How to pay yourself from a Finnish company: salary vs dividends in 2026
Once your osakeyhtio (limited company) makes money, you take it out in two ways: as salary or as dividends. Most owners use a mix of both. The short version: set a realistic YEL income first, take a moderate salary to use the low tax brackets and because salary is deductible for the company, then take dividends within the lightly taxed 8 percent band. The best split depends on your profit, the company net assets and your other income. Here is how each part works in 2026, in plain English.
One sentence to remember
Salary is deductible for the company but taxed in full as your earned income; dividends are not deductible but are taxed lightly up to 8 percent of net assets. The art is balancing the two.
Salary vs dividends at a glance
| Salary | Dividends | |
|---|---|---|
| Deductible for the company? | Yes. It lowers profit and the 20 percent corporate tax. | No. Paid from profit already taxed at 20 percent. |
| How you are taxed | Earned income, progressive state and municipal rates. | Within 8 percent of net assets and 150,000 euros: 25 percent capital income, 75 percent tax-free. Above 8 percent: mostly earned income. |
| Pension (YEL) | Separate. YEL is based on your YEL income, not your salary. | Separate. Dividends do not build YEL either. |
| When you can take it | Monthly, like any wage. | Decided at the annual meeting from confirmed profit. |
| Depends on | Your work. | The company net assets (the 8 percent base). |
Salary: simple, deductible, fully taxed
A salary you pay yourself is a normal business cost. It reduces the company profit, so it cuts the 20 percent corporate tax on that money. For you, it is earned income, taxed at progressive state rates plus your municipal rate, the same as any employee.
Because the lowest earned-income brackets are taxed lightly, a moderate salary is usually efficient: the first slice of income carries a low rate, and the company gets the deduction. The downside is that high earned income climbs into high marginal rates quickly, which is where dividends become attractive.
Dividends: lightly taxed, but capped by net assets
Dividends are paid from profit the company has already kept after paying the 20 percent corporate tax. They are not deductible, so that money is taxed twice in total. What makes them attractive is the personal-side treatment for an unlisted company:
- Up to 8 percent of the company net assets, and up to 150,000 euros: 25 percent is taxed as capital income (30 percent up to 30,000 euros, 34 percent above), and 75 percent is tax-free. This is the sweet spot.
- The part within 8 percent but above 150,000 euros: 85 percent is taxable capital income, 15 percent is tax-free.
- The part above 8 percent of net assets: 75 percent is taxed as earned income, 25 percent is tax-free, which is much less favourable.
When you pay a dividend up to 150,000 euros, the company withholds 7.5 percent advance tax. The key limit to understand is the 8 percent of net assets, because it ties your tax-favoured dividend to how much equity the company has built.
Why net assets matter so much
Net assets are roughly the company assets minus its debts: the equity. The lightly taxed dividend is capped at 8 percent of that figure. A brand new company has almost no equity, so the 8 percent base is tiny and you can take very little tax-favoured dividend. As the company keeps profit year after year, its net assets grow and the tax-favoured dividend grows with them. This is why young companies lean on salary and shift toward dividends as they mature.
YEL: the part founders forget
This is the point that surprises almost every foreign founder. Your Finnish pension and most earnings-related benefits (sickness allowance, parental allowance) do not come from your salary or your dividends. They come from your YEL income, a separate figure you confirm with a pension company.
If you work in your company and own more than 30 percent of it, YEL insurance is mandatory. Your YEL income should match what you would pay an outside employee with your skills for the same work, not the company profit or what you actually draw. In 2026 the contribution is 24.4 percent of the confirmed YEL income, and the income must be at least 9,423 euros per year to be insurable.
The practical trap: founders set YEL income as low as possible to save on the contribution, then discover years later that their pension and their sickness or parental allowances are tiny, because those were all based on the low YEL figure. Set it realistically. It is one of the first things I check with a new company owner.
So how do you split it?
There is no single right answer, because it depends on your profit, your net assets, your other income and your plans. But a sensible order of thinking looks like this:
- Set a realistic YEL income and budget the 24.4 percent contribution. This is fixed regardless of the salary or dividend choice.
- Take a salary that uses the low brackets and that the company can deduct. For many small-company owners a moderate monthly salary is efficient and also keeps cash flowing to you during the year.
- Take dividends within the 8 percent and 150,000 euro band for the rest, as far as the net assets allow. This is the lightly taxed money.
- Leave the rest in the company if you do not need it. Retained profit is taxed only at 20 percent until distributed, and it grows your net assets, which raises next year's tax-favoured dividend room.
A simple illustration: a one-person company with modest equity in its first profitable year will usually pay most of the owner's income as salary, because there is little net assets base for tax-favoured dividends yet. A few years later, with retained profit built up, the same owner can take a larger share as lightly taxed dividend. The mix is not fixed once; it moves as the company grows.
Please note
This guide explains how the rules work in general. The right split for you depends on numbers I would need to see: your profit, net assets, YEL income and other income. Treat it as background, not as a final plan for your own company.
Want the right split for your own numbers?
I run the monthly bookkeeping and the salary and dividend planning for foreign-owned Finnish companies in English, the way I do for Mario at Sheimar Education Finland Oy. Send me your profit and net assets and I will show you a sensible split. Free 15-minute consultation.
Phone: +358 41 312 7714
Email: [email protected]
Frequently asked questions
Is it better to pay yourself salary or dividends in Finland?
Most owners use a mix. Salary is deductible for the company and taxed as your earned income, so a moderate salary uses the low progressive brackets. Dividends are paid from after-tax profit, but within 8 percent of the company net assets and up to 150,000 euros they are taxed lightly (25 percent capital income, 75 percent tax-free). The best split depends on your profit, the company net assets and your other income.
How are dividends from a Finnish private company taxed in 2026?
For an unlisted company, dividends up to 8 percent of the company net assets and up to 150,000 euros are taxed at 25 percent as capital income (30 percent up to 30,000 euros, 34 percent above) and 75 percent is tax-free. The part above the 8 percent limit is taxed 75 percent as earned income. The company withholds 7.5 percent advance tax on dividends up to 150,000 euros.
Does salary or dividends build my pension in Finland?
Neither directly. An owner who works in the company and owns more than 30 percent is insured under YEL. Your pension and most earnings-related benefits are based on your confirmed YEL income, which is an estimate of the value of your work, not on the salary or dividends you actually draw. You pay the YEL contribution (24.4 percent of YEL income in 2026) regardless of how you pay yourself.
Why can a new company pay only small tax-favoured dividends?
The lightly taxed dividend is capped at 8 percent of the company net assets (equity). A brand new company has very little equity, so the 8 percent base is small. As the company retains profit year after year, its net assets grow and so does the amount you can take as tax-favoured dividend. Early on, salary often does more of the work.
When can I take dividends from my Finnish company?
Dividends are decided by the shareholders, normally at the annual general meeting after the financial statements confirm a distributable profit. You cannot take dividends freely month to month the way you draw a salary. Salary can be paid monthly; dividends follow the accounts.
Are dividends deductible for the company?
No. Dividends are paid from profit that has already been taxed at the 20 percent corporate rate, so they carry two layers of tax. Salary is deductible, so it reduces the company profit and the corporate tax, but it is taxed in full as your earned income. This trade-off is the heart of the salary versus dividend decision.