Owning a Taxi company in Finland
Kirjoittanut: Taru Jytilä - tiimistä SYNTRE.
Owning a taxi company in Finland
This essay is about owning a taxi company in Finland.
Growing up I was used to seeing a lot of taxi’s outside of our house, as my father owned a taxi company.
It was one of my first jobs when I turned 18 to get a license to drive them and work for my father. When my parents were travelling, I was organizing the schedule for the drivers. The responsibility was challenging but beneficial, in my opinion. I gained interested in the industry and was working in and out in the taxi business whenever it suited me. After working abroad and as Finland was struggling with covid pandemic it was one of the few jobs that was available. I worked as a taxi driver and studied to get in to a school. Since then it has been interesting field for me and I just recently finished my studies to become entrepreneur in the taxi industry. My plan is to get one car after or during my studies as a side hustle.
Being an entrepreneur in Finland is challenging due to many laws and regulations. You have to be on top of all the legislations so you would not get in trouble with your employees or with the federals. Taxi industry has changed a lot during the last decade. It used to be very free and easy going job especially in the countryside. Since then, a lot has changed. The government wanted to make it easier for people to become entrepreneurs and that there would be an open market for people to get their own license to start the business. Back in the days there used to be a specific amount of licenses in the cities , so that there would not be too many taxis in each city. It meant that you could not get your own taxi if there was no licenses to buy or to inherit. Usually when entrepreneur got retired he sold the license to someone unknown or to their family members who could continue the work. Finland wanted to get rid of the old habit and wanted to release the markets. That basically means that they took away this system and whoever wanted to become entrepreneur could just apply for the license. The minister Anne Berner was the one who wanted this regulation called “ Liikennekaari” in the first place and the law change happened in 2018. Since then the industry got wild.
Aynone could get the license to become an entrepreneur, even without any company id. There was no more regulations for the prices and customers got tricked to pay huge amounts of money. Drivers were not expected to have any exams to become drivers. This created huge issues in the industry. There was all kinds of “wild” drivers who did not have anything to do with taxi industry. They did not speak the language and did not even know how to drive in Finland. Especially in the Helsinki area, the taxi amounts got out of hands. There was not enough customers anymore for all these cabs. In 2017 before the change, there used to be around 10 000 entrepreneurs and almost all of them were owners of only one taxi car. This means that almost all of the entrepreneurs revenue was around 27 000€ and when you take out the costs were talking about 15 000- 20 000€ . Apparently according to our government this was too much as they thought that the industry needs to be released. ( Ahokas, P. Thesis, 2017)
Our government is supporting some of the citizens taxi trips to hospitals and to other government facilities. They can support the journey if there is no public transportation or if the person is disabled. Usually the person pays some smaller fee of the journey and the government supports the rest. Example with Kela, the customers only need to pay 300€/year and the government supports the rest of the journeys. This is very needed for people who has long term sickness and needs to travel to the hospital often from a longer distance. (Lehikoinen, H. 2018.)
As the new regulation was not successful among with the citizens, government had to recognize their mistake and now 2021, they have made some new regulations for the industry once again. They brought in a must for entrepreneur course and exam. They brought in an exam for the drivers. The entrepreneurs have to have a business ID and the car needs to be registered for the business. There has to be a meter in the car again for the tracking purposes. So many of the good old things came back, thanks to Sanna Marin. (Wiren, S.2018.)
Different company forms
In the taxi industry you can choose from the below 4 which ever company form suites you the best. There are 5 different company forms in Finland you can choose from. One of the 5 forms is co-operation which does not really fit in the taxi industry so I will not get in to specifics with this form. In 2021 there were 600 000 new companies published in Finland. Most popular ones are sole trader and limited company. ( Accountor, 2021.)
Toiminimi – Sole trader
Sole trader form of company if one of the most common in Finland. This is easy company form for taxi drivers who has only one car, hairdressers, bookkeepers and several other occupancies.
Usually there is only one person working in this company, who is also the entrepreneur. You can start it with 0€ capacity. You must register the company in PRH which is the bureau in Finland which maintains all the company information who are operating in Finland. This form will cost you 0/60/115€ depending if you want to publish it in a register. If you just open the company id in your tax page, it does not cost you anything. The old traditional paper form way it will cost you 115€.
It is recommendable to use this form if its mainly you who is working, and the business is rather small.
Accounting needs to be only single-entry bookkeeping and you can do it most likely yourself. All the money is considered to be your personal money. It is recommendable to have a separate bank account for the company money. You can lift the money from the company account as a private drawing. You are personally responsible for the company. This means the money, contracts and responsibilities. ( Accountor, 2021.)
Avoin yhtiö – Open company
In open company you must have at least 2 persons. All of the partners are considered as entrepreneurs. There is recommended to be great loyalty within the partners in this type of company form and it is popular for couples and family members to have this kind of companies together. Everything done by this company is guaranteed with your personal backup. If one of the company members takes a loan for the company , you are also personally responsible for it. You don’t need starting capital to start this form of business. There must be a written contract of founding the company. There can be private drawings or salary payment done in this company form. The registration cost is 240€. There must be double-entry bookkeeping done.
Kommandiittiyhtiö – Limited partnership
In limited partnership company there must be at least 2 persons. First one is responsible for the decisions and responsibilities of the company and other one is silent partner. Responsible one is considered to be the entrepreneur and is personally responsible for all the debts the company has. Silent partner is only responsible for the money they have invested in the company. You don’t need starting capital in this form. There can be private drawings or salary payment done in this company form. The registration cost is 240€. There must be double-entry bookkeeping done.
Osakeyhtiö – Limited Company
Limited company is the most popular form of company in Finland. The reason might be that this is the only form where the entrepreneur is only responsible for the amount they have personally invested in the company. If company for example goes to bankruptcy because of bad economics, not because the entrepreneur has done something illegal, they are not responsible for the debts the company has. The company has stocks, which amount you can decide when creating the company. The owners of the stocks can be private persons or other companies. It can be private or public company. If its public, you can buy the shares in stock market. You need at least one alternative member to start a company with. You can pay yourself salary or lift dividends. The registration cost is 240€ or with a paper form 380€. There must be double-entry bookkeeping done.
Human resource managment
When managing people you must know what you are doing. Employees are very on top of requirements these days and will challenge you if things are not going by the book. It is important for the employer to have time management in order to avoid burnouts and to be able to run the business according to the Finnish laws. Even if the worker would have the taxi at all times, it is important to keep an eye on the worker, so he will not overwork, which could lead to sickness and mean huge expenses for your company.
Safety leading is a concept which purpose is to avoid health problems, safetiness and productivity.
Some facts the employer should be responsible for:
- Avoid risks & try to prevent them
- Create safety systems to avoid the staff to get hurt
- Guide employees and explain safety instructions
- Good ergonomic working environment for the employees
- Track the working hours and reference period
- Make sure the driver is filling the driving log (Työsuojelu, 2021.)
Example of an office template where you can download a free template to create working schedule for your employees. Another good but payment needing program is called Monday.com.
Julkishankinta / ” Governament supported rides ”
In Finland there are several types of taxi rides that are supported by the government fully or partly. Around 40% of all the rides are these types of government supported ones. (Suomen Taksiliitto, 2016.) Even though inflation is now coming the students still need to be taken to school and people still need to go to hospitals. So even if the consumers buying power is getting lower the need for taxi rides is still there. Government is supporting the taxi rides for those in need. This is decided by the doctor or the facility the customer is using. Normally people are elderly or disabled or they live far away from the treatment center and there is no option for public transportation. There is also support for elderly people who needs help getting to buy groceries, getting a haircut or visit the bank. Kela has a way of connecting customers to take a shared ride to the hospital and this way they have reduced the amount of taxi rides impressively. Governament is saving around 20 million euros a year by combining taxi rides. ( Ahokas, P. 2017. ,HE 161/2016, 2.1 Lainsäädäntö ja käytäntö, momentti 170; Suomen taksiliitto F 2013.)
Verotus – Taxation
VAT for transportation in Finland is 10% when transporting people on board and 24% when transporting packages. If travelling outside of Finlands boarders VAT is 0%. Entrepreneurs have to admit to VAT register in Finland if their revenue exceeds 15 000€. ( Yrityksen perustaminen ) VAT is money that the entrepreneur is collecting from the clients and settling it to government. It is wise to think that this money does not belong to the company in any stage, it just travels trough your bank account to the tax office.
Autovero “Car tax “ is something we have to pay in Finland each time we bring a new car and register it.
If you are buying a taxi car we used to have a relief for this tax. This has changed as well together with the taxi release and is no longer valid when buying a normal 1+4 car. It is only valid when you purchase a car that has the ability to carry disabled people and is minimum 1+6 seater. Car needs also to be used for carrying students or daycare clients. ( Finlex, 2003.)
Ajoneuvovero “ vehicle tax “ is a tax in Finland that has to be paid yearly from all the cars that are used in decommission. The tax amount depends on whether the car uses diesel or gasoline as fuel. ( Traficom,2022.)
Grey area – Harmaa talous
Before new laws it was easier for the government to investigate how the taxi industry is working and is there a lot of grey area business happening. All the taxis used to have licenses so the authorities knew who is driving, how many kilometres in a year they drive and all the reports from the taximeters was sent to the transmission center. Now days this information is not reported anymore and it is hard for the government to track the business anymore. ( Vero, 2020. ) They do not know who is driving , how much they drive or the payment information used in the cars.
Most common ways to circumvent taxes are paying salaries in cash, not informing cash payments to tax administration and not using the right vat percentage’s when taking the payment. ( Vero, 2020. )
Tax office made increased monitoring throughout a year 2021 and found out that 8,7 million euros was not reported as an income. This is only from a small percentage of the entrepreneurs. Over 3 million euros was paid in cash for the workers. There were cases where worker was lifting social security benefits from the government and employer was paying him in cash to drive the taxi at the same time. There was also cases reported where the employer did not have needed licenses to rehearse entrepreneurship. (Rulamo, A. 2022.)
Uber in Finland
What is Uber? It’s a company published in the United States that works today in 73 different countries. Their methology is to convey taxi rides from consumers to drivers. Since then some papers have leaked which indicates that they were strongly lobbying our ministers and could be one of the reasons why we started to reform our taxi industry laws. We heard about Uber in Finland the first time in 2014. First they were hiring drivers without taxi driving licenses and Finlands government boomed at them that that’s not legal. They have been lobbying since then together with our ministers who could possibly affect changes in the parliamentary. (Hänninen, J. Kössö, T. 2022)
Whilst doing the tax investigation it was regular that the driver thought that they do not need to inform the income to the government but that Uber would do it on their behalf. (Rulamo, A. 2022.)
It seems like the brainwash from Uber was working as our minister at that time , Anne Berner did a law amendment proposal that was basically everything that Uber wanted. It is unclear if Anne Berner benefited from this agreement somehow. (Hänninen, J. Kössö, T. 2022)
( Picture from Ubers files. YLE, 2022. )
Uber is working currently in Finland but only in the Helsinki area. Drivers need to fulfill the legislation in Finland so they have to have a taxi drivers license. Uber is taking a 25% cut from all the rides they have transmitted trough their system. Usually Uber rides are around 30-40% cheaper than the regular taxi in the country. (Granström, T. 2018)
Now since there are new changes coming again in the industry it might have an affect on Ubers actions and being legit again.
I think taxi industry was working very well and was blooming before the new regulations. Back in 2014 when I was driving a taxi for my father the licenses were limited, there was a specific number of taxis and there was work for everyone. Entrepreneurs work was laudable as everything was reported and it was not so effortless to cheat. In my opinion Anne Berner ruined the industry and she should have been responsible for the poor decisions she made as a minister.
Gladly our government has recognized that this law change was unsuccessful and now they have published a repair kit, called taxi 2021 to try to repair the wrong decisions made earlier. Their aim is to bring back the qualification to be an entrepreneur in Finland with a training and exam, drivers need to pass an exam and there needs to be a machine in the taxis to report all the traffic so that it can be checked if needed. Prices and license owner records needs to be seen inside or outside the car. (Traficom, 2022.)
Lot of good qualifications are being taken back to use , so lets hope our taxi industry will become as good as it used to be, or even better.
Accountor, 2021. Link: https://www.accountor.com/fi/finland/artikla/suosituimmat-yritysmuodot-vertailussa
Ahokas, Petteri. Thesis, 2017. Link: https://www.theseus.fi/handle/10024/132415?locale-attribute=lsv
Anssi Rulamo, STT. 2022. Link: https://www.lapinkansa.fi/pimeita-palkkoja-kirjaamatta-jatettyja-ajoja-taksa/5041738
Finlex, 2003. Link: https://finlex.fi/fi/laki/ajantasa/2003/20031281#L2P12
JYRI HÄNNINEN, TUULIA KÖSSÖ. Yle, 2022.Link: https://yle.fi/uutiset/74-20000080
Lehikoinen, Heini. 2018. Link: https://elamassa.fi/terveys/milloin-ja-miten-kela-korvaa-taksimatkoja/
PRH, 2022. https://www.prh.fi/fi/kaupparekisteri/yritystenlkm/lkm.html
Suomen taksiliitto C, Luonnos hallituksen estys liikennekaareksi sekä eräiksi siihen liittyviksi laeiksi. Link: http://www.taksiliitto.fi/files/taksiliitto/Taksiliiton%20lausunnot/STL_lausunto_liikennekaari_23052016.pdf. Read on 28.10.2022
Suomen taksiliitto D, Suomen taksiliiton liittokokouksen julkilausuma. Read on 29.10.2022. Link: http://www.taksiliitto.fi/ajankohtaista/?NewsAction=ShowNewsItem&ItemId=11591. Luettu 23.3.2017 Suomen taksiliitto E. Taksintarkastajat. Http://www.taksiliitto.fi/taksiliikenne/taksitarkastajat/
Teemu Granström, Iltalehti. 2018. Link: https://www.iltalehti.fi/autouutiset/a/201806052200992274
Traficom, 2022. Link: https://www.traficom.fi/fi/liikenne/tieliikenne/ajoneuvon-verotus
Traficom, 2022. Link: https://www.traficom.fi/fi/liikenne/tieliikenne/ajoneuvon-verotus
Työsuojelu, 2021. https://www.tyosuojelu.fi/tyosuojelu-tyopaikalla/turvallisuusjohtaminen
Verohallinto, Harmaan talouden selvitysyksikkö. 2020. Link: https://docplayer.fi/178327036-Nakokulmia-taksialan-harmaaseen-talouteen-uuden-liikennepalvelulain-aikana-selvitys-1-2020.html
Wiren, Sini. 2018. Link: https://www.lvm.fi/-/liikenne-ja-viestintaministeri-marin-taksisaantelya-uudistetaan-ja-ongelmiin-puututaan-1015111
Yrityksen perustaminen. https://yrityksen-perustaminen.net/alv-rekisteri/
Yrityksen perustaminen. Link: https://yrityksen-perustaminen.net/arvonlisavero/#kannat