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Taxi entrepreneur - how to start up your taxi service
In order to operate as an independent taxi driver, you must first be registered as a self-employed individual and get the necessary licences that entitle you to drive a taxi. The form of company can basically be any of the various legal forms. Typically, taxi drivers are self-employed individuals operating under a business name (T:mi).
You must always report your fare income on a business tax return, regardless of whether the taxi ride was arranged by an outside intermediary or not.
When you start your business as an independent taxi driver, do as follows
1
Register as a self-employed business operator
Submit a start-up notification at ytj.fi. You will get your own Business ID and can sign up for the Tax Administration’s registers that include the VAT register, the prepayment register and the register of employers.
2
Apply for the necessary licences
In order to operate a taxi service, you must have a taxi service licence. In addition, the driver must have a taxi driving licence.
Visit the Traficom website for more information about applying for licences
3
Register your car for licensed use
If you drive a car as a taxi even part-time, you must register it for licensed use. The register entry may affect vehicle inspections and insurances.
See the Traficom website for instructions on how to change the vehicle use information
If you buy a minivan taxi, and it is adapted for disabled passengers or approved for transporting children to school/daycare, you can submit an application for exemption from car tax. No reduction of car tax is given to usual passenger cars operated in taxi service.
4
Keep a driver's log
As a professional driver, you need to keep a driver’s log. If your vehicle has a taximeter that prints out receipts, your driver’s log can consist of the meter’s reports.
Keep the driver’s log by workshifts or, if no workshifts for your driving are scheduled, keep the log by 24-hour periods. The logbook must contain the following information:
- the fare income you receive, divided into cash amounts, credit payments and other income.
- the kilometres driven during the tax year, divided into taxi-service kilometres against payment, kilometres necessary for your operation but not paid for by your customers, and kilometres driven for private and other purposes.
If your car is exempt from car tax, your driver’s log must also include
- total kilometres for every calendar month, with separate entries for professional driving and for other driving
- school and daycare rides itemised by date and by kilometre, if the car has been exempted from car tax for this reason.
Make sure to store your driver’s logs for at least 6 years from the end of each tax year. If requested, you must present the logs to the Tax Administration.
If you are an employee, not an owner of a taxi company, the rules set out in the Finnish Working Hours Act (872/2019) concerning personal drivers’ logbooks must be adhered to. You must log your driving when you are an employee, making records of the start times and end times of work shifts; including the start and end of break times and start and end of your periods of rest. Please keep the current week’s and the previous week’s last driving day’s logbooks with you. Read more about log records for the driver’s log
5
Offer a receipt to your passengers
You must always offer a receipt to your paying customers. You can also send the receipt electronically, for example via email. Enter all the payment transactions in your company’s bookkeeping system.
Read more about the obligation to give a receipt: Play fair – don’t forget the receipt!
Register for VAT
You must register as a VAT taxpayer if your annual turnover exceeds the threshold of €20,000 per calendar year. Even if your turnover is lower, you can still register if you want.
When you have been registered for VAT, you need to add VAT to all your taxi fare prices and transport fees. VAT is
- 13,5% in passenger transport (14 % until 31 December 2025)
- 25,5% in other transport services as of 1 September 2024 (e.g. food deliveries or transport of goods).
File and pay VAT in MyTax.
See the instructions for filing and paying VAT.
As a VAT taxpayer, you can deduct VAT included in purchases
Registration for VAT also entitles you to deduct the VAT that is included in the purchases you make for your taxi business. For example, you can deduct the VAT included in your expenses for fuel or charging costs and for repair or car wash expenses. Check the amount of VAT you paid in your receipt.
If the vehicle is used for other taxable business activities in addition to passenger transport and the vehicle is also in private use, VAT deductions can be made only with regards to passenger transport.
- Read more about VAT on a vehicle and its operating costs
- Read more about the liability for paying VAT and registration for VAT
- Detailed guidance: Renting out areas for motor vehicle parking from the perspective of value-added taxes (available in Finnish and English, see chapter 8.8)
- See other guidance for VAT.
Your taxi enterprise is registered for VAT — do you sell rides through a digital platform?
You can sell your passengers taxi rides through a digital platform that they use with a mobile app. This way, the platform is normally the supplier of an intermediation service to you. As a result, you need to pay a fee to the platform company.
You are the seller of the transportation service to your customer.
Please make sure that your name is stated on the receipt. It may be that your passenger receives the receipt from the app. The receipt should mention your name as the seller of the transportation service. One of the required items shown on the receipt is the VAT of 13.5% included in the price of the transportation service.
File your VAT return in MyTax. Write the VAT period’s total VAT on your selling of transport services into the “Tax on domestic sales by tax rate: 13.5%” line. This should be the VAT on the entire amount that you had received from your passengers – do not subtract the fee you need to pay to the platform.
Esimerkki alkaa
Example: You are selling passenger transport services and you use the intermediation service of a platform, which is not Finnish. After the ride, your passenger receives a receipt from the mobile app. Your name is stated on the receipt as the seller of the service.
The passenger pays €113.50 through the intermediation on the platform (with 13.5% of VAT included), so the price without VAT equalled €100.00 and the VAT on it was €13.50.
The platform will keep €10.00 as its fee and send you €103.50 (= €113.50 – €10.00).
The amount you had received from your passenger (€113.50) included €13.50 of VAT. This is the VAT on the passenger-transportation service, which you must enter into the “Tax on domestic sales by tax rate: 13.5%” line on the VAT return.
Esimerkki päättyy
As noted above, the platform company charges you a fee. The intermediation service is subject to Finnish VAT.
You are the buyer of the intermediation service so you must determine whether you need to use the VAT reverse-charge mechanism, in which you are the party that must pay the Finnish VAT because of your role as the buyer.
- If you receive an invoice from the platform company with Finnish VAT included at 25.5%, you will simply need to pay the full invoice, and you are not under a reverse-charge obligation.
- If you receive an invoice from the platform and it has no Finnish VAT marked on it, you must pay the VAT on behalf of the foreign digital platform using the reverse-charge mechanism.
The selling of intermediation services requires that the VAT reverse-charge mechanism should be applied, if
- the foreign platform has no fixed establishment in Finland that would participate in the selling of the service,
- the platform has not, on a voluntary basis, obtained a Finnish VAT registration for its sales in Finland.
If the rules require that you use the VAT reverse-charge mechanism, here is what to do
First, calculate the VAT at 25.5% of the fee charged by the foreign platform company (fee × 0.255 = amount of value-added tax). You need to perform this calculation yourself. The information you should write into your VAT return is different depending on whether the foreign platform company is established in an EU country or outside of the EU:
- Declare the following if the platform is established in an EU country:
- Fill in the VAT you had calculated under “VAT on services purchased from other EU Member States”.
- Fill in the total amount you paid for the intermediation under “Services purchased from other EU Member States”.
- Declare the following if the platform is established outside the EU: write the VAT you had calculated into the “Tax on domestic sales by tax rate: 25.5%” line on the VAT return.
After that, you can deduct this VAT. To do so, write the same amount of VAT into “Tax deductible for the tax period”, on the VAT return that you are submitting for the same period.
Read more about how your company can deduct value-added taxes
If you are not on the VAT register, you should submit an application for VAT registration as a buyer so you can declare and pay the VAT on the intermediation fees. When you complete the application form for VAT registration in MyTax, select “Purchases or self-supply” for “your company’s business activity”.
Although you might only have a small-scale business operation, you are still under a duty to get a VAT registration because of your role as the buyer. When your taxi is otherwise a non-VAT business enterprise and you apply for VAT registration as a buyer, you cannot deduct the VAT you had paid when buying the intermediation service.
Read more about the business activities that give rise to the requirement to register for VAT
File your income and deductions on the business tax return
Any income you receive from your taxi service is taxable income that you must file on the business tax return. The tax return for business operators and self-employed persons, for example, is filed in the spring, at the start of April.
Read more about the tax returns of different company forms.
For purposes of taxation, you can deduct the expenses that relate to your operation and that you have paid in order to generate business income. Examples of deductible expenses include fuel, car repair and car wash expenses. You can only make deductions based on the percentage of expenses that was used for your taxi operation.
Claim a deduction for the vehicle you use as a taxicab
You are entitled to a depreciation on the vehicle if the vehicle is part of the assets of your business enterprise. Motor vehicles are regarded as being part of your business assets if more than half of the kilometres driven during the year are business-related.
If your taxicab is not a business asset, you are allowed to claim an additional tax deduction based on the number of business kilometres driven.
Your driver’s log helps you to provide evidence regarding business-related driving.
More information:
Note that, for the purposes of tax control, the Tax Administration receives information on the payments made to you from the intermediaries of passenger transport services. So please remember your filing obligation.