Notification of establishment and Business ID
According to the Finnish Tax Administration's 2026 tax info for new entrepreneurs, setting up a sole proprietorship starts in OmaVero. You get the Business ID immediately, and at the same time you can register in the prepayment register, the VAT register and, if needed, the employer register. The Finnish Tax Administration's processing time for registrations is about three weeks.
Registration with the Trade Register is done as needed through the PRH's YTJ service. According to the PRH, the registration notification to the Trade Register costs €75. A notification made on paper takes longer to process. From 1.1.2026, Trade Register filing became mandatorily electronic for other business forms, but sole traders are excluded from this requirement.
It is usually worth being in the prepayment register
The prepayment register is not mandatory, but an unregistered starting entrepreneur may find it hard to get assignments. An entrepreneur in the register takes care of their own taxes, and the payer of the invoice does not need to withhold tax.
If the sole trader is not in the register, the customer must withhold advance tax from the work payment according to the entrepreneur's tax card, and if no tax card has been presented, the withholding is 60%. Being in the register is also a prerequisite for the customer to receive the household expenses deduction for the service.
Advance tax
Income tax of a sole proprietorship is paid as advance tax, which is based on your own estimate of the profit for the financial period. The due date of the advance tax is the 23rd day of the month. The advance can be changed during the financial period, and an additional advance can still be applied for after the period has ended if the result is better than estimated.
Estimating the result of the first year is difficult, so it is worth checking the estimate every few months. Too small an advance tax leads to residual tax and interest, while too large ties up cash that a starting company often needs. A good practice is to move part of each payment received to a separate tax account as soon as the money arrives.
The sole proprietorship's income tax return can be filed in OmaVero, in the Ilmoitin.fi service or on a paper form. It is worth getting the bookkeeping in order right from the start, because receipts are needed for both the tax return and any VAT return.
Value added tax and the 20 000 euro threshold
A sole proprietorship does not need to register as liable for value added tax if the turnover for the current and the previous calendar year is at most EUR 20,000. Once the limit is exceeded, the entrepreneur is entered in the register from that moment, and all sales exceeding the limit are taxable in full. It is worth filing the notification in good time. Even a business below the limit can apply to join the register voluntarily, in which case it can deduct the VAT on its purchases.
Value added tax rates from 1.1.2026:
- 25,5 %: the general rate
- 13,5 %: for example food, restaurant and accommodation services, medicines, books and sports services
- 10 %: newspapers and magazines
- 0 %: for example exports outside the EU
- The tax period is in principle one month; a quarter is possible with turnover under 100 000 euros and a year with turnover under 30 000 euros
- The VAT filing and payment date is usually the 12th of the month
YEL 2026 and the reduction for new entrepreneurs
YEL, the Self-Employed Persons' Pension Insurance, is mandatory for entrepreneurs aged 18–69 when estimated earned income is at least 9 423,09 € a year and the business has continued uninterrupted for at least four months. In 2026 the YEL contribution is 24.40 % of the confirmed earned income, regardless of age.
A starting entrepreneur gets a 22 % discount on the YEL contribution for 48 months. YEL contributions are fully tax-deductible. Estimate your work income realistically, because besides your pension it affects, for example, sickness allowance.
Note that a reform of YEL is being prepared. According to the preliminary memorandum of the Finnish Centre for Pensions, the government's mid-term policy review decision would apply to 2028, and the discount for new entrepreneurs would be replaced by payment flexibility. No changes have been enacted yet.
Start-up grant and other support to get started
If you are moving into self-employment from paid work, unemployment or studies, find out about the possibility of a start-up grant before starting your activity. The start-up grant's conditions, amount and application process can be found in Grants Radar's separate start-up grant guide, and other financing options for a new business in Grants Radar's search lists.
Free advice on starting a business is available, for example, from Yritys-Suomi and local start-up centres.
Frequently asked questions
How much does it cost to set up a sole trader business?
A business ID is obtained through the Finnish Tax Administration in OmaVero. If you register with the Trade Register, according to the Finnish Patent and Registration Office (PRH) the registration notification costs €75.
Does a sole trader have to join the VAT register?
Only if turnover in the current and previous calendar year exceeds 20 000 euros. You can also register voluntarily.
When is YEL insurance mandatory?
When estimated earned income in 2026 is at least €9,423.09 a year and the business has been running for four months. A new entrepreneur gets a 22 % discount for 48 months.
Calculate it yourself
Ready-made tools
- Grant application template · Application template, budget template and checklist
- Invoice template and invoice register · Invoice with all mandatory details, VAT breakdown, reference number and outstanding receivables
Sources
- Finnish Tax Administration: Tax info for new entrepreneurs 2026
- PRH: Start-up notification for a private trader
- Federation of Finnish Enterprises: Trade register matters must be handled electronically from now on
- Finnish Tax Administration: Prepayment register
- Finnish Tax Administration: Minor business activity exempt from VAT
- Finnish Tax Administration: VAT rates
- Finnish Centre for Pensions: The ABC of self-employed pension cover 2026
- Taxpayers of Finland: Pension insurance contributions 2026
- Finnish Centre for Pensions: On the effects of the mid-term review YEL reform (memo 2026)
The article is general information and does not replace the guidance of an authority, a lawyer or an adviser. Check up-to-date information from the sources.