Do you need to take out YEL insurance?

​​​YEL stands for the Self-Employed Persons' Pensions Act. YEL is statutory insurance that must be taken out under certain conditions. YEL insurance secures the self-employed person's income after retirement and during illness, parental leave and unemployment.

When? You need to take out YEL insurance within six months of starting business activities as a self-employed person. However, it is best to arrange the insurance immediately, as the premiums will be charged retrospectively from the start of the self-employed activity and increased with the technical interest rate. A penalty for failure to insure will be charged if insurance is taken out too late.

The obligation to insure starts from the beginning of the month following your 18th birthday and ends at the latest at the end of the month in which you turn 68.

Foreign entrepreneur and YEL

Finland is covered by co-ordinated social security provisions together with EU and EEA countries and Switzerland. In these countries a self-employed person is normally covered by the social security system of the country he/she works in. Under certain conditions, he/she can remain within the scope of the Finnish social security system.

Finland has bilateral social security agreements with Australia, USA, Canada, Quebec, Israel and Chile, but provisions on self-employment in these countries are scarce or non-existent.


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What are the EU and EEA countries and social security agreement countries?

Self-employed persons coming from EU, EEA and social security agreement countries are subject to co-ordinated social security regulations. 

EC regulation 883/2004 to be applied
EU countries

  • The Netherlands, Belgium, Bulgaria, Spain
  • Ireland, United Kingdom, Italy, Austria
  • Greece, Cyprus, Latvia, Lithuania
  • Luxembourg, Malta, Portugal, Poland 
  • France, Romania, Sweden, Germany 
  • Slovakia, Slovenia, Finland, Denmark 
  • Czech Republic, Hungary, Estonia, Croatia

EEA countries

  • Iceland, Liechtenstein and Norway

Switzerland

Social security agreement countries

  • Canada, Chile, Israel 
  • The Province of Quebec, USA, Australia

Pension cover and a foreign entrepreneur from an EU or EEA country or Switzerland

As a general rule, self-employed persons are always covered by the social security of the country they work in, irrespective of their home country or nationality. This means that a person who moves to Finland and is self-employed must take out YEL insurance in Finland.

A self-employed person’s social security premiums are paid and social security benefits are received in accordance with Finnish legislation. Upon reaching retirement age, pension can be applied for from Finland through the pension system of the country of residence.

A self-employed person may also remain within the social security cover of his/her country of origin

The main exception to the general rule concerns self-employed persons who work temporarily in another country or several countries. They may remain covered by the social security of their country of origin. All of the following conditions must be met:

  • the estimated duration of working does not exceed 24 months
  • the domicile of the self-employed person or the company is in the country of origin, and 
  • the self-employed person has a certificate attesting to their arrangement of pension cover in their country of origin (a certificate of posting).

An exemption may be granted for a maximum of five years. Any exemptions are agreed on by the authorities of the agreement countries. 

Working in several EU/EEA countries or Switzerland

A self-employed person working in several countries falls under the social security system of their country of residence or the company’s main location.

Substantial part of activities in the country of residence

  • A self-employed person is covered by the social security of his/her country of residence, provided that a substantial part (at least 25%) of all the activities takes place in this country. 
  • Self-employment activities are determined on the basis of the self-employed person’s net sales, working hours, the number of services rendered and/or income.

Activities outside the country of residence
If the self-employed person does not engage in a substantial activities in his/her country of residence, he/she will fall under the social security system of the country where the company’s main location is.

When determining the main location of a company, the following is considered:

  • the permanent and established location of the self-employed person’s activities 
  • the nature and duration of the activities being carried out
  • the number of services rendered

Certificates from the Finnish Centre for Pensions
A self-employed person who works in two or more EU countries needs a certificate by the Finnish Centre for Pensions to prove that he/she is covered by the Finnish social security system. The certificate exempts the self-employed person from having to pay statutory insurance premiums in the country where the work is being carried out. This means that a self-employed person covered by the Finnish social security system continues to pay statutory social insurance premiums to Finland also when working abroad.

Further information online
» Finnish Centre for Pensions
 

Pension cover and a foreign entrepreneur from other than an EU or EEA country or Switzerland

​Pension cover must be arranged in accordance with Finnish legislation. A self-employed person may also have pension-cover-related obligations in his/her country of origin. ​​​