Turning a toiminimi into an Oy in Finland: the order that avoids tax
A sole trader (toiminimi) cannot be turned into a limited company (Oy) directly. You found a new Oy, move the business into it and close the toiminimi, and the Oy gets a new business ID. If the business carries on in the same form, its assets and debts move over at their tax values and the ownership stays essentially the same, the change causes no immediate income tax. The founding costs 400 euros.
The three conditions for no tax
The Tax Administration treats the change as tax-neutral when the business stays the same business. That requires all three:
- The business continues in the same form in the new Oy.
- Its assets and debts move to the Oy, essentially all of them, at the values they had in the toiminimi's taxation.
- The ownership stays essentially the same: you own the Oy, as you owned the toiminimi.
Selling the assets to the Oy at a higher price, keeping part of the business outside, or bringing in a large new owner at the same time can break the identity and make the transfer taxable.
The steps
- Close the books of the toiminimi up to the transfer date, so you know exactly what moves over.
- Found the Oy and pay for its shares with the business. This is a contribution in kind (apportti), and it needs an auditor's statement on the value of what you put in. Because of that, the guided online package does not fit; the ordinary start-up notification costs 400 euros.
- File the notifications together at ytj.fi: the start-up notification for the Oy (form Y1) and the termination notification for the toiminimi (form Y6). One filing reaches both the Trade Register and the Tax Administration.
- Register the Oy for VAT and as an employer as needed. The change of form does not itself change your VAT liability.
- Move the bank account, contracts and invoicing to the Oy's name and new business ID.
What carries over, and what does not
| In the change | |
|---|---|
| Business ID | the Oy gets a new one |
| Assets and debts | move at their tax values |
| Confirmed tax losses | carry over to the Oy |
| Operating reserve (toimintavaraus) | dissolved and taxed in the year of the change |
| The toiminimi's tax year | ends when the Oy is entered in the Trade Register |
When it is worth it
Moving to an Oy usually pays once profits are higher than you need to live on, because profit kept in the company is taxed at 20 % instead of your personal rate. It also separates your own money from the company's, at the cost of double-entry bookkeeping, annual financial statements and payroll if you pay yourself a salary. We compare the two forms with real figures in our article on toiminimi or Oy, and registration fees are in our article on company registration costs.
The order matters more than the paperwork: decide the transfer date, close the toiminimi's books to it, and file both notifications together. If you want an accounting company in Finland to plan the change with your numbers and keep the books on both sides of it, ask before you file anything.
Sources
- Tax Administration: change of company form (in Finnish)
- Tax Administration: change of form of business into a limited company, detailed guidance 7.10.2025 (in Finnish)
- Finnish Patent and Registration Office: changing a private trader into a limited company (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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