Your own limited company

• • Assess whether the company model is suitable for you and make a profitability calculation together with your accountant or another tax/financial administration expert. 

• • Please note that the company model does not apply to the publisher’s shares that your company may receive from Teosto or their taxation. 

• • The company model requires that you own a limited company in full or in part. 

• • The company may have multiple shareholders, but each of them must be a music creator member of Teosto. 

• • Download the required forms from the Forms page (Music Author or Publisher –> Taxation and Revenue models –> Company model agreement) 
  • Print out the completed agreement and sign them
  • Submit the signed forms to our customer service either as a PDF file or as high-quality photos by using the Secure mail at turvaposti.fi/viesti/omateosto@teosto.fi. 
    • Give your message the subject line “The Company model” and attach the documents. PLEASE NOTE! After you have sent the Secure mail, you will receive an email from turvaposti@turvaposti.fi with the subject “Vahvista turvapostin toimitus” (Confirm the delivery of Turvaposti). Click on the link in the message to confirm the sending of the form. .

In addition to the agreement form, you must provide us with the following documents: 

• Trade Register extract of your limited company (no more than three months old) 
• The company’s list of shareholders (up-to-date) 

As the agreement is for a fixed-term, you must renew it at the end of the agreement period if you wish to continue the agreement.  In order to renew the agreement, please send us the following: 

• • a new signed agreement form
  • an up-to-date Trade Register extract
  • an up-to-date list of shareholders 

You must also make a new, up-to-date calculation of the royalties you will receive for the purpose of determining the licence fee. 

You must report the amount of the licence fee (i.e. the result of the calculation) to us in the company model agreement form. Since the licence fee is paid by your company to you as the music creator, it is personal taxable earned income. If you are not included in the tax prepayment register, your company must withhold tax on the licence fee and report the income you receive to the Tax Administration in the same way as the other fees that your company pays to you. Correspondingly, your company may claim a tax deduction for the licence fee paid to you. Review the calculation and the related reports to the Tax Administration carefully with your accountant. 

Teosto does not charge anything for the adoption of the model, but if you use the help of an accountant, for example, in assessing profitability, it may result in extra costs.

Transferring copyright usage rights to your company as part of this model involves the payment of annual licence fee from your limited company to you, and its tax implications.

The calculation of the fair value is based on the instructions (in Finnish) issued by the Finnish Tax Administration on 28 September 2018.

The fixed term offers you the opportunity to consider the benefits and usability of the taxation model at regular intervals. 

The taxation model for limited companies will not affect publishing agreements or the relationship between the music creator and the publisher, such as the payment of advances. If an advance is paid while the company model is in force, it must be paid to your company, whose debt it will remain. 

Your company will pay back the advance (i.e. recoup) with the royalties it receives from Teosto. For this purpose, the publisher will issue a power of attorney to withhold your company’s distributions in order to recoup the advance. The publisher’s advance can only be paid back on the basis of the total distribution paid to the company: the recouping of royalties per work is not possible.  

Please note that the distributions collected by Teosto must be included in your company’s revenue, even if the money itself is used to pay back the publisher’s advance. Each distribution must, therefore, be recorded in your company’s accounts. 

If the advance has been paid to the music creator before the adoption of the company model and it is deducted from the author’s personal distributions, the transfer of the deductions to the distributions received by your company will also affect the publisher’s position. In this case, the music creator must inform their publisher before starting to use the company model. In such a situation, the most straightforward way of switching to the taxation model for limited companies is to agree with the publisher that the remaining personal advance will be paid off before switching to the new model, and a new advance will be agreed on separately between the publisher and the company. In this case, the powers of attorney required by the publisher must also be updated. 

The adoption of the taxation model will not affect the publishing agreement between you and the publisher. During the validity period of the company model, you can enter into publishing agreements as usual.   

If you have received or are about to receive advances, the company model may have an effect on the arrangement. See previous section How are publishing advances paid in the company model? 

In this taxation model, Teosto pays the royalties to your company. Royalties will be paid in accordance with the normal distribution schedule and are subject to Teosto’s distribution rules and other regulations and decisions that apply to distribution. As with distributions to individuals, administrative expenses and cultural contributions are also deducted from distributions paid to companies. Teosto will pay the royalties to the company in gross amounts without withholding tax if the company is included in the tax prepayment register. 

Yes, it is possible. Following the changes made to Teosto’s membership agreement, the rights you transfer to your company will be narrowed according to the self-administered or removed rights. Please also note that your company will not receive any Teosto royalties for these rights and areas after this, with the exception of the performing rights royalties you have left for Teosto to administer. 

Royalties that are paid to a company in the company model are not subject to VAT, even if the company is registered in the VAT register. 

The private copying and lending compensation financed from the state budget are not included in the scope of this taxation model. This means that they will not be paid to your company. Instead, they will be paid to you as personal income regardless of the company model. 

No, they are not covered in this taxation model. You can enter into an agreement with Teosto on the royalties paid by Teosto. The agreement will not apply to the following copyright income, for example: 

• royalties paid to you directly as a member or customer by foreign copyright societies that are equivalent to Teosto (the company model applies to royalties paid to you through Teosto by foreign copyright societies) 
• copyright income paid to you by other Finnish copyright societies 
• royalties paid directly to you by the publisher 
• royalties paid directly to you by other parties 
• the lending compensation and the private copying compensation 

The annual licence fee you receive from your company is your earned income, for which you pay tax. Your company will take care of the tax withholding. If your company is not included in the tax prepayment register, the royalties paid to your company will also be subject to tax withholding in accordance with the applicable legislation. 

No, it cannot. The company model will remain in force until the end of the agreement period. You can influence the length of the agreement period yourself: the length of the period may be 1–5 years. The company model may only be terminated during the agreement period in exceptional circumstances, such as the death of the music creator or the insolvency or bankruptcy of the company. 

Your personal access rights to Teosto’s web service as a music creator will remain the same in the company model. You can view the information on the royalties paid to your company separately in the web service. 

You can also register you works and report your performances as usual.