Pension Insurance for Artists in Finland
An artist can take out pension insurance in accordance with the Self-employed Persons’ Pension Act (YEL) if they carry out artistic work with the intent to profit.
Contributing to a self-employed person’s pension does not require the artist to establish a company or commence activities as a private trader. A person pursuing independent operations with the intent to profit can be considered an entrepreneur for the purposes of the Self-employed Persons’ Pension Act. An independent artist might be such a person.
The authorities can determine that an artist is an entrepreneur, even if that person has not made any pension contributions or been otherwise considered an entrepreneur. The tax authorities notify the Finnish Centre for Pensions about the artist’s entrepreneurial operations if their tax return indicates that the entrepreneurial income exceeds the specified limits.
Pension Insurance Obligation
The entrepreneur is responsible for obtaining pension insurance. Self-employed persons’ pension insurance is mandatory if the confirmed income is above a certain threshold (EUR 7,645.25 per year as of 2017) and the person does not fall within the scope of another pension act related to the same work activities.
Supplementary personal pension-insurance policies do not substitute for the statutory insurance. An artist can fall within the scope of the Self-employed Persons’ Pension Act retrospectively due to the aforementioned notification submitted by the tax authorities to the Finnish Centre for Pensions. The artist will then be required to pay any pension contributions due, with penalty interest.
Determining Confirmed Income
The essential part of YEL insurance is the determination of the artist’s confirmed income under the YEL scheme. This confirmed income determines the YEL pension contribution and later the amount of the pension. It is also the basis for determining many social-security benefits, such as parental and sickness allowances, as well as earnings-related unemployment benefits.
The confirmed income under the Self-employed Persons’ Pension Act reported for the determination of the self-employed persons’ pension contribution cannot be changed retrospectively. Therefore, special attention should be paid to the amount of confirmed income when applying for self-employed persons’ pension insurance.
In 2017, the YEL pension contribution for those under 53 or between 63 and 67 years of age was 24.1% of the confirmed income, and for those aged 53–62, it was 25.6%. A person starting out as an entrepreneur receives a discount from the pension contributions for the first four years. The new entrepreneur’s discount rate in 2016 was 22%. For an entrepreneur starting operations in 2017, the YEL pension contribution was 18.8% of the confirmed income for those under 53 or aged 63–67 and 19.97% for those between 53 and 62 years of age.
Pension contributions are tax-deductible, and these contributions can also be deducted on a spouse’s tax return.
Pension Insurance Responsibility for Employees
In addition to arranging pension cover for themselves, artists may be responsible for obtaining pension cover for others. This is the case, for example, when an artist hires people for a production who will be in an employment relationship with the artist. In such cases, the artist assumes the position of the employer and has pension-insurance obligations for the persons working under this relationship.
Visual Artists’ Confirmed Income for YEL Insurance
The Finnish Centre for Pensions provides guidelines on determining an entrepreneur’s confirmed income under the YEL scheme in an annual confirmed-income guide. This includes specific instructions for various sectors.
For visual artists, the Finnish Centre for Pensions has published two sets of instructions for determining a visual artist’s confirmed income:
- General instructions for all visual artists
- A separate guide for sculptors
The tables included in these guides can be useful tools for negotiating self-employed persons’ pensions with pension-insurance institutions and for determining confirmed income for YEL purposes.
For visual artists, the confirmed income on which the self-employed persons’ pension is based is determined according to their annual sales of works, as follows:
| Annual Sales (EUR/year) | Confirmed Income for Entrepreneur (EUR/year) |
|---|---|
| – 11,000 | – 7,600 |
| 11,000–22,000 | 7,600–10,000 |
| 22,000–33,000 | 10,000–12,000 |
| 33,000–43,000 | 12,000–15,000 |
| 43,500+ | 15,000+ |
Note: “Annual sales” refers to sales from which the expenses incurred in the artistic operations have been deducted. If the artist falls within the scope of VAT liability, the figure refers to sales excluding VAT and the expenses incurred in artistic operations, also excluding VAT.
The deductible expenses for visual artists vary significantly. Special attention should be paid to these allowable expenses when determining confirmed income for YEL insurance. For example, a sculptor creating a large work of art may include costs like foundry and stone-processing services.
Additional Information Regarding Grant Income
Since 2009, in addition to the confirmed income for YEL, grant income falling within the MYEL (Farmers’ Pension Insurance Act) scope affects the amount of an artist’s social benefits. All grants exceeding EUR 3,822.63 (as of 2017) and awarded for work lasting at least four months fall within the MYEL scope and are not included in the calculation of confirmed income for YEL. Also, state grants for five years or longer awarded before 2009 and still under payment are linked to a separate state pension scheme.