Spring 2020 tax returns are coming soon. Pre-completed tax returns for individual tax payers will be posted in March-April 2020. As a light entrepreneur, you will be subject to tax as an individual tax payer, not as corporate tax payer. Normally, if your pre-filled tax information is correct, you don’t need to do anything.
However, if you wish to claim deductible expenses and thus correct your tax return, the filing date is either 5., 12. or 19. May 2020. Check the date of your tax return, either from the printed version or online from MyTax as soon as it is available and save the date.
Billing service, tax free expenses and reimbursements
Through Ninjou’s billing service, you can get travel expenses and daily allowances included in the billing. Billing related cost compensations are paid without tax deductions, meaning they must be claimed tax free in the spring tax return. Accommodation, travel and other receipts are accepted by Ninjou and the compensations are completely tax free. The costs may, for example, include paints, screws or other materials sold to the customer.
Example 1: Costs included in the billing, separately claimed tax free
You agree with your customer a billing of 200 euros total where the costs like kilometre compensation or daily allowance are not billed separately. The travel compensation charges will be included in the billing. Ninjou will report these non-taxed reimbursements to the tax authority as non-taxed salary. If you do not apply these reimbursements to be as tax-free in the spring tax return, you will pay residual taxes to the tax administration. In this case, you will have to amend your tax return to avoid tax on the costs.
A light entrepreneur can also receive tax free allowances if they are billed on top of an agreed fee and itemised on an invoice. In practice, this must be agreed in advance with the customer and there should be no artificial limitation on the total amount of tax free expenses.
Example 2: Tax free costs to be invoiced on top of the fee for the work done
A fee of 200 euros is agreed and on top of that a 44 euro daily allowance is charged plus 100 kilometers of travel by a car = 100 x 0,43 euros. The total amount of the invoice is 287 euros, of which 87 euros is tax free and 200 euros is subject to tax.
Note that the above examples do not consider VAT and its effect on billing and expenses. It is important and perhaps complex enough to have its own (or even several) blog articles!
Ninjou automatically reports the tax-free allowances to the Finnish Tax Administration so you don’t have to. Did you know that you can apply for tax deductions, for example, on tools you purchase for your work for up to five years afterwards? So it’s worth digging through the old receipts on the bottom of the drawer to claim tax relief!
Ninjou helps with tax issues related to billing
Ninjou can help you figure out the best way to bill your customer. It’s a good idea to talk to us about the invoicing before you agree with the customer on billing and the amounts. Our practical and experience-based tips may well be helpful for a starting light entrepreneur.
As part of its billing service, Ninjou also provides registered users with a convenient information tool that will quickly get you all the amounts you need to claim tax free for your spring tax return. You can also get tax filing instructions and tax advice from us.
Feel free to ask us about taxation via chat! We serve on weekdays 9 am – 4 pm (EET GMT+2), but do leave a message at any time of the day, when it best suits your own schedule. We’ll get back to you as soon as possible, usually by the next business day.
Tax facts for the text were provided by Jani Puustinen – always there to help all Ninjou light entrepreneurs in billing and tax related issues!
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