How to Register a Sole Proprietorship (Toiminimi) in Finland

Registering as a sole proprietor (known as toiminimi in Finnish) in Finland is appealing because the process is relatively simple, costs are modest, and there is no minimum capital requirement. You get full control, flexibility, and a low barrier to formalizing your freelance or small business operations.

It’s generally easy with many processes handled online through the Business Information System (YTJ) and Tax Administration (Vero). The VAT thresholds, name registration, and social security contributions are among the trickier areas, especially as your business grows.

Main challenges include choosing whether to register your business name, knowing when VAT becomes mandatory, estimating your taxable income (and prepayments), and understanding the cost of social security contributions. On the other hand, the benefits are lower startup costs, better access to formal contracts, tax deductions, and legal recognition.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official Finnish sources or seek professional guidance before taking action.

What is a sole proprietorship in Finland?

In Finland, a sole proprietorship is commonly known as toiminimi, which translates to “firm name”, and it refers to the business itself and the person who operates it. Other terms include, yksityinen elinkeinonharjoittaja, which means “private entrepreneur”. There is no distinction between you and your business as a legal entity, which means you are personally liable for business obligations and debts.

How does a sole proprietorship work in Finland?

Sole proprietership vs other business structures in Finland

Step-by-step guide: How to register a sole proprietorship in Finland

Step 1: Check eligibility

You must be at least 18 years old, not bankrupt or subject to any limitations, and have a Finnish personal identity code. You also need personal online banking codes, a mobile certificate, or an identity card with a microchip (HST card).

If you live outside the EU/EEA, you will need a valid passport and permit that allows self-employment.

Step 2: Choose your business name

You must include your full legal name in your business name. You can choose to register a company name, but it’s not mandatory. If using a unique trade name, check name availability through the Finnish Patent and Registration Office (PRH) name service.

Step 3: Gather required documents

• Valid ID/passport or national ID
• Personal identity number
• Personal online banking codes, a mobile certificate, or an identity card with a microchip (HST card)
• Description of business activity (type of service or goods)
• Contact information and Finnish address

Step 4: File the start-up notification

Submit a start-up notification via the YTJ (Business Information System). This gives you a Business ID and registers with necessary agencies (taxation and trade register if needed).

Step 5: Register for VAT (if applicable)

If your annual turnover from goods/services subject to VAT exceeds €20,000, you must register for VAT. If you’re below the threshold, VAT registration is optional.

Categories exempt from VAT include:

• Health/medical services
• Social services
• General education
• Financial and insurance services
• Specific performing artists’ fees
• Copyrights
• Selling and renting properties
• Postal services

Step 6: Pay fees and contributions

Submitting a start-up notification with the Trade Register costs €70. No minimum capital is required. Prepayments for income tax will be set by Vero based on estimated profit.

Step 7: Post-registration obligations

• Keep accurate records of all business income and allowed business expenses

• Make advance prepayments for taxes

• If VAT registered, file VAT returns (monthly or quarterly depending on turnover). Smaller VAT-registered businesses may file less frequently)

• Comply with social security and pension contributions

Financial and tax obligations for sole proprietors in Finland

Income Tax: You pay personal income tax on your net profits (business revenue minus deductions). Finland uses progressive tax rates. You also make advance (prepayment) assessments and payments during the year, based on your estimated income.

VAT (Value-Added Tax): You must register for VAT if your taxable turnover exceeds €20,000/year. Standard VAT rate is 25.5%, with reduced rates of 14% and 10% for certain goods and services. Some services or sectors are exempt. Returns are filed quarterly if turnover does not exceed €100,000 per calendar year. VAT can also be paid quarterly or once a year if turnover is less than €30,000. Otherwise, VAT returns must be filed monthly.

Social Security and other contributions: As a self-employed person, you are responsible for pension, health, unemployment, and other social insurance contributions. These are calculated based on your income and must be paid to the Finnish social security system. They’re typically paid in conjunction with your tax prepayments.

Deductions and recordkeeping: You can deduct business‐related expenses, such as car expenses, commuting expenses, workspace cost, entertainment expenses, and depreciations and minor acquisitions. Maintain business records, invoices, receipts, bank statements for at least 6 or 10 years depending on the type of document.

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