Business · company form 2026
Sole trader vs limited company in Finland 2026 — which pays off?
The taxation of a sole trader (toiminimi) and a limited company (Oy) differs significantly, and the better form depends on the business profit and net assets. When all the profit is withdrawn for yourself, the sole trader is often cheaper, because an Oy first pays 20% corporate tax on its profit and then dividend tax on the distributed dividend — so the dividend is partly taxed twice.
An Oy, in turn, wins when profit is left in the company or taken as a salary-and-dividend mix. The calculator runs the same profit through both forms (including YEL, the sole trader’s capital-income split, corporate tax and dividend tax) and shows which leaves more in hand.
Compare business forms
Profit before the owner’s salary/withdrawals and taxes.
Assets − debts. Affects the sole trader’s capital split and the Oy’s relieved dividend.
The sole trader keeps more: €3,358/year.
Sole trader
You keep
€38,340
Effective total burden: 36.1 %
| YEL contribution | €14,640 |
| Capital-income tax | €3,000 |
| Earned-income tax | €4,020 |
| Total taxes and contributions | €21,660 |
| Net in hand | €38,340 |
Limited company (Oy)
You keep
€34,982
Effective total burden: 41.7 %
| YEL contribution | €14,640 |
| Corporate tax (20%) | €9,072 |
| Dividend tax | €1,306 |
| Total taxes and contributions | €25,018 |
| Net in hand | €34,982 |
The comparison is indicative and assumes all profit is withdrawn for yourself: in the Oy as a dividend after corporate tax. In practice a salary-and-dividend mix or leaving profit in the company can change the result. The sole trader’s capital-income share is 20% of the net-assets return (you may elect 10% or 0%). Taxes are calculated with the national-average municipal rate. YEL is included in both forms. This is not tax advice.
Sole trader or limited company — which pays off in 2026?
When all the business profit is withdrawn for yourself, the sole trader (toiminimi) is most often cheaper than a limited company (Oy). The reason is the partial double taxation of dividends: an Oy first pays 20% corporate tax on its profit, and when the remaining profit is distributed as a dividend, dividend tax is paid on top. A sole trader’s business income, by contrast, is taxed directly as the entrepreneur’s income — partly as lightly taxed capital income (20% of the net-assets return) and the rest as progressive earned income. For example, at a profit of €60,000 and net assets of €50,000, the sole trader keeps about €38,300 and the Oy about €35,000 when everything is withdrawn. However, the Oy wins in situations where profit is left in the company to grow net assets, income is taken as a salary-and-dividend mix, or personal liability is to be limited. The YEL contribution is mandatory in both forms.
Sole trader or limited company — what decides it
For a sole trader, business income is taxed directly as the entrepreneur’s personal income: a 5% entrepreneur deduction is taken from the profit, and the remainder is split into capital income (by default 20% of last year’s net-assets return, taxed 30/34%; you may also choose 10% or 0%) and earned income (progressive tax). There is no separate corporate tax. In an Oy, 20% corporate tax is paid on the profit, and only when a dividend is withdrawn does the shareholder pay dividend tax.
Rule of thumb: at smaller profits and when you withdraw everything for yourself, the sole trader is usually lighter. An Oy starts to pay off at larger profits, when part of the profit can be left in the company (taxed at only 20%) or when net assets build up and the relieved dividend becomes available. The choice of form also depends on liability, administrative cost and future plans — not tax alone.
Frequently asked questions
Sole trader or Oy — which pays less tax in 2026?
At smaller profits and when you withdraw everything for yourself, the sole trader is often cheaper. An Oy wins at larger profits when profit is left in the company or taken as a salary-and-dividend mix. The calculator shows the difference at your own profit.
How is a sole trader’s profit taxed?
A 5% entrepreneur deduction is taken from the profit, and the remainder is split into capital income (by default 20% of the net-assets return, taxed 30/34%) and earned income (progressive). There is no separate corporate tax.
Why is an Oy dividend taxed more heavily?
An Oy first pays 20% corporate tax on its profit, and the shareholder then pays dividend tax on the distributed dividend. So the same money passes through two taxes when taken as a dividend.
When is it worth turning a sole trader into an Oy?
Often when the profit grows large enough that you do not need to withdraw all of it, or when you want to leave profit in the company or share ownership. There is no exact threshold — the calculator helps compare with your own figures.
Is YEL paid in both forms?
Yes. YEL insurance applies both to a sole-trader entrepreneur and to an owner-entrepreneur working in an Oy, and it is based on the confirmed YEL earned income, not on the salary or dividend withdrawn.