Determination of sales profit
Entrepreneurs are not entitled to an earnings-related allowance for time periods, over which the sales profits from their company assets are periodised. Sales profits from the company’s non-current assets or other long-term investments are considered relevant in terms of termination of your entrepreneurial operations, even if such profits had been obtained during the past six months prior to termination. Sales profits are allocated between owners in relation to each owner’s share of ownership and periodisation is carried out separately for each owner.
Sales profits may be generated as a result of shareholding, partial business ownership, business lines or company assets having been sold. Please note that sales profit may also be generated as a result of the fact that company assets have not been sold or taken into private use. In some cases, sales profit may be generated even if no sales profit has been generated. On the other hand, company assets may have been sold, but may not have resulted in profit that needs to be periodised. This can be the case if company debts and due interests at the time when the business operations are terminated exceed any sales profit generated.
Submit a sales profit report
You are required to attach a sales profit report form to your unemployment allowance application. All of our members applying for daily allowance must fill in the sales profit report form at least in part, even if a balance sheet review is not necessary.
In the following cases, sales profits will not be periodised:
- Business operations have continued for a maximum of 18 months.
- The grand total on the balance sheet for the company’s last fiscal year minus business operation debts does not exceed € 20,000.
- The company has been declared bankrupt.
- The applicant is a an entrepreneur’s family member covered under TyEL, who has no share of ownership in the company.
How is sales profit periodisation carried out?
The economic circumstances of your company are always examined when business activities are terminated. You are required to submit to the fund a sales profit report form. First, we will carry out a balance sheet review and if the grand total on the balance sheet for the company’s last fiscal year minus business operation debts exceeds € 20, 000, we will then examine whether any sales profit has been generated
If sales profit has been generated, it will be periodised starting from the date of termination of business activities. Unemployment allowance will not be paid during the periodisation of sales profit. Sales profits will be periodised according to the income, on which the earnings-related allowance is based.
Periodisation will postpone the starting date of earnings-related allowance Sales profits are periodised over a maximum time period of 24 months.
Allowance will be paid after periodisation
Periodisation will postpone the starting date of earnings-related allowance but does not affect the amount or the payment period of the allowance. Sales profits are periodised over a maximum period of 24 months. After the periodisation ends you will be paid unemployment allowance based on your selected insurance level if you are still registered as an unemployed job seeker with the TE office and provided you have not been absent from the labour market without a valid reason.
How long will a periodisation last?
You can get a rough estimate of the length of the periodisation by comparing your insurance level with the sales profit under periodisation.
- if your insurance level is € 20,000 and the sales profit is equal, the sales profit is periodised over approximately 12 months.
- if your insurance level is € 20,000 and the sales profit is € 10,000 the sales profit is periodised over approximately 6 months
If your company has been sold for example for € 40, 000, you can deduct 50% of that sum as an acquisition cost, resulting in € 20,000 as sales profit to be periodised.
Example of periodisation of sales profit:
Insurance level and/or pension insurance income per year € 42,000
Monthly income your allowance is based on € 42,000/12 = € 3,500
Sales profit € 35,000
Length of periodisation € 35, 000/ € 3,500 = 10 months