Estimating your freelance tax, what comes off and when

First: which kind of freelancer are you?

This decides everything else, and plenty of guides skip it.

Invoicing through a service. You have no business ID. The service invoices your client, withholds tax according to your tax card, reports the income to the Incomes Register and pays you the rest. Your income is wage income.

Your own business ID (toiminimi). You invoice under your own name, keep accounts, file VAT returns and pay prepayments (ennakkovero) yourself. Your income is business income and your expenses are deducted from the result.

The difference between the two is on sole trader or light entrepreneur. The rest of this page covers both, because people move between them.

Through an invoicing service: what is withheld

Three things come off, in this order:

1. The service fee, calculated on the VAT-exclusive invoice amount. Ours is 1,90 to 3,90 per cent by package, with a minimum of 9,90 to 14,90 euros per invoice and a cap of 249 euros.
2. Statutory contributions on the employer and employee sides.
3. Tax withholding, at the rate on your tax card.

What is left is paid to you. Your own numbers, with the current rates applied in the right order, come out of the commission calculator.

The estimate you actually need is therefore not “what tax will I owe” but “is my tax card rate right for the year I am about to have.”

Getting the tax card rate right

Your withholding rate is set from an estimate of your annual income. If the estimate is wrong, the rate is wrong, and you find out in the autumn.

If you earn more than the card assumes, income above the ceiling is withheld at the higher additional rate, and any shortfall becomes back tax the following year with interest on the larger amounts.

If you earn less, you have lent the state money interest-free and get it back as a refund.

Neither is a disaster, and both are avoidable: the card can be revised during the year, as many times as you need. The Tax Administration’s own tax rate calculator gives you the figure from your estimated income and deductions.

We do not publish tax bands on this page. They change every year, and a stale band on a freelancing site is exactly the sort of thing that reads as authoritative and is not.

Under your own business ID: what you settle yourself

Nothing is withheld for you. The sequence is:

1. Turnover: everything you invoice, VAT excluded.
2. Minus deductible business expenses: tools, software, professional literature, travel, insurance, service fees. The 1 200 € threshold for deducting a tool at once, and the 25 per cent depreciation above it, are on deductions.
3. Minus YEL contributions, which are deductible.
4. = the business result, from which a 5 per cent entrepreneur’s deduction is made automatically.
5. Tax is then assessed on what remains.

You pay this during the year as prepayments, based on your own estimate. Revise the estimate when reality diverges from it: the mechanism is the same as the tax card, and so is the consequence of ignoring it.

Example. Turnover 40 000 € and deductible expenses 5 000 € leave a result of 35 000 €, not 40 000. The difference is not a refund next spring; it is tax never paid.

YEL is not optional above the threshold

Whichever route you take, YEL is a separate question from income tax and it is the one that surprises people.

It becomes compulsory when your estimated work income exceeds 9 423,09 euros a year (2026), you are 18 to 68, and you work as an entrepreneur for at least four months. The contribution is 24,40 per cent of the work income you declare, with a 22 per cent discount in the first years.

Crucially, the work income figure you choose also sets your sickness allowance, parental allowance and unemployment security, not just your pension. The full picture is on YEL and an entrepreneur’s social security.

VAT, if turnover crosses the line

VAT registration becomes compulsory when turnover exceeds 20 000 euros in an accounting period. Below that it is voluntary, and there are reasons to register anyway, registration is what makes the VAT on your own purchases deductible.

The mechanics are on the VAT guide.

A short checklist

1. Decide which route you are on, service or business ID.
2. Estimate your annual income honestly, including the quiet months.
3. Set the tax card rate, or the prepayment, from that estimate.
4. Check whether you cross the YEL threshold, and at what work income.
5. Check whether you cross the VAT threshold.
6. Revise during the year when the estimate stops matching reality.

Run your own numbers through the commission calculator for what reaches your account, and ask us if something does not add up, get in touch.