Light entrepreneur

As a light entrepreneur, you need YEL insurance if

• you are 18 years or older,
• you employ yourself,
• your self-employed activities continue for a minimum of four months and
• your YEL income (your gross salary as a light entrepreneur), exceeds €672 a month for at least four months (in 2021).

The insurance starts at the beginning of the calendar month following the light entrepreneur’s 18th birthday. The upper age limit for YEL insurance depends on birth year:

• for those born in 1957 or earlier it is 68 years
• for those born in 1958-1961 it is 69 years and
• for those born in 1962 or later it is 70 years

If you work as a light entrepreneur while simultaneously drawing old-age pension, YEL insurance is voluntary for you.

You need YEL insurance if your YEL income, i.e. you gross salary, exceeds EUR 672 a month on average (in 2021). The starting date of your YEL insurance will be the date when your gross salary surpasses this limit.

Example

Candice Carpenter begins working in March and her gross salary is EUR 300 per month in March, April and May. In summer, business picks up and as of June, Candice's gross salary is already EUR 850 per month. Candice should take out YEL insurance starting on 1 June.

This is correct. You have six months to take out YEL insurance. The starting date of the insurance must, however, always be the date when your gross salary surpasses the minimum limit for YEL income €672 per month (in 2021).

Example

Clara Consultant begins working in November 2020, and her gross salary is €2,800 per month right from the start. Clara must take out YEL insurance for herself by the end of April 2021. The starting date of the insurance, however, will be 1 November 2020.

If your gross salary is higher than the minimum limit for YEL insurance (€8,063.57 in 2021), but your actual work lasts less than four months, you do not need to take out YEL insurance.

Example

Tim Trainer has been invited to teach a course that will last four weeks. He prepares the course contents over a period of two weeks before the course begins. He has thus worked a total of six weeks on the course. Tim's gross salary is €8,100 for the course. Tim does not need to take out YEL insurance if this is his only assignment and he otherwise does not work as a light entrepreneur or employ himself.

If your gross salary varies but on average exceeds €672 per month (in 2021), you should take out YEL insurance.

Example

Greta Gardener’s busiest season is from the start of April until the end of September. In winter, the work is more random. Greta’s YEL insurance is valid all year. Greta estimates her YEL income so that it corresponds to the amount of her gross salary on an annual level. In addition, Greta selects the due months of the contributions according to her season.

YEL income is always an estimate of your gross salary over a 12-month period, starting from the first day the insurance is valid or from a change in your YEL income onward. You can use the amount of your gross salary that has already been paid to calculate a 12-month period estimate of your YEL income.

If your work increases or decreases, re-estimate the situation and change your YEL income.

Example

Sam Student employs himself as a cleaner alongside his studies. The amount of Sam’s gross salary varies considerably. For example, in February and March, Sam works a lot and his gross salary is €1,000 per month. In April and May, he is busy with school exams, and his gross salary only amounts to €200 per month. In summer, Sam works full time and his gross salary is approximately €1,800 per month. In September, when school resumes, his work decreases again and his gross salary is roughly €400 per month.

Sam’s gross salary:
February €1,000
March €1,000
April €200
May €200
June €1,800
July €1,800
August €1,800
September €400
Total €8,200

Over an eight-month period, Sam’s gross salary amounts to €8,200 in total, i.e. approximately €1,025 per month. Sam multiplies the monthly average by 12 to get the annual amount of his YEL income. The correct level of Sam’s estimated YEL income is therefore around €12,000.

For light entrepreneurs, the obligation to take out YEL insurance and the right level of YEL income are determined based on their gross salary. For example, costs invoiced from the customer or tax-free cost reimbursements are not considered salaries and are not taken into account when determining YEL income.

YEL income is not calculated based on the calendar year. YEL income is always determined on an annual level, even if the YEL insurance is valid for only part of the year. 

Calendar year means the period from January to December.

Annual level means any 12-month period, for example, from 1 April 2020 until 31 March 2021.

Even though YEL income is estimated at the annual level, YEL insurance contributions are invoiced, however, for the insurance’s period of validity.

Example

Phil Photographer works as a light entrepreneur for five months and his gross salary is €1,000 a month. He estimates that he does not need YEL insurance, because his gross salary is less than €8 063,57 in 2021 (minimum YEL income). When examining Phil’s gross salary on the yearly level (€1,000 x 12), it exceeds the minimum limit for YEL insurance. Phil must take out YEL insurance for the five months that he works and pay YEL insurance contributions for a five-month period.

YEL insurance cannot be frozen, but it can be terminated if there is a break in your work lasting several months. When you begin working again, take out new YEL insurance.

Take out YEL insurance

If you work less due to an illness you can lower the level of your YEL income to match your work input (i.e. gross salary). Remember to change your YEL income immediately when you notice you are working less, because YEL income can be changed from the date of notification at the earliest.

Change your YEL income in Varma Online Service

In addition to changing your YEL income, you can also influence your YEL insurance contributions by changing your monthly instalments and by taking advantage of the flexibility option for YEL contributions.

Read more about the flexibility option

Even if invoicing and payments are handled through an invoicing service company, this does not mean that you are automatically considered self-employed under the earnings-related pensions acts. If the work relationship between the light entrepreneur and the party ordering the work has the characteristics of an employment relationship, then it is considered an employment relationship. In this case, the employer is responsible for taking out pension insurance.

According to the Finnish Centre for Pensions’ decisions, café employees and retail salespeople are employees.

More information from the Finnish Centre for Pensions on the characteristics of an employment relationship and entrepreneurial activities (in Finnish and Swedish only)

If you are unsure which earnings-related pensions act applies to you as a light entrepreneur, please contact Varma’s experts.