Selling price, wages or trade income?

Sales of artwork

When a finished work of art is sold, for example at an exhibition, the money received is considered the sale price. It is considered the sale price even if the seller has produced the piece him- or herself and therefore reflects the value of the work done to produce the artwork.

Note that the sale price is not compensation for the work done and no tax is withheld nor are social security or pension insurance contributions made from this sum. The VAT included in the sale price depends on whether the seller is liable to pay VAT for the sale or not. You can find more information on VAT on the How to make a living as a visual artist website.

Trade income from commissions

When you produce a commissioned artwork, it is not the work you are selling, and the compensation you receive is not considered a sale price. When the compensation you receive is actually payment for the work you have performed, it is considered trade income. This is usually the case with commissioned work. For example, compensation paid for a portrait commissioned from an artist is specifically defined as trade income by the Finnish tax authority.

If the artist receiving the trade income is registered in the tax authority’s prepayment register, no tax is withheld from the paid sum. If the artist is not registered in the prepayment register, tax is withdrawn from the trade income. In order to be paid by the commissioner, the artist must provide the commissioner with his or her tax card.

No employer’s social security contributions are paid for trade income. Whether pension insurance contributions need to be paid for trade income depends on the situation. Usually, it is not necessary. However, municipal pension insurance contributions are paid for trade income received from a municipality, unless the person who carried out the work has taken out YEL pension insurance. Note that municipal pension insurance contributions are only paid for the portion of the received sum that is payment for work done. For this reason, when you know you are being paid by a municipality, you should itemise your labour costs and any material, outsourcing or other costs in the commission contract.

Wages for commissions

You can also produce commissioned artworks for your employer, although this is rarely done. An employment relationship means that you are managed and supervised by your employer.

In addition to withholding tax, the employer’s social security contributions must be paid for any wages you receive. If you are paid wages for a commissioned work carried out under an employment contract, the statutory TyEL insurance (employer’s pension insurance) contributions are also withheld from your wages.

Guidelines by the tax authority: taxing wages and trade income