EN
Finland · account typesLevel 2Products10 minUpdated Equity savings account or book-entry account?
Two accounts with different jobs. The difference is not which one is better, but when the tax is paid and what you can buy on the account. Let's go through the differences with an example, a comparison and four common misconceptions.
The tax rules described here apply to individuals who are tax residents in Finland. If you are taxed elsewhere, your own country’s rules apply.
- Why an account is a container and not an investment, and what it determines
- How the timing of tax differs between the account types
- What tax advantages the book-entry account has of its own
- How to choose based on what you plan to own
An account is not an investment
The first thing to keep apart: an account is a place to hold investments, not an investment itself. A share, an ETF and a fund are investments; a book-entry account and an equity savings account (osakesäästötili) are containers you keep them in. The same share behaves exactly the same on the market whichever account it sits in, but the taxation and the range of what you can hold differ.
A book-entry account is the basic account, and on it you can own practically anything traded on an exchange: stocks, ETFs, ETCs and bonds. The equity savings account (ESA) is more limited but taxed differently: you can only buy listed shares on it, and sales inside the account do not trigger immediate tax.
The video loads from YouTube only when you press Show. YouTube may then set cookies.
The biggest difference is when tax falls due
This is easiest to understand through an example. You buy a share for €1,000. Its value rises to €1,500 and you sell it. What happens on each account?
- You buy the share for €1,000
- You sell it for €1,500
- You make a €500 capital gain
- The gain is taxed in the year of sale
- Available to reinvest: minus the tax
- You buy the share for €1,000
- You sell it inside the account for €1,500
- The sale does not trigger tax
- The full €1,500 can be reinvested
- Tax only when you withdraw money from the account
Deferring tax has a flip side too
Because tax deferral is the ESA's clearest advantage, it is easy to conclude that the ESA is always better for tax. It isn't. The book-entry account has features the ESA does not have, and with a smaller portfolio or a long holding period they can weigh more than the deferral.
First look at what you are planning to do
It is not a good idea to choose the account type based on what kind of investor you see yourself as. An investor doesn't first decide what kind of person they are, but what they plan to own and do. So start from your intention.
| If you want to… | The more relevant structure |
|---|---|
| invest in ETFs | Book-entry account |
| invest in funds | Book-entry account or fund account, depending on the product |
| pick individual listed shares | Book-entry account or ESA |
| switch between individual shares inside the account without immediate capital gains tax | ESA |
| use the deemed acquisition cost | Book-entry account |
| use realized losses more flexibly | Book-entry account |
| build an ETF core and also pick individual shares | Book-entry account, with an ESA alongside if needed |
You can use both
It is not always one or the other. You can use the accounts side by side if they have different jobs in your portfolio. For example, a book-entry account can hold an ETF core that takes care of broad diversification, and an equity savings account can hold individual listed shares that you want to switch between without every sale triggering tax.
This doesn't mean that using both is the most sensible solution for everyone. Two accounts also means two sets of holdings to follow and report. Using both only makes sense when the accounts genuinely have different jobs, not just because it is possible to open both.
Four common misconceptions
These four come up in discussions so often that it is worth learning to recognize them.
The comparison at a glance
This is the whole picture in brief. If you only remember one thing, remember the first row: the accounts are for different jobs.
| ESA | Book-entry | |
|---|---|---|
| What for? | Individual listed shares | Broader investing |
| ETFs | No | Yes |
| Tax on selling a share | Only when funds are withdrawn | Capital gain taxed when realized |
| Dividends | Stay in the account without immediate Finnish tax | Taxed when the dividend is paid |
| 15% tax-free portion of dividends | No | Yes |
| Deemed acquisition cost | No | Yes (20% / 40%) |
| Using losses | As a rule only when the account is closed | Realized losses deductible according to the rules |
| Deposit limit | €100,000 | No equivalent limit |
| Number of accounts | One | Several |
This content is for information purposes only and should not be construed as investment advice or a recommendation. Investing always involves the risk of losing capital. The value of financial instruments and investments can go up or down, and past performance is no guarantee of future returns. Tax rules, rates and deposit limits can change. Check the current details with the Finnish Tax Administration or your service provider.
Your progress is saved in this browser.