: this is general information about Finnish rules, not advice for your own situation, and the rules change. Ask us before you act on it.
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Karma Accounts is an accounting company in Finland for sole traders and small companies. We keep the bookkeeping current and file on time, and you get the amount before the due date.
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