Advance tax in Finland: what light entrepreneurs and sole traders need to know

Table of Contents

1. Short answer: what is advance tax?
2. When is advance tax paid?
3. Light entrepreneur without a Business ID: do you need advance tax?
4. Sole trader: what is the advance tax amount based on?
5. Advance tax is not the same as VAT
6. When should you apply for or change advance tax?
7. How to apply for advance tax in MyTax
8. Example: moving from occasional side work to a sole proprietorship
9. What happens if advance tax is too low?
10. What is supplementary prepayment?
11. How Bisse.fi helps you keep the numbers under control
12. Frequently asked questions
13. Summary

1. Short answer: what is advance tax?

Advance tax, in Finnish ennakkovero, is income tax paid in advance on income where tax is not otherwise withheld at source. It is not an extra tax. It is simply a way to pay the year’s income tax as the year goes on.

For light entrepreneurs and sole traders, the most important distinction is this:

If you have your own sole proprietorship, advance tax is not based on turnover. It is based on an estimate of taxable profit. In practice, you estimate your sales, deductible expenses and other taxable income. MyTax calculates the advance tax based on the information you provide.

For related background, read VAT threshold €20,000 in 2026 and Sole proprietorship or light entrepreneurship.

2. When is advance tax paid?

According to the Finnish Tax Administration, advance tax is paid on income where tax is not withheld. This can include, for example:

• taxable profit from business activity
• agricultural income
• rental income
• capital gains
• foreign income with no Finnish tax withholding
• other income-generating activity where the tax is not paid through a tax card or withholding

For an entrepreneur, this means that if your own business activity turns a profit, you should not wait until the final tax assessment to pay the tax. Advance tax spreads the income tax into instalments during the year.

When you apply for advance tax, you receive an advance tax decision. The decision shows the instalment amounts, due dates and payment instructions. If your business changes during the year, you can apply for more advance tax or reduce it in MyTax.

3. Light entrepreneur without a Business ID: do you need advance tax?

If you invoice without your own Business ID through an invoicing service, you usually do not apply for advance tax just for the income paid through that service. The reason is that you are not invoicing the customer through your own company. The invoicing service handles the invoice, payments and taxes according to its service model.

For a Bisse.fi user, this means in practice:

• you can see the invoice amount before tax and the amount left for you
• you provide the required tax details in the service
• the service handles withholding and other tax-related steps according to its terms
• you do not need to set up a sole proprietorship just to invoice one customer

This does not mean that you can never have advance tax. If, in addition to invoicing service income, you have rental income, capital gains or your own sole proprietorship, advance tax may still apply to those other types of income.

If you have your own Business ID and use Bisse.fi to help with your sole proprietorship’s bookkeeping, invoicing or document handling, the situation is different. In that case, you operate through your own business, and estimating advance tax is part of your own business tax management.

4. Sole trader: what is the advance tax amount based on?

For a sole trader, advance tax is based on the estimated taxable profit of the business and the other income and deductions for the tax year. It is not based on turnover alone.

A simplified way to think about it:

Example:

In this situation, advance tax is not calculated from €30,000. The starting point is the estimated profit. The final tax assessment can still change if actual income, expenses, deductions, other earned income or capital income differ from the estimate.

The Tax Administration’s guidance also notes that YEL or MYEL income affects the calculation of an entrepreneur’s health insurance contributions. This is why a sole trader’s overall tax position is not only “sales minus expenses”. MyTax also takes other reported information into account.

5. Advance tax is not the same as VAT

This is one of the most common sources of confusion.

Advance tax is related to income tax. It is based on how much taxable income the business is expected to generate.

VAT, value added tax, is related to sales. If a business is in the VAT register, it adds VAT to taxable sales, reports it on VAT returns and pays the amount due to the Tax Administration after deductions.

Example:

If you have a sole proprietorship, keep these two amounts separate in your thinking: VAT is not spending money, and advance tax is not the same thing as the VAT on an invoice.

Read more in the VAT guide for entrepreneurs.

6. When should you apply for or change advance tax?

You should apply for or change advance tax whenever the previous estimate no longer matches reality.

Common situations include:

• you start as a sole trader
• your invoicing grows clearly more than expected
• a major customer relationship ends and the result will be lower than estimated
• expenses increase because of tools, software or subcontracting
• you move from an invoicing service to your own Business ID
• side work becomes more regular or full-time
• you receive other income where no tax is withheld

If advance tax is too high, you pay too much during the year and receive a refund later. If advance tax is too low, the final tax assessment can lead to back taxes and interest.

A practical routine is to check the estimate at least three times a year:

1. When you start the activity or send your first larger invoices.
2. In summer, when you can see actual invoicing and expenses from the first part of the year.
3. Near the end of the year, when the full-year result becomes clearer.

7. How to apply for advance tax in MyTax

Advance tax is applied for or changed in MyTax. In its instructions for entrepreneurs and individual taxpayers, the Finnish Tax Administration directs users to the MyTax section for tax cards and advance tax. There you can apply for advance tax or change advance tax already set for the correct tax year.

In MyTax, you normally report:

• the year for which you are applying for advance tax
• estimated business income
• estimated business expenses
• other income and deductions, if they affect the tax rate
• whether you want to pay advance tax monthly or in fewer instalments
• whether the activity is seasonal

Once the application has been processed, you receive an advance tax decision in MyTax. If you do not use Suomi.fi Messages or electronic tax mail, the decision may also arrive by post. The decision shows payment instalments, due dates and payment instructions.

If your business activity is minor and you also have salary income, the Tax Administration’s guidance says that in some cases business income can be included on your salary tax card instead of being handled through advance tax. In MyTax, the choice is made in the same area where you report business income subject to advance tax.

8. Example: moving from occasional side work to a sole proprietorship

You have done occasional graphic design work through Bisse.fi without your own Business ID. During the year, you get more customers and decide to set up a sole proprietorship because you also want to make software and equipment purchases through your own business.

Estimate for the rest of the year:

The important distinction is:

• work previously invoiced through Bisse.fi is not turnover of the new sole proprietorship
• when estimating sole trader advance tax, you look at the future profit of your own business
• if you also have salaried work, salary affects your overall tax position
• VAT is assessed separately if the sole proprietorship belongs to or applies for the VAT register

You do not apply for advance tax on “all money paid by customers”. You give MyTax an estimate of taxable business income and other income.

If you are not sure whether your own Business ID is the right step yet, read When light entrepreneurship is not a good fit and Sole proprietorship or light entrepreneurship.

9. What happens if advance tax is too low?

If the advance tax and any tax withholding paid during the year are not enough to cover the final tax, the missing part is paid as back tax.

A small underestimate is usually not a disaster, but it can cause:

• a large payment later
• interest charges
• cash-flow problems
• a false feeling that the business money is freely available

This is especially important for a sole trader, because money often comes directly to your own account or to the business account. If you do not set aside the tax portion, the business result can look better in everyday life than it really is.

A practical method:

1. Track sales and expenses monthly.
2. Make a rough profit forecast at least a few times a year.
3. Update advance tax in MyTax if the estimate changes clearly.
4. Keep VAT, advance tax and your own spending money separate.

10. What is supplementary prepayment?

Supplementary prepayment, in Finnish lisäennakko, is a way to top up taxes if advance tax or withholding paid during the tax year is not enough. The key difference is timing:

• during the tax year, you apply for advance tax or a change to advance tax
• after the tax year, you apply for supplementary prepayment

According to the Tax Administration, sole traders and other individuals can apply for supplementary prepayment from December of the tax year until their personal taxation is completed. Individual taxpayers can usually pay supplementary prepayment without late-payment interest with relief until the end of January after the tax year, but the dates for each year should always be checked in MyTax and in the Tax Administration’s guidance.

Do not pay supplementary prepayment on your own without an application. The Tax Administration’s guidance says you must apply for supplementary prepayment before paying, so the payment is allocated to the correct tax.

11. How Bisse.fi helps you keep the numbers under control

Advance tax only becomes difficult when income and expenses are unclear. When the numbers are up to date, the decision is much easier.

Bisse.fi helps in different ways depending on your situation.

If you invoice without your own Business ID:

• you can invoice without setting up your own company
• you see how much is left from the invoice
• the service handles taxes and statutory payments according to its service model
• you can focus on pricing your work and serving customers

If you have your own sole proprietorship and use Bisse.fi to help with bookkeeping or document handling:

• you keep sales and expenses organised
• you get a better view of the business result
• VAT and bookkeeping documents stay more up to date
• estimating advance tax is easier when the numbers are not scattered

Before starting your own Business ID, you can estimate the effect of invoicing with the salary calculator. If you already have a sole proprietorship, pay special attention to profit, not just turnover.

12. Frequently asked questions

Is advance tax mandatory for a sole trader?

If the sole proprietorship generates taxable profit and the tax is not handled through a tax card, advance tax is usually needed in practice. MyTax calculates the amount based on the information you provide.

Can I pay sole trader taxes only at the end of the year?

During the tax year, the correct method is to apply for advance tax or change your advance tax. After the tax year, missing tax can be topped up with supplementary prepayment. If you wait until the final tax assessment, the missing part may become back tax with interest.

Is advance tax calculated from turnover?

Not directly. For a sole trader, the starting point is estimated taxable profit: sales minus deductible expenses and other items taken into account in taxation. Turnover helps you understand the scale of the activity, but it does not alone determine advance tax.

Does a person invoicing through Bisse.fi without a Business ID need advance tax?

Usually not for income paid through the invoicing service alone. If you have other income without withholding, such as rental income, capital gains or your own sole proprietorship, advance tax may still apply to those income types.

Is advance tax the same as withholding tax?

No. Withholding is taken from salary, for example, based on your tax card. Advance tax is set for income where withholding is not otherwise made. In the final tax assessment, both are counted as taxes paid during the year.

Can I reduce advance tax if income stays low?

Yes. You can change advance tax in MyTax if the estimated profit decreases. It is worth making the change in time so you do not pay unnecessarily large instalments during the year.

What if I pay too much advance tax?

Tax paid in excess is taken into account in the final tax assessment and refunded if you do not have other taxes due. In practice, advance tax that is too high can still weaken cash flow during the year.

13. Summary

Advance tax is a prepayment of income tax on income where tax is not otherwise withheld. For a sole trader, it is a normal part of business life, because business profit is ultimately taxed as part of the entrepreneur’s personal taxation. For a light entrepreneur invoicing through an invoicing service without their own Business ID, income paid through that service alone does not usually require a separate advance-tax payment.

Remember these points:

• Advance tax is not an extra tax. It is a prepayment of income tax.
• For a sole trader, advance tax is based on estimated profit, not turnover alone.
• VAT and advance tax are different things.
• You can and should change advance tax if the profit estimate changes.
• During the tax year, you apply for a change to advance tax. After the tax year, you apply for supplementary prepayment.
• If you invoice through Bisse.fi without your own Business ID, the service handles taxes according to its service model.

Register with Bisse.fi and invoice your work clearly without your own Business ID. If you are considering a sole proprietorship, also read VAT threshold €20,000 in 2026 and Sole proprietorship or light entrepreneurship.

Sources: Finnish Tax Administration, Advance tax for business customers, Which income is subject to advance tax?, How to apply for advance tax in MyTax and Supplementary prepayment. This article is general information, not tax or legal advice. Check your own situation with the Finnish Tax Administration or an accountant if needed. Article published on 7 July 2026.