Tax debt among sole traders and small employers exceeds €1bn

Small business owners had €1.3 billion in tax debt in 2025, the Tax Administration reports. Small business owners accounted for roughly one third of all tax debt in Finland.

The tax debt situation among small business owners has been deteriorating steadily for several years, says Sanna Mäki-Karvia, Customer Relations Director at the Tax Administration.

“Over the past year, tax debt increased by €200 million compared with the previous year, equalling 18%,” Mäki-Karvia says in a press release.

“The weak economy is naturally reflected in the level of tax debt, but based on our observations, the majority of tax debt is due to insufficient skills, lack of understanding and carelessness.”

In the Tax Administration’s statistics, small business owners include sole traders, small firms with a few employees, light entrepreneurs and farmers.

“This group accounts for 6.3% of tax revenue but 31.6% of tax debt. Most businesses in Finland are small, and small businesses face challenges,” Mäki-Karvia adds.

Mikael Pentikäinen, CEO of Suomen Yrittäjät, the Finnish SME association, considers the situation worrying.

“This shows that many small businesses and business owners are under pressure. There are several underlying factors, including uncertainty caused by wars, the weak economy, and increases in pension contributions and taxes.

“That is why it’s important for the Government to take measures that ease the difficulties faced by small businesses. One key and timely issue is to reform the entrepreneurs’ pension system in a way that particularly helps those small business owners whose YEL income has risen above their actual earnings because of the pension insurers’ calculator,” Pentikäinen continues.

“Business services across the country, and Suomen Yrittäjät for example, also play an important role in supporting entrepreneurs. Responsibility lies broadly, not only with decision-makers.”

Rapid decisions

Mäki-Karvia says part of the increase in tax debt is explained by the low threshold for becoming an entrepreneur and limited knowledge at the outset.

“Starting a business today is very easy and quick, and it should be – entrepreneurship is the backbone of society. But whereas starting a business used to involve more careful consideration, today people often make that decision quickly and, unfortunately, often without enough understanding. In some cases, the decision is effectively made on people’s behalf, as employees in many sectors have been shifted into entrepreneurship. I would say this is also visible in the tax debt statistics,” Mäki-Karvia says.

Pentikäinen notes that a large number of businesses are currently being established.

“Part-time entrepreneurship is on the rise. The labour market right now might also be leading many to seek a living through entrepreneurship. However, the skills of running your own business develop through experience and training.”

The Tax Administration says new entrepreneurs are often unprepared for the absence of a stable monthly income.

“For example, they don’t understand advance taxes or what filings need to be submitted. It’s unclear to many that VAT isn’t the entrepreneur’s own money,” Mäki-Karvia says.

Pentikäinen acknowledges that “there are undoubtedly also gaps in business-related competence behind this, as the Tax Administration notes”.

“That is why it’s important to ensure that new entrepreneurs receive advice on preparing a business plan, for example through enterprise agencies. The future of the Entrepreneur’s Financial Assistance Service, which is under threat due to budget cuts, must also be secured. It has given many entrepreneurs in difficulty valuable support to get their businesses’ finances healthy again.”

Pentikäinen also highlights the role of entrepreneurship education and training.

“The focus should be on fundamentals rather than overemphasizing success stories. Anyone becoming an entrepreneur must understand that their business won’t be viable in the long term without enough paying customers. This is something many seem to overlook.”

Early support

The Tax Administration says around 70% of tax debt is owed by taxpayers with no assets or insufficient means to pay. Among small business owners, this amounts to roughly €870 million.

The Tax Administration assists new entrepreneurs through measures such as outreach calls and messages to help them act correctly and meet their obligations.

Mäki-Karvia encourages entrepreneurs to seek help before problems accumulate.

“You can ask the Tax Administration for advice. We offer help and support to those who want to manage their affairs properly and, where necessary, we refer them to support services such as the Entrepreneur’s Financial Assistance Service.”

Pentikäinen points out that the Tax Administration has access to background data on companies in difficulty.

“It would be important for the Tax Administration to carefully analyse which type of business or entrepreneur is concerned, so support can be directed to the right people.”

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