As a sole trader, you are not taxed based simply on how much money enters your bank account. Instead, taxation is based on your taxable business profit. In practice, business-related expenses are deducted from your business income, and tax is calculated on the remaining profit.
Understanding tax-deductible expenses is therefore one of the most important parts of managing your finances as a sole trader in Finland.
The Finnish Tax Administration allows self-employed individuals to deduct a wide range of expenses related to their business activities, including equipment, travel expenses, workspace costs, vehicle expenses, pension insurance contributions and other costs incurred in generating business income.
Many entrepreneurs end up paying more tax than necessary simply because they forget to record deductible expenses. Problems can also arise in the opposite direction if clearly private expenses are incorrectly recorded as business costs.
This guide explains which expenses sole traders can usually deduct, which expenses are generally not deductible and how to keep your expenses organised throughout the year.
If you want to make expense tracking easier, Kletta can automate much of the process. With Kletta’s receipt scanning feature, you can photograph or upload a receipt, and Kletta automatically extracts the information and suggests the appropriate expense category.
| Expense | Usually deductible? | Notes |
|---|---|---|
| Work equipment and tools | Yes | When purchased for business use |
| Software and digital services | Yes | Accounting, invoicing, design tools, cloud services, etc. |
| Marketing and advertising | Yes | Websites, domains, advertising and content production |
| Business travel | Yes | When the journey relates to business activities |
| Workspace / home office | Yes, subject to conditions | Depends on how the workspace is used |
| YEL pension insurance contributions | Yes | Deductible for tax purposes |
| Private expenses | Usually no | Must be connected to generating business income |
A tax-deductible expense is a cost that relates to your business and helps you generate or maintain business income.
The basic principle is straightforward: if you incurred the expense because of your business, it may be deductible for tax purposes.
The purpose of the expense is what matters. Typical deductible expenses listed by the Finnish Tax Administration include vehicle expenses, business travel, workspace costs, entertainment expenses, depreciation and smaller business purchases.
This is particularly important for sole traders because taxable business income is calculated after deductible business expenses have been taken into account.
If expenses are not recorded, your taxable profit can appear higher than it really is. On the other hand, recording private expenses as business expenses can cause problems when preparing your tax return.
With Kletta’s automated accounting, your recorded invoices, receipts, income and expenses are automatically reflected in your bookkeeping.
The exact expenses you can deduct depend on your industry, but several expense categories are common to most sole traders.
Computers, phones, monitors, cameras, tools, office supplies and other equipment required for your work can generally be deductible when they are used for your business.
For tax purposes, some smaller purchases can be deducted immediately rather than through depreciation.
In 2026, an individual low-value fixed asset costing no more than €1,200 can generally be deducted at once. The total annual deduction for low-value assets is limited to €3,600. Assets with a useful life of no more than three years can also generally be deducted immediately.
More expensive equipment with a longer useful life may need to be deducted gradually through depreciation.
The important point is that the purchase must genuinely relate to your business.
Software is now an essential business expense for many entrepreneurs.
Common examples include:
If you use these services to operate your business, their costs are generally business expenses.
Subscriptions are particularly easy to overlook because individual monthly payments can seem small. Over an entire year, however, they can add up to a significant deductible amount.
Expenses related to attracting customers and promoting your business are generally deductible.
These may include:
If the purpose of the expense is to generate customers, sales or visibility for your business, the connection to business income is usually clear.
Travel expenses relating to your business can also be deductible.
Examples include journeys to meet customers, temporary business trips, public transport tickets and certain vehicle-related expenses.
If you use a car for both business and private purposes, keeping accurate records is particularly important. The tax treatment depends partly on how much the vehicle is used for business.
A driving log makes it easier to demonstrate which journeys were business-related and which were private.
Kletta includes an automatic driving log for sole traders, which makes it easier to keep your business journeys organised for bookkeeping and taxation.
Workspace expenses can be deductible when the space is used for your business.
If you rent a separate office, studio or other workspace for your business, the related business expenses may generally be deductible.
Sole traders working from home can also claim a home office deduction in 2026. According to the Finnish Tax Administration, the formula-based deduction depends on how extensively the home is used for work.
For the 2026 tax year, the standard amounts are:
The correct amount depends on your circumstances and how much you work from home.
Keeping business and private expenses clearly separated is particularly important when your home is also your workplace.
YEL pension insurance contributions are another important deduction for many sole traders.
Paid mandatory YEL contributions can be deducted either:
However, the same YEL contribution cannot be deducted twice.
YEL is often discussed mainly in connection with pension and social security, but its tax impact is also important when calculating the overall cost of running your business.
Not every expense you pay can be treated as a business expense.
If an expense clearly relates to your private life and you cannot demonstrate a genuine connection with your business activities, it is generally not tax-deductible as a business expense.
The fact that you personally paid for something does not make it a business expense.
Examples of non-deductible expenses can include normal private living costs, private purchases and other expenses unrelated to generating business income.
Maintaining a clear distinction between business and personal spending helps keep your bookkeeping accurate and makes tax reporting considerably easier.
Deductible expenses directly affect how much tax you pay as a sole trader.
When all legitimate business expenses are recorded correctly, your taxable profit reflects the actual profitability of your business.
For example:
Business income: €50,000
Deductible business expenses: €15,000
Business profit before other tax adjustments: €35,000
Failing to record legitimate expenses could therefore make your business appear significantly more profitable than it really is.
Accurate expense tracking also makes it easier to estimate your prepayments during the year. If your expected income or expenses change significantly, your prepayment amount may also need to be updated.
You can read Kletta’s guide to declaring and adjusting tax prepayments.
The easiest way to manage deductions is to keep your bookkeeping up to date throughout the year.
A good routine is to:
This prevents deductions from being forgotten and makes preparing your tax return considerably easier.
Kletta can automate much of this process by combining receipt scanning, expense tracking, bookkeeping and tax reporting in one application designed specifically for sole traders.
One of the most common mistakes is forgetting small recurring expenses.
Software subscriptions, monthly services, equipment purchases and marketing expenses may individually seem insignificant, but together they can represent a substantial amount over a full year.
Another common mistake is recording expenses where the connection to the business is unclear.
Documentation is equally important. Even when an expense is genuinely business-related, you should be able to demonstrate what was purchased, how much it cost and why it relates to your business.
Receipts and other supporting documentation therefore remain an essential part of bookkeeping.
Sole traders can deduct expenses that relate to running their business and generating income.
Typical deductible expenses include:
Recording these expenses correctly helps ensure that you pay tax based on your actual business profit rather than an unnecessarily high estimate.
Kletta makes this easier by automatically turning your recorded income and expenses into bookkeeping and using that information for your tax reporting. You can also learn more about how Kletta automates VAT and tax returns.
It is an expense related to your business and the generation or maintenance of business income. If the cost was genuinely incurred for business purposes, it may be deductible for tax purposes.
Yes. Sole traders working from home can claim a home office deduction in 2026, subject to the applicable conditions. The amount depends on how extensively the home office is used for business.
Yes. Mandatory YEL contributions are tax-deductible. They can be deducted through your business taxation, personal taxation or, in certain situations, your spouse’s taxation. The same contribution cannot be deducted more than once.
Generally not. An expense must have a genuine connection with your business activities and income generation in order to be deductible as a business expense.
Yes. You should retain documentation for business expenses so that the purchase, amount and business purpose can be verified if necessary.
Keeping track of every receipt, subscription, business trip and deductible purchase manually can quickly become time-consuming.
Kletta is an accounting app built specifically for sole traders. It helps you keep income and expenses organised, automatically generates your bookkeeping and handles VAT and tax reporting based on the information recorded in the app.