What an invoicing service cannot bill

The idea of an invoicing service is simple: you agree the work with your client yourself, the service sends the invoice and pays you the money as salary or as work compensation. The Finnish Tax Administration accepts this model, and in the same guidance it sets out the limits.

The limits are not the service’s rules. They are tax rules, they apply to every invoicing service alike, and no agreement between you and your client can change them. Below are the situations where the service cannot be used.

Work done in an employment relationship

This is the most important one and the most common. If you and the client are in an employment relationship, what the client pays is wages and the client is the employer. Employer obligations cannot be moved to an invoicing service.

In practice that means two things. Work you do as an employee cannot be invoiced through a service. And an employer cannot convert employees into light entrepreneurs who invoice their former employer for the same work on the same terms.

The Tax Administration’s own examples are blunt. A sixteen-year-old hired for a summer job at an ice cream kiosk, whose employer makes invoicing through a service a condition of the job: not allowed, because this is employment. A company that tells its fifty employees they may continue only by invoicing through a service, with no change to how or when they work: not allowed, because an employment relationship does not become an assignment just because the paperwork changes shape.

If an employer suggests this to you, the suggestion is not a solution to your problem. It is an attempt to move their obligations.

Personal fees

Some fees are defined in law as wages even when no employment relationship arises between payer and recipient. They include meeting fees, personal lecture and presentation fees, fees for membership of a governing body, a managing director’s fee, wages drawn by a partner in a general or limited partnership, and compensation for a position of trust.

None of these can be invoiced through an invoicing service. The payer has to withhold tax on them.

Anyone who speaks for a fee should read that twice. A personal lecture fee is wages, while selling a training package can be an assignment. The difference is not in the name but in what was agreed and who carries what.

When you have a Business ID

A sole trader cannot pay themselves a salary, and income from business activity does not turn into salary income by being invoiced through a service. That applies to all business income, whether or not the activity needs a licence.

You can still use the service. You simply agree that it collects the payment from your client and pays it to you as work compensation rather than as salary. If your business is not on the prepayment register, the service withholds tax on the work compensation and reports the payment to the Incomes Register.

The Tax Administration’s example is a photographer with a Business ID who also does carpentry work from time to time. Both are income from his business, so neither can be paid to him as salary. As work compensation, both are fine.

Limited companies and partnerships

A company is a legal person separate from its owners. A limited company cannot move its employer obligations to an invoicing service, so a shareholder cannot invoice work done for their own company through one. The same applies to general and limited partnerships.

Nor can shareholders invoice work done for the company in their own name as work compensation, because that payment is the company’s income.

When the law itself blocks it

In some professions the legislation requires the work to be done in employment, or only as a private trader.

Real estate agency is the clearest example. Agency tasks may only be performed by a person in the service of a licensed agency, and the Supreme Administrative Court held in KHO 2022:33 that being in its service means an employment relationship or membership of the agency’s management. Someone performing agency work independently as an outside contracting party is not in its service, so the fee cannot be paid as salary through an invoicing service.

If your field has licences or registration requirements, check this before the first invoice.

When the client pays you directly

An invoicing service cannot be used to route money that has already reached you. If the client pays you into your account, in cash, through a payment service or in goods, the payment is in your control at that moment. For tax purposes the payer, and the party that must withhold, is the client rather than the service, even if you pass the money on to the service afterwards.

So the invoice goes out through the service, or it does not go out at all.

Agency work

A staffing company that hires out labour is the employee’s employer and carries the employer obligations. An agency worker cannot invoice the staffing company through an invoicing service for work done at the user company.

Selling goods

What you receive for goods is a sale price, not compensation for work. It cannot be invoiced or paid through a service as salary or work compensation, even if most of the price rests on your own labour.

The Tax Administration’s examples are an artist selling landscape paintings and a person selling hand-knitted socks. Both are sale prices.

The line runs at commissioned work. When a client commissions a portrait from an artist, what they pay is compensation for work, and it can be invoiced through a service. A finished item off the shelf is a sale; work made to order is work.

Capital income

Capital gains, interest income and rental income cannot be invoiced through a service as salary or work compensation. They are capital income, not payment for work done.

If your own case sits on the line

The line between salary and work compensation is drawn on an overall assessment, not on the heading of a contract. The Tax Administration’s guidance Wages and work compensation in taxation sets out the criteria that assessment uses.

We check the invoice before it goes out, and if the situation looks like one of the above we say so then rather than in a tax decision later. If it is genuinely unclear, book a time: half an hour before the first invoice costs less than a correction afterwards.

Source: Finnish Tax Administration guidance Laskutuspalveluyritysten ja niiden käyttäjien verotuskysymyksiä, record number VH/8201/00.01.00/2024, in force from 18.12.2024 until further notice. This post is a plain-language summary and does not replace the guidance or personal advice.