YEL vs TyEL 2026: When Each Applies and Why It Matters

tulos.ai automates financial administration for entrepreneurs and accounting firms, but the YEL vs TyEL choice is one of those decisions that should be made deliberately and reviewed regularly. The wrong insurance type does not only mean paying into the wrong system. It can weaken pension accrual, sickness allowance and unemployment security exactly when they are needed.

Would it not be easier if the insurance type were based on one clear test of ownership and work contribution instead of a guess assembled from several sources?

Table of Contents

1. YEL and TyEL in two sentences
2. Who is an entrepreneur and who is an employee?
3. The ownership test in detail
4. Cost comparison 2026
5. What YEL covers and what TyEL covers
6. YEL income and salary: how they differ
7. Typical situations and the right answer
8. What happens when the situation changes
9. Common mistakes
10. Summary and action list

This article is part of the Entrepreneur’s Insurance Package 2026 hub. If you want the whole insurance picture first, start there.

YEL and TyEL in Two Sentences

YEL is the entrepreneur’s pension insurance. It applies to a person who owns a company or a significant part of it and works in the company. The contribution is calculated from declared YEL income, not from actual withdrawals or salary.

TyEL is employee pension insurance. It applies to a person who works for an employer for salary without significant ownership. The contribution is calculated from paid salary and is split between the employer and employee.

The same person can be covered by both at the same time if, for example, they run a sole trader business and also work as an employee for another company.

Who Is an Entrepreneur and Who Is an Employee?

The Finnish test combines three factors:

1. Ownership in the company where you work.
2. Position in the company, for example a leading position or board membership.
3. Family ownership counted together with your own ownership.

Main rule in 2026:

• Sole trader: YEL applies if the YEL income threshold is met.
• General partnership and limited partnership: a general partner is covered by YEL.
• Limited company (OY): YEL applies if you meet one of these:
  • you own more than 30% of the shares alone, or
  • you own more than 50% together with family members, and you have a leading position in the company, such as CEO, board member, procurist or similar. A pure employee role without a leading position does not make you an entrepreneur.
• Light entrepreneur: YEL applies when the YEL income threshold is exceeded. The invoicing service handles salary mechanics, but for insurance purposes you are treated as an entrepreneur, not as an employee.

If you do not meet the entrepreneur criteria, employee salaries fall under TyEL.

The Ownership Test in Detail

Ownership is calculated based on voting power, not only the number of shares. Different share classes, such as A and B shares with different votes, can affect whether the 30% or 50% threshold is exceeded.

Family members include a spouse and direct ascendants or descendants living in the same household, such as children, parents and grandparents. Siblings are not counted.

Example:

• You are the CEO and own 25% of the shares.
• Your spouse owns 30%.
• Together you own 55%.
• You have a leading position.
• You are covered by YEL even though your own share is only 25%.

This is why in family companies YEL can apply to more people than the share numbers alone would suggest.

Cost Comparison 2026

The YEL contribution in 2026 is:

• 24.40% of confirmed YEL income
• new entrepreneurs receive an approximately 22% discount on YEL contributions for the first four years
• the minimum YEL income threshold is €9,423.09 per year

The TyEL contribution in 2026 is approximately 24.40% of paid salary in total:

• employer share: on average 17.10% of salary for a contract employer
• employee share: 7.30% of salary

Key points:

1. The base amount is different. YEL is calculated from declared YEL income, which may not equal the actual withdrawal or salary. TyEL is calculated from paid salary.
2. Deductibility differs. YEL is the entrepreneur’s personal tax-deductible contribution. The employer share of TyEL is a deductible company expense, while the employee share is withheld from salary.
3. The new-entrepreneur discount exists only in YEL. Missing it is a common mistake for new entrepreneurs.

What YEL Covers and What TyEL Covers

Both provide statutory pension accrual and connect to Kela benefits. The practical differences are especially visible in social security.

In practice, the largest risk for an entrepreneur is that YEL income is set too low for tax or cash-flow reasons. Then sickness allowance or parental allowance can be only a fraction of what the entrepreneur actually needs.

YEL Income and Salary: How They Differ

Salary is the amount an employer pays an employee. It appears on the payslip, tax is withheld from it and it is the base for TyEL.

YEL income is the entrepreneur’s or pension company’s estimate of what salary would be paid if the same work were done by someone else. It is not the same as profit, withdrawals or revenue.

The Finnish Centre for Pensions and pension companies review YEL income regularly. In 2026 many entrepreneurs have received proposals to increase YEL income. The entrepreneur makes the decision, but a justified counterproposal should be made in writing.

A good routine: review YEL income when

• revenue grows by more than 25%
• your work contribution or responsibility increases
• you receive a reassessment proposal from the pension company

Typical Situations and the Right Answer

Situation 1: Sole trader on the side while employed.
You are a full-time employee and run a small sole trader business on the side. Salary from employment is covered by TyEL. If the sole trader’s YEL income exceeds the threshold, you are also covered by YEL. You can belong to both systems at the same time.

Situation 2: Sole owner of an OY who is CEO.
100% ownership plus a leading position means YEL. Even if you pay yourself salary, it is not insured under TyEL unless your ownership falls below the threshold.

Situation 3: Employee of an OY who owns 10% of shares.
Under 30% alone and no leading position means TyEL. Salary is insured normally under TyEL.

Situation 4: Family company where two siblings own 40% and 30%.
Siblings are not counted as family members for the combined family rule. The 40% owner exceeds the 30% threshold and is covered by YEL. The 30% owner is exactly at the threshold, but the law requires more than 30%, so they are covered by TyEL unless another rule applies.

Situation 5: Light entrepreneur with annual YEL income of 12,000 €.
Above the YEL threshold means YEL. The invoicing service may handle payments like salary, but for insurance purposes you are an entrepreneur and YEL is mandatory.

What Happens When the Situation Changes

YEL and TyEL are not permanent labels. Review the situation whenever:

• Business form changes, for example sole trader to OY.
• Ownership crosses the 30% threshold, up or down.
• You take or leave a leading position.
• You marry or divorce, because family ownership is recalculated.
• Revenue or work contribution changes materially, which may require a YEL income review.

An unreported change can create retroactive contributions and administrative work when the pension company later corrects the situation.

Common Mistakes

1. YEL income is set too low for tax reasons. You may save hundreds in contributions but lose thousands in sickness allowance when incapacity hits.
2. The new-entrepreneur discount is not used. The YEL discount of about 22% for the first four years is missed if the entrepreneur status is not reported correctly.
3. An OY owner pays themselves salary and insures it under TyEL even though YEL applies. This can be corrected retroactively.
4. Ownership changes but the insurance type is not changed. If ownership falls below 30% and TyEL is not arranged, work may remain uninsured.
5. Family ownership is ignored. A spouse’s share can push combined ownership above 50%.
6. YEL income is not reviewed annually. A pension company proposal should not be rejected automatically, but it should not be accepted without your own calculation either.

Summary and Action List

• YEL applies to entrepreneurs, TyEL to employees. The same person can be in both systems in different roles.
• In an OY, the key thresholds are more than 30% alone or more than 50% with family, combined with a leading position.
• YEL is calculated from YEL income, TyEL from paid salary. The base difference is the most important practical distinction.
• YEL income affects sickness allowance and parental allowance. Too low an income is a real social-security risk.
• Review the insurance type whenever ownership, position, business form or revenue changes materially.

Action list for the next 14 days:

1. Open your current YEL or TyEL agreement and check the base: YEL income or TyEL salary.
2. Compare YEL income with your real work contribution.
3. If the business is within its first four years, check that the new-entrepreneur discount is active.
4. In an OY, check ownership percentages and family ownership.
5. If revenue has grown by more than 25% in the last year, request a YEL income review from the pension company.

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