Running a business in Finland means navigating a tax environment that evolves as your company grows. From the moment you obtain your Finnish Business ID (Y-tunnus) to the moment you expand, hire employees or close the company, your tax registrations and obligations change.
This guide explains the complete Finnish tax life cycle for companies, from startup to closure, with a clear focus on what international founders must know. It covers the role of the Finnish Tax Administration (Verohallinto), PRH, the Incomes Register (Tulorekisteri), employer obligations, VAT (ALV) rules, corporate income tax requirements and the registrations needed at every stage.
How tax obligations evolve in Finland
In Finland, a company’s tax responsibilities develop in four main phases:
establishment,
operations and employer obligations,
structural changes or maturity, and
business closure.
Several authorities are involved:
Verohallinto (Finnish Tax Administration) – tax registrations, ALV, employer registration, income tax
PRH (Patentti- ja rekisterihallitus) – company formation and structural changes
TE Office (TE-toimisto) – employer-related services and employment obligations
Tulorekisteri (Incomes Register) – real-time salary reporting
Understanding how and when to register for each obligation is essential for compliance and smooth business operations.
Phase 1: the foundation – tax registrations at company establishment
The business ID (Y-tunnus)
The Y-tunnus is the starting point of all tax activities in Finland. It identifies your company in every interaction with Verohallinto, PRH, banks, insurers and partners. Without a Finnish Business ID, you cannot register for VAT, employer obligations or income tax.
VAT (ALV) registration
Finland has a VAT threshold of €15,000, and in many cases (especially for international founders) voluntary VAT registration is beneficial even below the threshold.
VAT registration is required if your sales exceed the threshold or if your business activities require ALV registration from day one (e.g., consulting, digital services, import/export, e-commerce).
Choosing the VAT reporting method
When registering, companies choose between:
Accrual basis (suoriteperuste) – VAT is reported when an invoice is issued.
Cash basis (maksuperuste) – VAT is reported when payment is received.
Cash basis is often preferred by small businesses for cash flow management.
Industry-specific registrations
Depending on the type of business, additional registrations may be required at the start, such as:
food establishment licences
alcohol trade permits
regulated service approvals
These registrations often require parallel communication with municipal authorities or regional administrations.
Phase 2: growth and operations – new obligations as the company scales
Registering as an employer
Once a company hires its first employee, several mandatory registrations begin:
Employer registration with Verohallinto
Your company must register as a regular employer (säännöllinen työnantaja) or occasional employer based on payment frequency.
Pension insurance (TyEL)
Finnish pension insurance is mandatory and must be arranged through providers like Ilmarinen, Varma or Elo.
Accident and occupational disease insurance
Työtapaturma- ja ammattitautivakuutus is obligatory for all employees.
Unemployment insurance contributions
Handled through the Employment Fund (Työllisyysrahasto).
Reporting to the Incomes Register (Tulorekisteri)
Every salary, benefit and reimbursement must be reported to Tulorekisteri in real time.
Late or incorrect reporting leads to penalties.
Expansion triggers
As your company grows, additional registrations may be needed:
Branch or subsidiary registration when entering new markets
EU VAT registrations through the OSS or IOSS schemes for cross-border sales
Group VAT registration (ALV-ryhmä) for companies operating under one corporate group
These steps help optimise tax management and simplify VAT reporting.
Phase 3: maturity and changes – adjusting tax registrations
As a company becomes more established, business structure and operational needs often change.
Changes in company structure
Transforming from a partnership to a limited company, merging with another entity or dividing operations requires notifying both PRH and Verohallinto. Each structural change has tax implications.
Reporting major business changes
The following must always be updated in the business information system (YTJ) and with Verohallinto:
address changes
board and shareholder updates
changes in business sector (toimiala)
changes in accounting period
beneficial owner updates (UBO)
Mergers, acquisitions and demergers
Corporate restructuring requires careful planning due to VAT implications, transfer taxes, valuation rules and reporting requirements.
Phase 4: exit strategy – tax registrations when closing a business
When a company ceases operations, tax registrations must be removed in the correct order.
Notifying the Tax Administration
This includes deregistering from:
VAT (ALV)
employer obligations
prepayment register
insurance schemes
Filing final tax returns
Before closure, companies must submit:
final VAT return
final corporate income tax return
final Incomes Register submissions
financial statements (if applicable)
Deregistering as an employer
All pension, accident and unemployment insurance providers must be notified.
A clean tax record ensures a smooth deregistration, prevents future audits and protects the board from liability.
Key Finnish taxes and registration points
VAT (ALV)
registration threshold
monthly, quarterly or annual reporting
OSS/IOSS for EU digital and e-commerce sales
Corporate income tax (yhteisöjen tulovero)
20% tax rate
prepayment tax system
annual business tax return (veroilmoitus 6B or similar)
Employer obligations
withholding tax (ennakonpidätys)
social security contributions
TyEL, unemployment fund contributions
Tulorekisteri reporting
Withholding tax on payments abroad
Lähdevero applies to certain payments to non-residents, including royalties, service fees and dividends, depending on tax treaties.
Common pitfalls in the Finnish tax life cycle
International companies often face challenges such as:
delays in VAT registration
errors in Tulorekisteri reporting
misclassification of employees or contractors
forgetting to update Verohallinto about major changes
incorrect employer registration
failing to deregister when ceasing business
Most penalties arise from missed deadlines or overlooked registrations.
How 1Office Finland prevents these issues
1Office Finland supports companies throughout the entire tax life cycle:
company formation and Y-tunnus application
VAT (ALV) registration and ongoing reporting
employer registration and payroll processing
Tulorekisteri submissions
insurance registrations
cross-border VAT (OSS/IOSS)
structural change management
business closure and tax deregistration
Our team ensures that every registration is submitted correctly and on time, preventing penalties, delays and compliance risks.
Why long-term support is essential
Tax registrations in Finland follow the life cycle of a business. As your company grows, expands internationally, hires employees or prepares for closure, your obligations change. Keeping track of these requirements is difficult without expertise in Finnish tax law.
A long-term partner like 1Office Finland helps you stay compliant at every stage: from your first VAT registration to your final corporate tax return.
Let 1Office Finland manage your tax registrations and compliance.
