YEL, sale prices, whistle-blowing: Legislative amendments in force since the start of this year
We’ve listed the changes to the law that entered into force at the start of the new year.
This article was published in Finnish on 22 December 2022.
Entrepreneur’s Pension Act (YEL)
The amount of an entrepreneur’s pension contributions and social security level are determined in accordance with the value of the entrepreneur’s labour input. When this labour input is evaluated, the hours worked by the entrepreneur and the salary level in the sector must be considered, but also the size of business operations and information provided by the entrepreneur.
A business’s key financial indicators are also significant when assessing the value of a business owner’s labour input. When the value of a new entrepreneur’s labour input is determined, the fact should be considered that the initial phase of business ownership is not always profitable or solvent, even if the owner works in the business full-time.
The amendments to the Entrepreneur’s Pension Act stress overall assessment and the role of median salary merely as part of the bigger picture, in which all the available information on a business owner’s professional skill, experience, as well other characteristics and size of the business operations, are considered.
A business owner can provide this information themselves, and the pension provider must take it into account when setting the YEL income. In addition, the pension provider must provide grounds for its decision, which strengthens a business owner’s legal protection.
Extending the transition period from three years to six and reducing the maximum pension contribution increase from €8,000 to €4,000 gives business owners even more time to adapt to the change.
Consumer Protection Act
Changes to telemarketing and door-to-door selling regulation
A written confirmation procedure is now in place for telemarketing sales to consumers. After a sales call, a consumer must now be sent a written quotation. If the consumer does not accept the offer in writing after the sales call, the contract does not bind the consumer.
The consumer’s right of withdrawal in doorstep selling has been expanded. A consumer now also has the right to cancel a purchase made from a doorstep seller of bespoke items, for example. In addition, if the doorstep seller fails to tell the consumer about their right of withdrawal as required by law, the doorstep sale contract does not bind the consumer.
Obligation to post previous price when marketing discounts
When goods are marketed as being on sale, the lowest price at which the goods were marketed in the 30 days prior to the price reduction must also be posted. If, on the other hand, the price reduction is gradually increased during a marketing campaign lasting no more than 60 days, the lowest price at which the product has been marketed during the 30 days preceding the price reduction may be posted as the lowest price. This obligation does not apply to special offers on perishable foodstuffs.
Verification of consumer reviews
When consumers leave reviews, the business must now provide information about whether the business has ensured the published reviews are from consumers who have really used or bought the products as well as information about how that is verified.
The Act provides for the protection of people who report wrongdoing. The Act requires all businesses which employ 50 employees or more to set up an internal channel for reporting abuses. The regulations on the protection of whistle-blowers apply to all companies if their employees use an internal channel or one maintained by a government agency to report abuse.
The Act governs the protection of whistle-blowers and the processing of reports. If a company has to set up an internal reporting channel, companies with under 250 employees benefit from a transition period and have until 17 December 2023 to establish their internal channels. Larger companies must establish their channels within three months of the law entering into force.
Amendment to the Pay Security Act
Under the amendment, receivables based on unilateral judgments and settlements confirmed by a court may be paid as guaranteed wages. In addition, in cases of serious labour exploitation, the application period for payment of guaranteed wages is shorter than in other situations. The rights of the government agency responsible for pay security to receive and provide information, as well as employers’ obligation to assist, have been expanded.
Change security for the over-55s
As part of the government’s package to promote the employment of people aged 55 and over, additional unemployment security days are being phased out. The change security under the Employment Contracts Act will be expanded for people aged at least 55 who have lost their jobs for production or financial reasons. People aged 55 and up will also be given the right to request part-time work inside of full-time work.
R&D tax incentive for business owners
Companies engaged in business or agriculture can now benefit from an additional tax credit for salary and procurement expenses for research and development activities as provided by law. The goal is to increase R&D activities in businesses which have previously either conducted them on a small scale or not at all. The general additional credit will be available for the first time for returns for the 2023 tax year, with an extra additional credit becoming available based on tax returns for 2024.
Electricity credit based on large electricity bills
For electricity bills at consumers’ permanent addresses between 1 January and 30 April 2023, consumers are entitled to a domestic tax credit for electricity bills for the portion of the total between €2,000 and €6,000. The credit is equal to 60% of the total amount which qualifies for the credit.
Travel expense credit maximum amount and kilometre-based credit increase continue
The temporary expense credit maximum amount and personal car kilometre-based credit increase are being continued into 2023. The maximum amount of the credit based on travel expenses between home and work is €8,400. The kilometre-based travel expense credit is 30c/km if the credit is granted based on the costs of using the claimant’s own car. When the credit is granted for users of the limited type of company car arrangement, the credit is 24c/km.
Reduced personal liability for travel expenses between home and work during family leave
Taxpayers now benefit from reduced personal liability for travel expenses between home and work if they are receiving maternity allowance, special maternity allowance, paternity allowance, pregnancy leave allowance, special pregnancy leave allowance, parental allowance or partial parental allowance.
Increased age-based work income tax credit
The maximum amount of work income tax credit has been raised in three steps for people aged at least 60, 62 and 65 to both lengthen careers and encourage retirees to take up temporary or part-time jobs.
Hidden dividends now completely taxable
The share of hidden dividends liable for taxation has risen from 75% to 100%.
Two VAT rate amendments
The VAT rate on electricity has been reduced and people transport services in Finland are temporarily VAT-exempt.
To mitigate the effects of higher electricity prices and inflation, the VAT rate on electricity has been lowered from 24% to 10%. The lower VAT rate applies to the sale of electricity between 1 December 2022 and 30 April 2023.
In addition, people transport services which were liable for 10% VAT are exempt from VAT. The exemption includes the right to offset taxes paid on procurements. The amendment is applied to personal transport services provided in Finland between 1 January and 30 April 2023.