Vehicle as a business expense

If you use a car - or any other vehicle - in your business, it's possibly one of your most important tools. In the same way, the expenses related to your vehicle and the work trips made with it are one of the most important areas that need to be properly documented in your business.

As a user of our sole trader (toiminimi) service, or if you're still just interested in the service, it's good to keep the points listed below in mind, so that your vehicle is properly accounted for in your bookkeeping in a way that gives you the best benefit from it.

Adding your car's details

Add your car's details to the app under Car details (found in the Menu). Add your car's registration number, the car's business-use rate (over or under 50 %), and the car's supporting document.

If you bought your car more than a year ago, attach a price valuation of the car as the document. You can get a valuation from any car dealer, or for example from the Alma Ajo online service. The valuation must show the car's registration number, the valuation (amount in €), the odometer reading at the time of the valuation, and the date of the valuation. You can get this information, for example, from the Alma Ajo service under Aikajana.

If you bought your car less than a year ago, attach the bill of sale or hire-purchase agreement as the document. This document must show the car's registration number, the purchase date, and the purchase price in euros.

What benefits do you get from using a car?

This depends on how much you use your car for business trips. The car's business-use rate mentioned above is therefore significant information.

If you use your car over 50 % for business trips, meaning your car is driven more for business than personal trips, then in the eyes of the Tax Administration your car belongs to your business. In this case, your annual tax return will account as an expense your car, as well as its related costs, such as fuel, washes and servicing.

If you use your car under 50 % for business trips, meaning your car is driven more for personal trips, then in the eyes of the Tax Administration your car is your personal vehicle. In this case, your annual tax return will claim mileage allowances according to your driving log.

The driving log plays a significant role, as it's used to determine the ratio between business and personal trips. This information is essential in order to meet the requirements of the Finnish Tax Administration.

Keeping a driving log

You can only deduct expenses arising from your vehicle if you have kept a driving log of your work trips in accordance with the Tax Administration's guidelines. If you drive a lot, keeping a driving log may feel like a lot of work, but any back taxes or other tax-related problems will certainly feel like even more.

The following information must be recorded for every single work trip

• The trip's start and end time (date and time of day)
• Starting and ending location, and if necessary the route driven (exact addresses)
• Kilometres driven
• Purpose of the trip
• Odometer reading at the start and end of the trip
• The driver's details
• Kilometres driven with the car during the year

The format of the driving log is up to you. You can record the information by hand in a notebook, in an Excel spreadsheet on your computer, or use an app developed for this purpose. Our favourite is an app called Driversnote, which saves you a lot of manual work.

As an entrepreneur, you must keep your driving logs for at least 6 years.

Car expenses on the tax return

A car's useful life is typically over 3 years and its acquisition cost over 1 200 €. For this reason, the car is reported as an annual depreciation on the tax return of at most 25 %. In other words, the acquisition cost (of the car) is split into portions across different years.

When the residual value (remaining value) is 1 200 € or less, it can be written off in full at once.

Driversnote

Driversnote is a driving log app that makes your everyday life significantly easier. All you need to do is press Start at the beginning of a work trip and Stop at the end - the app takes care of the rest. It only tracks work trips, so don't log personal trips in the app at all. The share of personal trips is calculated from the difference between the work trips you've logged and the total kilometres driven. So remember to also enter the odometer reading in the app.

Once you've logged your work trips for the whole year, only one task remains. Create a report of the whole year's trips. You must keep this report for at least 6 years. Report the kilometres from the report in the tax return survey, which we always send you at the start of the year.

Driversnote's Pro licence costs 11 € per month, but through us you get the app with a 20 % discount.

• Log in or create a Driversnote account via this link to activate the discount
• Contact our customer service in the app's Support requests section to get an invite link, through which you can join the Truster team

Traditional driving log

If apps aren't your thing, you can also download a free driving log, which you can fill in electronically or in the more traditional way, printed out with a pen.

Whether you've typed the details into a driving log on your computer or written the whole year by hand, report the year's total kilometres to us via the tax return survey. We don't ask for your driving logs. Keep them yourself for at least 6 years, in case the Tax Administration wants to check them.