@Investco_Tuomas Example: Fund values increase by, say, 10% during the calendar year. Do you have to pay annual corporate tax / advance tax on such an unrealized profit? Or does the corporate tax only become due when the funds are redeemed? In other words, does the tax authority follow cash flow or the balance sheet? My own guess would be cash flow.
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In short, unrealized appreciation of investments is generally not recognized as income in a limited liability company. Other assets, fixed assets, financial assets, and current assets are, as a rule, valued at acquisition cost at most. In certain situations, you can choose to use a procedure where investments are valued at fair value, in which case unrealized appreciation is also recognized as income.
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This came to mind: could, for example, an ordinary family or a group of friends set up a holding company?
For example, there would be 10 shareholders, each investing €100/month, totaling €1,000/month. The first payouts could be, say, after 25 years.
Is it even possible to invest in a holding company on a monthly basis, or does it have to be a lump sum?
The idea is that a low-income family could gain a foothold in the future and provide an easier life for their grandchildren.
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Thank you for the question and welcome to the forum! Yes, the setup you proposed is technically entirely possible. Investments can also be made monthly.
When planning the structure, it is good to take administrative costs into account, which are largely fixed and therefore are not significantly lower even if the company has fewer assets. All-in, outsourced administrative costs for a company are at least approx. €1,000/year, so the amount of wealth needs to be quite large for the corporate structure to be justified. Additionally, as we have mentioned in previous posts, for example, investing in the stock market and funds with capital originating from an individual is rarely more tax-efficient through a company than when invested personally. A company does, of course, enable joint investment projects that are difficult to organize without a company. However, joint investment projects have their own challenges, and a functioning arrangement requires a lot of agreements, rules, and administration.
My advice, based on this information, would be to consider monthly saving through personal accounts and, depending on the investment strategy, potentially utilize equity savings accounts.
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After a short break, another new article has been published. A somewhat unpleasant, yet unavoidable topic for you to explore.
What happens to an investment company after the owner’s death?
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Thanks for the text! Nitpicking: there is likely a small typo here:
After the dissolution, there are 960,000 euros in the company’s account.
It is most likely regarding the estate’s account, not the company’s.
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Hello @Investco_Sampsa and @Investco_Tuomas.
Thanks for the excellent blog and your great answers. I have a couple of questions that I would be grateful to get answers to. I founded a company whose primary business is investing, but also includes potential consulting.
- Is there any reason why I shouldn’t register for VAT? I couldn’t think of any reason myself, provided there is even one consulting gig within a year.
Then the main question.
- The company is receiving physical investment gold, which is intended to be sold now that the price of gold is high. I also trade both gold and stocks.
How does investment gold work from an accounting perspective?
I am under the impression that it is comparable to securities; am I right?
Is there anything else that should be taken into account in that situation? As I understand it, an audit is only required if the balance sheet totals 100,000 euros, even if the turnover exceeds the 200,000 limit due to trading.
Thank you very much! Your blog and messages have certainly created a positive and professional image of you—great marketing! I will definitely be in touch with you if the business expands to the point where it makes sense to outsource the accounting.
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Thank you for pointing that out, you’re right of course. I’ll fix it!
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Thanks for the message!
Joining the VAT register creates a reporting obligation for the company and late fees if you forget to report on time. This can be lightened by choosing the longest possible reporting period where possible. If you are certain that consulting work is coming, you can well join now. If it’s uncertain, there is time to join later.
In your case, physical gold is treated as an investment, and the asset class for accounting/taxation is selected according to the same principles as for securities. The audit obligation indeed only applies if the 100,000 euro balance sheet threshold is also exceeded.
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Hi everyone.
Got a couple of questions.
- Is there a minimum amount when it’s worth starting to consider an investment company?
It was mentioned earlier that your annual fee is €1200/year, so not for peanuts? - With that fee, I don’t need to do anything else besides manage the investments and remember
to send all the annoying paperwork to you and you handle the rest? - How much does it cost to set up the company, do you help with that too?
- The costs are tax-deductible, right?
- Was Euromanga better than that new corner joint?
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Thank you for the good questions and welcome to the forum!
I wouldn’t set a specific hard line for the amount, but it’s clear that it’s not sensible with a very small sum. It depends on whether you get sufficient benefits in your own situation one way or another. I recommend reading the texts below.
Pretty much, yes, we have aimed to minimize the customer’s responsibilities. The customer’s biggest task is specifically providing the material; however, in most cases, delivery is only once a year. We provide guidance with the material, and additionally, we have listed the situations where the customer should contact us during the financial year.
The registration fees for establishing a limited company (osakeyhtiö) are €240 or €370. We also assist with the setup.
Yes, they are.
We moved so recently that it still requires further research 
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Thank you for your reply.
I’m still just doing the groundwork; it won’t be relevant until next spring/summer when I’m planning to sell off a large one-bedroom apartment in Punavuori and move into a rental.
I’ve read a lot about investment companies and, according to my own calculations, it would be worth it. However, I want to sit down with a professional and go over the calculations specifically from the perspective of my plans. I’ll get in touch sometime next year.
Funny thing, by the way—it’s very possible you’re sitting there reading this in my brother’s old office; they moved from the same stairwell over to the Eteläranta side about 1.5 years ago.
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Hello, questions for the experts:
- What is the ultimate difference between an investment company and a holding company?
- I am buying shares of an unlisted limited company for my investment company, from which I expect to receive annual dividends. My investment company receives these tax-free, and I can withdraw funds, for example, at an 8% reduced tax rate. If my investment company also invests in listed shares, I believe those dividends are also tax-free for the investment company, but does my company pay corporate tax on the profit?
- I have intended for the investment activity to be passive; my company does not engage in any other business.
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Hi, thanks for the questions!
As far as I know, at least in Finland, there is no official legal definition or definition from the Tax Administration (Verohallinto) for these terms. They describe the nature of the company’s operations. An investment company (sijoitusyhtiö) refers to a company engaged in active investment activities, while a holding company refers to a more passive company that simply holds one or more ownership stakes.
Dividends paid by listed shares are taxable, unless the ownership stake in the company is over 10%, in which case the dividends are tax-free. However, tax is not withheld in advance from dividend income received from a Finnish listed company; instead, they are calculated annually as part of the company’s result. Withholding tax (lähdevero) is often levied on dividends paid by foreign companies, but these can mostly be credited in Finnish taxation.
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Thanks! There are still many websites online providing outdated information; it’s sometimes a bit difficult to find up-to-date information, and the tax authority’s language is occasionally a bit full of bureaucratic jargon.
Here is a fresh piece from Investco’s Santeri Pischow & Sampsa Leskinen 
Private equity funds have grown in popularity, particularly among larger investors, due to their higher returns compared to the listed market. In this text, private equity funds refer to closed-ended funds that primarily invest in unlisted assets, the most common of which are Private Equity funds that invest in unlisted shares.
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Hi,
A couple of questions::
- Isn’t value-added tax deductible only for the consulting part, so is it really worth it if the activity is very minor? K
- Isn’t an audit always mandatory for a company engaged in investment activities according to the Auditing Act: TTL2§2 “However, an auditor must always be elected in an entity whose principal business is the ownership and management of securities…”
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Hi @Investco_Sampsa!
Regarding my actual question about that latest blog post ( [Pääomarahastoihin sijoittaminen ja verotuksen sudenkuopat - Inderes]
Let’s assume a company has invested in a closed-end fund structured as a limited partnership (KY), with a lifespan of, for example, 15 years. Distributed profits are then tax-exempt income, and the share of the limited partnership’s (KY’s) profit is reported as taxable income. The fund unit cannot be sold; instead, there is a commitment to hold it, and part of the commitment is still unpaid.
Is it justified, in accounting, to treat such a fund unit as part of fixed assets? If the unit is part of fixed asset investments, how should it be reported for tax purposes: is it an operating asset or another type of investment?
Or can the value of such an investment be reported as part of current assets, like other so-called normal investments such as listed shares? How is the valuation of the investment then carried out? Is an initial impairment loss normally a tax-deductible expense?
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It’s worth reading the entire section.
An auditor must, however, always be elected in an entity whose primary business is the ownership and management of securities and which has significant influence, as referred to in Chapter 1, Section 8 of the Accounting Act, over the business or financial management of another accounting entity.
Basic investment companies do not meet the latter condition.
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Kiitos Ibidemille vastauksista, samaa mieltä.
Kiitos kysymyksestä! Oma näkemys on, että tällaiset sijoitukset ovat luonteeltaan lähes aina pysyviä vastaavia ja verotuksessa muuta omaisuutta. Vaihto-omaisuutta ne harvoin jos koskaan voivat olla, jos eivät ole likvideitä eikä niitä siten osteta ja myydä aktiivisesti.
Voisitko tarkentaa tätä.
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