The Artists’ Association of Finland has compiled a guide in PDF format (in Finnish) on the most important tax instructions for an artist:
The guide focuses primarily on business operations dealt with in accordance with the Income Tax Act. However, the taxation principles presented can to a large extent be applied also to the taxation of artists taxed in accordance with the Business Tax Act.
Selection of the tax act to be applied to an artist’s work activities: The Income Tax Act or the Business Tax Act? An artist can practise his or her profession in various forms, either as an employee or as a freelancer or entrepreneur. Also, an artist may receive income from various forms of activity.
It is usually most beneficial for the artist to have all of his or her operations taxed as a single type of income source – i.e., either completely as wages or completely as business income. This is because the expenses and losses from one form of activity are deductible only from income from the same form.
Transferring annually from the sphere of one taxation act to another is not considered to be in accordance with generally accepted accounting principles.
Paid work as an employee is taxed in accordance with the Income Tax Act. When an artist is a paid employee in addition to engaging in entrepreneurial artistic work, it is usually most profitable for the artist that all of his or her activities, including sale of artwork, be taxed in accordance with the Income Tax Act. The artist can then deduct, for example, the costs incurred during the sale of the artwork from his or her wage income insofar as the sales proceeds do not cover the costs of the artistic activities.
Entrepreneurs are taxed in accordance with the Business Tax Act. When an artist receives his or her primary income from the sale of artwork, he or she is usually taxed in accordance with the Business Tax Act. In this case, it is best to organise the entirety of one’s activities in the form of entrepreneurial work, in which the costs of the artistic activities are deductible, when required, from other proceeds received by the artist.
There are plenty of similarities in the deductibility of costs between the two forms of taxation, but there are also differences, so it is important to adhere to the correct set of instructions when submitting one’s income-tax return to the tax authorities.
If you have recently obtained a business identity code (Y-tunnus), the tax authorities may send you a Form 5 even if you have previously reported the proceeds and costs of your artistic work via Form 15. The existence of a business identity code alone does not oblige you to transfer your activities to the sphere of the Business Tax Act if the activities remain on a small scale.
When the sales proceeds from artistic activities exceed EUR 10,000 per year, the artist is liable for value-added tax for the sales. Whether the artist has VAT liability is not decisive for determining the tax act in accordance with which the artist is to be taxed for his or her income.
Ammattitaiteilijan verotusohjeita (PDF) (Finnish)
Taiteilijan tulot ja kulut – lomakkeen 15 täyttöohjeet (PDF) (Finnish)