The cornerstone of self-employed persons’ social security in Finland is valid YEL insurance coverage. YEL insurance is used to determine, for example, the sickness allowance and parental allowance paid by Kela. YEL insurance also accrues a pension and affects possible unemployment allowances.
Please pay special attention to the following if you are planning to start as an entrepreneur in Finland:
1. Take out YEL insurance
Apply for YEL insurance from a pension insurance company. There are many pension insurance companies in Finland, but the amount paid monthly to the pension insurance company is not affected by the specific company from which you are applying for insurance.
YEL insurance must be taken out by every self-employed person between the ages of 18 and 67 whose annual income from work is at least EUR 8,575.45. If your income from work is lower than this and you do not have a YEL insurance policy, you may be what is known as a light entrepreneur. In this case, your entitlement to benefits will be determined in the same way as for an employee in an employment relationship.
An employee earning at least EUR 800 per month is entitled to health insurance benefits. If you do not work as a light entrepreneur and you have not taken out YEL insurance, your right to social security will be determined on the basis of whether you are a permanent resident in Finland.
2. The entrepreneur’s place of residence matters
The decision to grant YEL insurance is made by the pension insurance company. If you come from a country other than an EU or EEA country, Switzerland or the United Kingdom, the prerequisite for obtaining insurance is residence in Finland and the intention of becoming an entrepreneur and settling in Finland for the time being. Residence in Finland is subject to an overall assessment, and an address in Finland alone is not sufficient grounds to grant insurance.
If you become an entrepreneur and come to Finland from another EU or EEA country, Switzerland or the United Kingdom, you will not need to live in Finland to receive benefits. In this case, YEL insurance is a prerequisite for receiving benefits.
3. YEL insurance can be applied for once business operations have continued for four months
YEL insurance requires that business activity has continued for four months. In other words, you can only apply for YEL insurance once you have been self-employed for a duration of four months. The insurance takes effect retroactively from the start of business activities, and Kela benefits can also be received retroactively from the entry into force of the YEL insurance policy.
4. Self-employed persons’ benefits are determined on the basis of YEL income
If you fall ill or take parental leave as an entrepreneur, you can apply for benefits from Kela. The easiest way to search for information is on Kela’s website. A valid YEL insurance policy is required in order for benefits to be paid, and entrepreneurs applying to be Kela customers must attach a certificate of their YEL insurance policy to their benefit application.
The amount of sickness and parental allowances paid by Kela is tied to the YEL income, so it is important that your YEL income is at the correct level and not set too low.
YEL income is also important when business activities end. If you cease your business operations and become unemployed, Kela will pay you basic unemployment allowance. In Finland, entrepreneurs can also join an unemployment fund, which will improve their social security if they become unemployed. A monthly contribution based on YEL income is paid to the entrepreneur fund, and correspondingly, the fund pays unemployed members an earnings-related daily allowance which is higher than the basic unemployment allowance paid by Kela alone. In 2023, the annual YEL income of a person applying to become a member of a pension fund must be at least EUR 14,088.
5. Occupational health care provides additional security
Anyone working as an entrepreneur in Finland can obtain occupational health care services and receive reimbursement from Kela. The entrepreneur may also be entitled to rehabilitation arranged by Kela or the Finnish Institute of Occupational Health.
If you reside in Finland permanently, you should also apply for a Kela card and register with the Digital and Population Data Services Agency. You should also ask for good practical tips for entrepreneurship from other immigrants who have become entrepreneurs, if possible.
The legal specialist consulted for the text is lawyer Antti Klemola from Kela.