xxx

Notification to the Tax Administration

If you want to discontinue an enterprise until further notice or for a defined period of time, you must notify the Tax Administration. A notification stating the enterprise has been closed down will not be automatically entered into the trade register.

If you wish to submit such a notification to the Tax Administration, you can do so by using an amendment notification form. The information will be entered into the Finnish Business Information System: a note that the entrepreneur has been removed from the prepayment register, the employer register and the VAT register will be added. If you restart the enterprise, you must immediately notify the Tax Administration using an amendment form.

The following amendment forms are available:

• Private entrepreneur, form Y6  • General partnership or limited partnership, form Y5  • Other form of business, form Y4.

If you discontinue the enterprise for a limited period of time, you must state the starting and ending dates. You must submit the VAT and employer payment return by the deadline to the tax office regardless of the discontinuation.

Pension insurance when an enterprise is discontinued

YEL insurance

This insurance will not be cancelled due to a temporary discontinuation (such as a short period of sick leave).

If a new entrepreneurship starts immediately after the previous enterprise was closed down or after a short break, this insurance will not be cancelled because YEL insurance is personal, not enterprise-specific. The insurance premium is based on annually estimated earned income. Additionally, entrepreneurs running a seasonal business must ensure they have a continuously valid YEL insurance policy.

When making changes to the enterprise, the entrepreneur should contact their pension company.

TyEL insurance

An employer with permanent staff must keep their TyEL (employment pension) insurance valid so long as there are employees who are paid by the company. The insurance need not be cancelled because of a temporary discontinuation of the enterprise. When discontinuing the enterprise, the entrepreneur should contact their pension company.

Closing down an enterprise

Closing notifications to the Tax Administration

When an enterprise is closed down, a notification to the Trade Register and the Tax Administration must be sent immediately. This means that the form the entrepreneur uses as notification to the Trade Register can also be used to include the information in the Tax Administration registers (prepayment register, VAT register and employer register). The notification is free of charge.

Terminating VAT liability

If an entrepreneur submits a notification terminating their VAT liability, a VAT return must be submitted for the last month the enterprise was in operation, or a tax return for the last year of operations must be submitted.

The entrepreneur’s obligation to pay VAT will end when the business as a whole or at least business subject to VAT is closed down. The obligation to pay VAT may also be terminated where the entrepreneur’s turnover for the financial period has not exceeded 8,500 Euro.

The entrepreneur may also remain as an entrepreneur liable to pay VAT while selling acquired business assets. VAT returns must be normally submitted during the time the assets are being liquidated.

A bankrupt’s estate may remain as a party liable to pay VAT when only liquidating business assets included in the estate. The bankrupt’s estate must submit a notification to this effect to the Tax Administration. If the bankrupt’s estate independently continues the business of the bankrupt company, the estate must submit a start-up notification.

Removing a party liable to pay VAT from the VAT register

A termination notification must be submitted at the latest when the business assets have been sold. The tax office will remove the party liable to pay taxes from the prepayment register.

Those who have voluntarily applied as parties liable to pay taxes and those whose turnover for the financial year does not exceed 8,500 Euro will be removed from the prepayment register starting at the earliest on the day a request to that effect is submitted to the tax office.

The tax office will send a notification regarding removal of the party from the VAT register. If the party wishes to appeal against the termination, they must request a decision from the tax office and appeal against it as stated in the directions on how to appeal.

Terminating regular salary payments

An employer who regularly pays salary to employees must submit to the tax office a notification terminating the salary payments.

The termination of regular salary payments will enter into force from the day the salaries were last paid. When salary payments are terminated, the last return must be submitted and the employer payments must be paid for the calendar month during which the registration was cancelled.

If an employer ceases to be a regular employer in the middle of a calendar year, the employer must submit their annual return by the end of January the next year.

If the employer still pays salaries occasionally after the termination date, they must pay the employer payments using a form for unprompted taxes. An annual return on paid salaries must always be submitted to the tax office and a receipt of the salaries must always be submitted to the employee. Annual return forms are available from the Tax Administration website under “Annual returns” and from all tax offices.

Removal from the prepayment register

A party registered in the prepayment register will be removed from the register upon request. The termination date will be the date on which the business activities ended.

Pension insurance

YEL insurance

YEL insurance will be cancelled if:

• the enterprise has been fully closed down  • there is so little business that the annual earned income of the entrepreneur remains below the minimum limit (which was EUR 6775,60 in 2010)  • the form of business, the enterprise ownership or the position of a person liable to have YEL insurance within the company changes in such a manner that the person is no longer included within the scope of the YEL insurance; or  • the person retires or starts to receive early old age pension. If the entrepreneur still continues to run an enterprise, he or she may take out a voluntary YEL insurance policy.

A written notification cancelling the YEL insurance must be submitted to the insurance company. Insurance companies offer ready-made forms for submitting the notification.

An entrepreneur (an individual entrepreneur or a private entrepreneur) is always held personally liable for paying their YEL premiums. Furthermore, the entrepreneur is held liable for the YEL premiums of their family members who work in the same company and are insured through the YEL scheme (a spouse or a child who lives in the same household and works in the enterprise without pay).

The pension insurance premiums can be collected by execution proceedings without a judgment or court decision.

If the enterprise is a partnership (a general partnership or a limited partnership) or an organisation (a limited liability company), the company bears the liability for paying the pension insurance premiums of partners who are involved in the business. If the company is a partnership, the partners of the general partnership or the general partners in the limited partnership are also liable for each other’s YEL premiums in the same manner as for all of the company’s liabilities.

Pension insurance premiums must be collected from an entrepreneur during the five years immediately following the debiting year; after that, the receivables will expire.

If an entrepreneur has expired YEL premiums, the entrepreneur’s pension will be lower.

TyEL insurance

The TyEL insurance of an employer with permanent staff will be cancelled when the employer no longer employs any employees subject to the Employment Pension Act (TyEL). TyEL insurance cannot be cancelled before a notification on the termination of the employment relationships has been submitted to the pension insurance company.

The employer company is liable for the entire TyEL premium. If the company is a partnership, the partners of the general partnership or the general partners in the limited partnership are also liable – including their personal assets – for the TyEL premiums. This also applies to private entrepreneurs. The TyEL insurance premium and any penalty interest can be collected by execution proceedings without a judgment or court decision.

The expiration period for TyEL premiums will be five years by the year 2013. The transfer to the five-year period will be implemented in stages by applying an expiration period of ten years in 2009 and by gradually reducing the expiration period so that it will be five years by 2013.

The liability regulations for an employer with permanent staff also apply to occasional employers.

If the employer is declared bankrupt, the TyEL premiums for the bankruptcy period will be paid by the bankrupt’s estate.

Closing notification to the Trade Register

When an enterprise included in the Trade Register is closed down, the enterprise must submit a closing notification to the Trade Register.

For more information on the procedure regarding the Trade Register when closing down an enterprise, please visit the website of the National Board of Patents and Registration of Finland, the Trade Register service, tel. +358 (0)9 6939 5900, or the section Closing down an enterprise for legal purposes.

Trade Register