Tax deduction of YEL contributions – how to deduct your YEL payments

How are YEL contributions deducted in taxation?

As a self employed person, you can deduct your YEL insurance contributions either:

• in your own personal taxation,
• in your spouse’s personal taxation, or
• in your company’s taxation.

Whether it makes more sense for you to pay the YEL contributions yourself or have your company pay them depends, for example, on whether you operate as a sole trader or through a company. The most beneficial option is influenced by:

• your business form
• your other income
• your other tax deductions

As a rule, it’s best to allocate deductions to income that is taxed at the highest rate.

You can print a detailed breakdown of your YEL contributions from the online service. The breakdown is formatted in the way required by the tax authorities.

Can YEL contributions be fully deducted in taxation?

Entrepreneur’s pension insurance contributions are fully deductible in taxation.

Keep in mind that from business income you can deduct only mandatory pension insurance contributions. From earned income, you can deduct mandatory contributions as well as other statutory and voluntary contributions.

Deducting YEL contributions for sole traders

As a sole trader, you can choose whether to deduct YEL contributions:

• as business expenses, or
• in your personal taxation.

You can still make this choice when completing your tax return. However, the contributions can only be deducted in one way, not both.

In most cases, it’s advisable for sole traders to deduct YEL contributions in personal taxation, where they are fully allocated to earned income. In this case, you report the contributions on your pre completed personal tax return, and they are deducted from earned income, not capital income.

If your earned income is low, it may be worth considering your spouse’s taxation instead. If your spouse has higher earned income, deducting the contributions there can be more beneficial. The higher the earned income, the lower the effective YEL contribution rate—regardless of whether the income is yours or your spouse’s.

If you have no earned income at all, deducting YEL contributions in personal taxation is not worthwhile. YEL contributions are not taken into account when confirming a loss in the earned income category.

You can assess how different options affect your total income using the tax percentage calculator (vero.fi).

Deducting YEL contributions in limited companies and other types of businesses

If you operate through a company that makes a profit, it is usually sensible for the company to pay the YEL contributions and deduct them in its own taxation.

Please note:

• If you want to deduct YEL contributions as company expenses, the company must also pay them.
• If the company pays the contributions, they cannot be deducted in personal taxation.

If your business operates at a loss, deducting YEL contributions from business income increases the confirmed business loss.

However, if you or your spouse have earned income, you’ll receive an immediate tax benefit from YEL contributions only by paying them yourself and deducting them from earned income.

If your earned income is low and your earned income tax rate is small, it is usually not advisable to pay the contributions yourself. In that case, it’s often better for the company to pay them and deduct them in company taxation.

How do YEL contributions affect the entrepreneur deduction?

As an entrepreneur, you’re entitled to a 5% entrepreneur deduction on your business income for the tax year.

If you deduct YEL contributions as business expenses, they reduce your business income, which also reduces the amount of the entrepreneur deduction.

If you deduct YEL contributions in your personal taxation, the entrepreneur deduction remains unchanged.

Please note that the entrepreneur deduction does not apply to limited companies.

Remember to claim the deduction – but keep it simple

As a self employed person, you’re responsible for claiming YEL deductions in your taxation. Contribution details are not automatically transferred from the pension provider to the Tax Administration.

Keep things simple. Focus on growing your business—optimising deductions only really matters when your business is profitable.

If you can’t find an answer to your question on this page, please contact the tax authorities’ customer service. The information provided here may not cover every situation.

We aim to review and update the information regularly, but we cannot guarantee its accuracy. Always check the applicable legislation and official guidance related to taxation separately.

Did you forget to deduct your YEL contributions? Here’s how you can correct the situation

If you forgot to deduct YEL contributions, you can still request a correction within the allowed appeal period. The general appeal period is three years from the beginning of the year following the end of the tax year.

Example: Tax year 2023 → deadline 31 December 2026.

Will voluntary pension savings continue to be tax-deductible in the future?

The government has proposed discontinuing the tax benefit for voluntary pension savings from 2027 onwards. This would mean that voluntary pension insurance contributions would no longer be tax deductible.

The tax deductibility of YEL contributions will remain unchanged.