Can I deduct car expenses?

When you use your own car for business, you can deduct expenses related to business driving for tax purposes. The deduction method depends on the proportion of your car’s total mileage during the tax year that is business-related. Keep a mileage log for tax purposes so that business and private driving can be distinguished.

How to report your business mileage

1. Keep a mileage log of your business journeys throughout the year.
2. Calculate your business mileage and the car’s total mileage for the tax year.
3. Enter the requested information in the UKKO -service's tax return questionnaire so that the deduction can be included in your business tax return.

What information should I include in my mileage log?

To calculate mileage allowances and deductions for car expenses, you need to know what proportion of your car’s total mileage is business-related. Record this information in your mileage log. You can keep a digital mileage log or record the required information in a notebook, for example. The UKKO service includes a downloadable driving log that lets you record your mileage quickly and easily.

For each business journey, record:

- the start and end times
- the starting point and destination, and the route if necessary
- the distance travelled in kilometres
- the purpose of the journey
- the odometer readings at the start and end of the journey
- the person using the car.

You also need to calculate the car’s total mileage for the tax year. This is used to determine the proportion of business driving.

When business use accounts for no more than 50% of your total mileage

If business use accounts for no more than half of your total mileage during the tax year, the car is considered a private asset and is not added to your business’s bookkeeping. You may qualify for an additional deduction based on your business mileage, provided that the conditions for the deduction are met. This also applies when business driving accounts for exactly 50% of your total mileage.

The additional deduction reduces your taxable business income.

This is not a mileage allowance paid to you: as a private trader with a business ID, you cannot pay yourself a tax-exempt mileage allowance.

What if more than 50% of your total mileage is business use?

If business use accounts for more than half of your car’s total mileage during the tax year, the car is considered a business asset and needs to be added to your company's bookkeeping. In this case, the business-use portion of your actual car expenses is deducted monthly through your accounting, instead of claiming an annual mileage-based additional deduction.

Deductible expenses may include the business-use portion of fuel, insurance, maintenance and repair costs. The private-use portion cannot be deducted for business tax purposes. Keep the receipts and supporting documents for your car expenses for accounting purposes.

If business use accounts for more than 50% of your total mileage, we recommend the UKKO Yrittäjä service for private traders. The light entrepreneurship service uses a simplified approach to accounting, which means that only low-value asset purchases can be included in your business’s accounting records.

Are journeys between home and work considered business use?

Journeys between your home and your business’s permanent place of business are considered private driving, not business driving. 

You can deduct the costs of these journeys on your personal tax return in accordance with the Finnish Tax Administration’s requirements.