Lesson 2: Taxation of enterprises:

Partneships and sole traders

How to calculate taxable profit?

+ Taxable income
- Deductable expenses
= Taxable profit
Income
Income is money or moneys worth derived from the
business: from sales, exchanges
Expenses
For the purpose of acquiring or maintaining income: all
expenses to create income = expenses included in
bookkeeping
Except: Income tax, 50% of entertainment expenses
Taxation in Finland

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Losses from previous tax years

Business losses are deductible from the profits in the
subsequent ten tax years
If more than 50% of the company sold, losses not
deductible

Taxation in Finland

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Allocation of income and expenses

Income and short-term expenses
The tax year in which goods are delivered = accrual basis
Long-term expenses
Depreciated using declining balance method, maximum:
Equipments and machinery (lasting over 3 years) 25%
Accommodation buildings 7%
Restaurant buildings 4%

Taxation in Finland

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Taxation of partnerships

Partnership
Money taken
away as
personal
withdraws,
not taxed

Taxable profit

Devided to investment
income and earned
income

Partners

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Taxation of the profit, partnerships

The net taxable profit is determined for the
enterprise
Then attributed to the partners personal income
according to each partners share in the
partneship
Partner is the final taxpayer
Taxable profit devided equally to partners, if
no other kind of agreements between the
partners
Income devided to investment income and
earned income using the following rules:
Taxation in Finland

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 Investment income = 20% * (Net assets of the

business + 30% of the paid wages during last 12
months)
Net assets of the company= Taxable value of
the assets Liabilities
The rest of the taxable profit is taxed as earned
income

Taxation in Finland

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Exercises:
5. The net profit of the Partnership Matikainen & Mtt is
158.000. The firm has losses from the years 2011-2012
worth of 13.500. The net asset value of the firm is 290.000.
Paid wages to employees were 78.000. The share of the
assets (and profit) belonging to Matikainen is 60%.

Calculate the income tax of Matikainen. Communal and

church tax together is 20 %.

Taxation in Finland

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6. The net profit of Partnership Susi & Leivo is 95.000. The

firm has losses from the years 2010-2012 worth of 8.500.
The net asset value of the firm is 73.000. Paid wages to
employees were 95.000. The share of the assets (and profit)
belonging to Susi is 60%.
Other incomes of Susi are:
Dividends from Nokia Plc 7.000
Capital gains 4.200
Wages paid by other eployers 8.500
His paid interests are: 2.000 related to investment income
and 2.800 related to own apartment
Calculate the income tax of Susi. Communal and church tax
together is 20 %.

Taxation in Finland

11/21/15