Information reporting requirement in the construction sector

The government has designated fighting against the grey economy as one of its focal areas. Introducing tax numbers was the first phase of legislative measures to combat the grey economy contained in the government programme. However, it is not expected that the tax numbers alone will be enough to enable adequate supervision. It will also be necessary to introduce a new information reporting requirement concerning employees and contracts at construction sites. Consequently, the requirement to provide information related to construction will be stepped up from 1 July 2014. 

Acts have been passed by the Parliament (363/2013 and 364/2013), under which the customers have the duty to submit information to the Tax Administration on construction contracts and contractors, and the main contractor of a shared construction site has the duty to submit information on persons working at a construction site.

The Tax Administration has set up a separate FAQs section with answers to individual questions about the reporting requirement. The FAQs are continuously updated.

In addition to construction activities at a site and employee information, the reporting requirement also applies to natural persons in the role of a constructor, if a construction permit is required for the project. This guideline only addresses households' reporting requirement in cases where construction is associated with a natural person's enterprising activities. A specific guideline on households' reporting requirements will be prepared later in 2013.   

1 General information about the new procedure

1.1 A new information reporting requirement

The information reporting requirement and the information to be provided concern activities related to construction, repairs and maintenance at a construction site, and companies and employees engaging in such activities. The concepts of construction and a construction site are also essentially linked with the obligation to use construction sector tax numbers and its supervision.

When reporting contract information, details of the contract (including contracting parties, total amount, duration) and transaction data related to the contract (including the amount invoiced during the reporting period) must be provided. Every month, each customer must report to the Tax Administration all those parties from whom they have ordered construction services.

In addition to contract details, information must be provided on all persons working at a shared construction site, regardless of the type of their employment relationship or employer. This information must also be provided on self-employed persons. Employee information must be reported by the project supervisor for each site. Each company will report their employees to the site's project supervisor, who will submit the data to the Tax Administration on a monthly basis.

In addition to construction activities at a site and employee information, the reporting requirement also applies to natural persons in the role of constructors, if a construction permit is required for the construction project. A natural person must report information on companies performing construction work and payments made to them,  as well as on any wages and other considerations he or she has paid to the workers. This report must be submitted to the Tax Administration prior to the final inspection to be carried out before the project is commissioned. At the final inspection, a natural person must present the building supervision authority a certificate issued by the Tax Administration of having met the reporting requirement. This guideline only addresses the reporting requirement applicable to organisations and, additionally, to households when the construction project is associated with a natural person's enterprising activities. A specific guideline on households' reporting requirements will be prepared later in 2013.   

Figure 1: Parties required to report information

1.2 General construction sector definitions

Definitions of construction related concepts are contained in the General Conditions for Building Contracts (YSE 1998). Provisions on construction are also found in legislation. See below for definitions of the most common concepts  related to construction that are relevant to issues addressed in this guideline.   

A construction contract is a contract in which a party (a contractor) undertakes, against a consideration (contract price), to construct a building, a built structure or other construction project, such as a road, a water pipeline etc., for the other party (constructor, customer).

The constructor is the party on whose account the main contractor performs construction work and who ultimately receives the results of the work. Auxiliary contracts, or contracts ordered by the constructor that are not part of the main contract, may also be undertaken at a construction site. The constructor only has a contractual relationship with the main contractor and any auxiliary contractors, not a subcontractor.

The main contractor is the contractor implementing the main contract. In a construction project, the main contract usually is one that covers the actual construction technical work, including work related to the foundation stage, construction of the frame and interior construction. The main contractor may have a part of the main contract performed as their own subcontracts.

Under the Decree on the Safety of  Construction Work (205/2009), the project supervisor means the main contractor appointed by the customer, or an employer using the main authority, or where there is no such employer, the customer.  

A subcontractor is a contractor that performs a separate subcontract agreed upon with the main contractor and a contractor. A subcontract is an independent entity which the main contractor has separated from the main contract and which is performed by a subcontractor selected by the main contractor. In this case, the customer is the main contractor rather than the constructor.

The main contractor and a subcontractor are customers in the subcontracting chain when they purchase construction work from another contractor.  

Based on the extent of the contractual obligations, contracts are categorised into various contract forms (including a main contract, a partial contract and a contract that includes design). Of the various forms of main contract, the most common ones are turnkey contracts and divided contracts. In a turnkey contract, the customer concludes a contract with a single contractor. This contractor may enter into subcontracts, but the parties performing subcontracting work do not have a contractual relationship with the original customer. In a divided contract, the customer concludes separate contracts on work divided into separate parts. As a rule, there is no contractual relationship between the various contractors in a divided contract. An auxiliary contract may, however, be subordinate to a main contract. The customer may divide a contract into partial contracts, in which case separate agreements are concluded on different parts of the work with the customer.

In Government Decree (205/2009), a shared construction site means a workplace where work referred to in the Decree's scope of application is carried out and where more than one employer, or more than one self-employed worker, operate simultaneously or successively.

A construction service means building and repair work on immovable property referred to in Section 31.3 paragraph 1 of the Value Added Tax Act (1501/1993), as well as the supply of goods installed in connection with the work. The information reporting requirement referred to in this guideline also applies to the erecting and dismantling of scaffolding and the leasing of employees for construction services or erecting/dismantling scaffolding, even if these are not construction services referred to in the Value Added Tax Act.

2 Customer's obligation to provide information on a contract (so-called contract information)

2.1 Whom does the reporting requirement concern?

Under the new Section 15 c of the tax procedure act (verotusmenettelylaki 1558/1995), the requirement to report contract information applies to parties ordering a construction service. The customer may be the constructor, the main contractor, an auxiliary contractor or a subcontractor. The customer of construction work is the contracting partner of the main contractor, auxiliary contractor or subcontractor who orders a construction project from this contractor.

The reporting requirement always applies to the constructor as a customer. The constructor's duty to provide information concerns projects on which they have concluded a contract. In a subcontracting chain, each customer for their part has the duty to report on their subcontractors. Each customer reports the information on the contracts they have concluded and the use of leased employees to the Tax Administration.

In most cases, the customer is a company or other legal person under private law.  The customer in a construction contract may also be the state, a municipality, a joint municipal authority, the Province of Åland Islands or a municipality or a joint municipal authority in this province, a parish, a federation of parishes, other religious organisation, other legal person under public law, an association, a joint interest (including a private road maintenance association) and a foundation. A similar reporting requirement applies to a housing company as a customer of construction work. In addition, a company operating abroad or its Finnish subsidiary, when this foreign organisation orders construction work to be carried out in Finland, may be a customer to whom the reporting requirement applies.

The customer may also be a natural person, when the construction project is associated with his or her enterprising activities (e.g. a self-employed worker who has new premises constructed for his or her business, or a farmer who is getting a new cowshed built). In these situations, the requirement to submit monthly reports applies to natural persons.

Under a specific agreement to this effect, the customer may delegate the fulfilment of the reporting requirement to another party, for example a constructor may transfer it to a consulting firm. However, the ultimate responsibility for meeting the reporting requirement rests with the customers themselves. The reporting requirement may also apply to a building management company that represents a housing company. In that case, too, the management of the housing company will be ultimately responsible for meeting the reporting requirement.     

Section 15 c of the tax procedure act contains the following provisions on the reporting requirements applicable to the customers of construction services:  

Section 15 c
The duty of the customer of construction services to provide information on the contract

The customer shall, on a monthly basis, submit to the Tax Administration for the purposes of tax control the required identification contact information of companies who are performing construction services referred to in Section 31.3, paragraph 1 of the Value Added Tax Act  (1501/1993) for the customer or erecting or dismantling scaffolding, or who lease employees to the customer for the said purposes. In addition, the customer shall provide information on the type and duration of the assignment, the location of the site and the payments made by the customer to these companies.

More detailed orders on the information to be reported, the time and method of reporting the information and the right to refrain from reporting the information referred to in this section in situations that have minor financial or tax control relevance will be issued by the Tax Administration.

2.1.1 A household as a constructor

When the project to be constructed is a single-family house or similar, the customer typically is a private person. The reporting requirement discussed in this guideline only concerns a natural person when the construction project is associated with his or her enterprising activities. In other cases, households as a rule only need to report to the Tax Administration once before the final inspection. A separate guideline will be prepared on the reporting requirements of households.  

However, if the contractor in the construction project initiated by a natural person is, for example, a construction company, a house manufacturer or other similar company (e.g. when the project is a single-family house), such companies have the duty to report their information on a monthly basis. The reporting requirement of a natural person only concerns contracts concluded by him/herself. Each contractor thus has the duty to report information on their subcontracts, also when constructing a single-family house. The alleviated reporting requirement of a natural person is thus not relevant to the reporting requirement of contractors working on a single-family house site, for example, which is regulated by Section 15 b and c of the tax procedure act similarly to any construction work. It should be noted that even in these cases, the natural person him/herself shall report the information in compliance with Section 15 d of the tax procedure act before the final inspection.

2.2 For what type of work must information be reported?

2.2.1 Construction services

Under Section 15 c of the tax procedure act, the requirement to report contract information applies to construction services referred to in the Value Added Tax Act. Under Section 31.3, paragraph 1 of the Value Added Tax Act (1501/1993), building services are the building and repair work on immovable property, as well as the supply of goods, which are installed in connection with the work. The information reporting requirement also applies to the erecting and dismantling of scaffolding and the leasing of employees for construction services or the erecting/dismantling of scaffolding, even if these are not construction services referred to in the Value Added Tax Act.

Construction can be divided into housing construction, civil engineering and specialist construction. The object of a construction service may be a building, the ground or a water area located on a property. Construction includes new buildings, renovations, repairs and alterations, extensions and maintenance. Civil engineering (so-called infrastructure construction) includes the construction of transport routes and networks. Specialist construction includes building installation work (e.g. electrical installations, heating, plumbing and ventilation, roofing), building completion (e.g. plastering, painting and glazing), site preparation and demolition. Construction services also comprise the installation and maintenance of equipment and devices that serve the general use of a building, such as elevators and general monitoring and alarm systems.

For example, the concept of a construction service in Section 31.3 of the Value Added Tax Act is used to determine the reverse charge liability in the construction sector. It should be noted, however, that even if the reverse charge liability did not apply to the party required to report information, they are obliged to provide this information if the work is deemed to be construction services referred to in Section 31, Subsection 3 of the Value Added Tax Act. Such entities as housing companies are thus required to report when they order construction services referred to in the Value Added Tax Act. Besides new buildings, renovations of plumbing and electrical systems, façade renovations, roof replacement, painting work inside and outside a building, paving of yards and driveways, lift maintenance, and adjustments of a heating or an air conditioning system are thus typical construction services.    

For more information on the concept of a construction service, see the Tax Administrations guideline on reverse charge liability (in Finnish). In addition, the Confederation of Finnish Construction Industries RT has, in cooperation with the Tax Administration, drawn up a list of the most common construction services to which the reverse charge liability in the construction sector applies (in Finnish). The purpose of the aforementioned instructions is to help taxpayers to interpret the rules and determine whether work carried out is regarded as a construction service referred to in the Value Added Tax Act and thus subject to the reporting requirement.  

2.2.2 Maintenance

The reporting requirement applies to maintenance and repair work on a property. Maintenance includes various repairs, for example those carried out to maintain the building in a good condition.

Monitoring and alarm systems, ventilation, fire extinguishing and lighting control systems and similar installations that serve the property in general become part of the property after their installation. Repairs to and maintenance of such systems already installed in the property are deemed construction services. The installation of such systems also comprises a construction service. The mere testing of a system is not considered a construction service.

If repair or maintenance services of both the property and equipment used for a particular activity carried out in the property are sold under a single contract, whether or not the reporting requirement applies is determined by  the main work performance.

2.3 For what type of work do you not need to report contract information?

2.3.1 Planning and supervision

The reporting requirement does not apply to planning, supervision and other similar services referred to in Section 31.3 paragraph 2 of the Value Added Tax Act associated with work referred to in paragraph 1 of this provision.

When purchased separately, the reporting requirement does not apply to the aforementioned planning and supervision services, but if it has been agreed, in the construction contract for example, that planning services will be ordered from the company providing the construction service, the reporting requirement also applies to the planning.

2.3.2 Supply of goods and other services

The reporting requirement does not apply to the supply of goods or other services related to the construction sector besides construction services. For example, the reporting requirement does thus not apply when a construction sector company buys building materials from a supplier, or purchases services other than construction services from a subcontractor, including consultancy or occupational health care services.  

The reporting requirement applies when the main performance is a construction service. However, the share of an auxiliary performance, for example building materials that are included in a construction contract, does not need to be deducted, and information may be reported for both construction services and building materials.

2.3.3 Repairs and maintenance of equipment used for a particular activity carried out in the property

Equipment used for a particular activity carried out in the property is not regarded as part of the property. The installation, repairs and maintenance of such equipment are thus not considered construction services referred to in the Value Added Tax Act. Such work includes maintenance of machinery and instruments that are part of the process in production plants.

2.3.4 Building services and maintenance

Building services and maintenance are not construction services, and they are thus excluded from the reporting requirement.

Building services mainly include preventive measures to identify possible faults and prevent their occurrence. Building maintenance work excluded from the reporting requirement includes chimney sweeping, various checks and cleaning operations of electrical, plumbing and ventilation systems in a property and various checks, measurements and testing of cooling systems in buildings.

Building services usually refer to continuous service packages, which may include cleaning, facilities maintenance, snow-ploughing, spreading of sand, attention to the heating system, ventilation and air conditioning and minor repairs. Minor repairs typically are covered by an ordinary building services contract, and no separate charge is made for them.

If a company providing building services charges a separate fee for repair services, these are considered construction services and the reporting requirement thus applies to them.

2.3.5 Limitations of the reporting requirement under a Tax Administration decision

Under the law, the Tax Administration may by its decision limit the reporting requirement in situations where the information is of minor relevance for tax control.

If the value of a contract payment is at maximum EUR 15,000 excluding VAT, the information need not be reported. If the threshold of EUR 15,000 is exceeded while the work is in progress, the reporting requirement begins from the month during which the threshold is exceeded.

When calculating the threshold, each separate order for a construction service whose  payment is determined separately is considered a single contract. For example, whether or not the reporting requirement applies to maintenance work carried out under a yearly contract thus depends on the value of each separate order.  

It should be noted, however, that if work carried out for a customer or the results achieved are based on several successive contracts that are uninterrupted or continue with small interruptions only, these should be considered a single contract when calculating the threshold.

The Tax Administration will confirm the aforementioned threshold in Euro in its decision on the general reporting requirement that will be issued at the turn of the year  2013‒2014.

2.4 Content of contract information to be reported

The contract information to be reported for a construction site includes the unit submitting the report, the contractor and the contract.  Each customer will submit the information on their contracts directly to the Tax Administration. The information to be reported concerns contractors operating at the site and their contracts. Information must also be provided on employers providing leased employees and payments made to them.

For more detailed descriptions of the information to be reported, see the record descriptions. The record descriptions indicate whether the information is mandatory, voluntary or conditionally mandatory; in the latter case, the information is only mandatory in certain situations. In conditionally mandatory sections, filling in the information or the result of a calculation determines whether some other information is mandatory.

General information:

• Type of report
  • When you are reporting the information for the period in question for the first time, enter basic report (perusilmoitus, P). The basic report may contain all the information for every site the reporting unit has, or basic reports can be decentralised and submitted by various sites. As a basic report is submitted, the Tax Administration assigns it a report ID, which can be used to amend or delete the information.  
  • If you wish to amend your report, you must submit a correction report (korjausilmoitus, K). In a correction report, all information must be re-completed, after which it will replace the earlier report. A correction report cannot be submitted without a basic report ID for the same month.
  • If, exceptionally, the reporting unit wishes to cancel the entire file submitted earlier, they should submit a deletion report (poistoilmoitus, D). A deletion report cannot be submitted without a basic report ID for the same month.
• Reporting year
• Reporting month
  • As the reporting month, you should give the month which the information concerns; for example, the information for October is submitted in December. In that case, the reporting month is 10 (October).
  • The information cannot be submitted in advance. In other words, you can only submit the information for a current reporting month. In order for the basic report for February to be submitted at the correct time, for example, it should be submitted between 1 February and 5 April.

Provide the following information on the reporting unit:

• Name
  • Always give the name of the unit to which the reporting requirement applies, i.e. the customer (constructor, main contractor, contractor or subcontractor).
  • The Tax Administration will have been notified of an authorised information provider (e.g. consultants, accountants, project supervisors or maintenance companies) through Katso system authorisations, and the authorisation holder should thus never be given as the reporting unit.  
• Business ID or personal identity code
  • If the reporting unit is a Finnish organisation, the information cannot be submitted without a business ID. If the reporting requirement applies to you, you must thus apply for a business ID.
• A foreign identification
  • You can only give a foreign identification if the reporting unit does not have a Finnish business ID. If a foreign reporting unit has a Finnish business ID, the Finnish ID should be given.
  • If necessary, the authorities will take the initiative in assigning a business ID to a foreign reporting unit. If the reporting unit is assigned a Finnish business ID, they will be notified of this. In the future, the reporting unit must use the Finnish business ID assigned to them to submit their reports.
• Type of foreign identification, numbered in the order of priority:
  • 1=Value-added tax ID (so-called VAT number)
  • 2= a foreign identification corresponding with a trade register entry
  • 3=TIN (foreign taxpayer identification number)
  • 4=Foreign personal identity code
  • If the unit does not have a VAT number, you should give a foreign identification corresponding with a trade register entry. If you do not have this, either, you should give your TIN and, as the last alternative, a foreign personal identity code.
• Home country
  • Give the country code of the reporting unit's home country. For a Finnish company, this is FI. The record description has a link to a list of all country codes.
  • If the name of your home country cannot be found on the country codes list, you must write the entire name.
• Address details in Finland and in the home country (in case of a foreign reporting unit)
  • The Tax Administration particularly recommends that you give the address of you main offices.
• Contact person name, telephone number, e-mail address and address in Finland
• Information on the party for whom the reporting unit works as a contractor
  • Voluntary section. However, the Tax Administration recommends that you provide this information, as it makes it easier to trace the subcontracting chain and improves the possibilities for tax control.

Provide the following information on the site:

• Site ID (työmaa-avain)
  • If the company uses the veronumero.fi service to submit its reports, give the site ID issued by the service
• Site number
  • We recommend that you use the project supervisor's site number. If there is no project supervisor's site number, give the customer's own site number for the site that the contract concerns
  • The Tax Administration recommends that you give both the site ID and the project supervisor's site number
• Site location
  • Address and municipality
  • If the site does not have an address yet, give a freely worded description of the site's location, for example an area or a site name
  • If the site does not yet have a site ID or a site number, the Tax Administration recommends that you give the exact postal address of the site. This way, the reporting unit can avoid receiving requests for information from or being contacted by the Tax Administration.

Provide the following information on the contractor:

• Name
• Business ID or personal identity code
  • In case of a Finnish organisation, the business ID is mandatory
• A foreign identification
  • To be given if the contractor does not have a Finnish business ID
  • If necessary, the authorities will take the initiative in assigning a business ID to a foreign company.
• Type of foreign identification, numbered in the order of priority:
  • 1=Value-added tax ID (so-called VAT number)
  • 2= a foreign identification corresponding with a trade register entry
  • 3=TIN (foreign taxpayer identification number)
  • 4=Foreign personal identity code
  • If the unit does not have a VAT number, you should give a foreign ID corresponding with a trade register entry. If you do not have this, either, you should give your TIN and, as the last alternative, a foreign personal identity code.
• Home country
  • Give the country code of the reporting unit's home country. For a Finnish company, this is FI. The record description has a link to a list of all country codes.
  • If the name of your home country cannot be found on the country codes list, you must write the entire name.
• Address details in Finland and in the home country (in case of a foreign contractor)
• Contact person name and telephone number

Provide the following information on the contract:

• The invoiced amount of the contract during the reporting period
  • As a rule, companies use performance-based accounting. In this case, the invoiced amount of the contract should be reported in the contract report for the period during which the product/service was invoiced, regardless of when the payment was made
  • Give the amount excluding value-added tax; and in performances subject to tax, the tax basis
  • The invoiced amount takes precedence over the paid amount
  • The invoiced amount may contain both a service and goods and materials
• The paid amount of the contract
  • Companies with a smaller turnover (e.g. self-employed workers) may also record business transactions based on payments received. In this case, the invoiced amount of the contract should be reported in the contract report for the period during which the product/service was paid for, regardless of when the product/service was handed over
  • Only to be reported if payment based accounting is used, or if there was no written invoice
• Advance payment
  • report any payments made in advance before the work is initiated
• Total contract amount
  • Changes need not be reported, but if the contract amount changes, the Tax Administration recommends that you give the new amount in the report for the following period
  • In case of hourly and yearly contracts, give an estimate of the total for the year in question
• Type of assignment
  • Options 1 = contracting, 2 = employee leasing  or 3 = maintenance work of a continuous nature
  • Contracting refers to a construction service ordered from another company.
  • Employee leasing refers to a contractual arrangement where a labour leasing company provides an employee for the use of another company (customer) against a consideration
  • Maintenance work of a continuous nature refers to work that does not have an exact end time
• Reverse charge liability applies
  • Select 1 = yes or 2 = no
• Contract start date
  • Give the start date of the work as stated in the contract
  • In format ddmmyyyy (for example, 23032014)
• Contract end date
  • Give the contract end date, if known. Otherwise give an estimated end date
  • If maintenance work of a continuous nature is carried out on the property round the year and you entered maintenance as the assignment type, you can leave the end date vacant
  • The Tax Administration recommends that you correct the information in the report for the following month if the end date changes This information is vital for the tax control of foreign companies.
  • In format ddmmyyyy (for example, 02092015)
• Not active - an entry for individual contractors
  • Make this entry if the work carried out by the contractor whom the report concerns is 1 = temporarily interrupted or 2 = concluded
  • The Tax Administration recommends that you make a Not active entry if the work has been interrupted on a temporary basis and the end date of the contract remains open. This way the reporting unit can avoid a request for information concerning a failure to report.
• Not active - an entry for individual sites
  • Make this entry if all work carried out at the site is 1 = temporarily interrupted or 2 = concluded
  • The Tax Administration recommends that you make a Not active entry if the work has been interrupted on a temporary basis and the end date of the contract remains open. This way, the reporting unit can avoid a request for information concerning a failure to report.

3 Project supervisor's duty to report information on persons working at a shared construction site (so-called employee information)

3.1 Whom does the reporting requirement concern?

The employee information for a site should be reported by the project supervisor. Project supervisors submit reports on their own employees and the employees of other contractors working at the site. Information on self-employed workers and leased employees must also be reported.

A project supervisor is defined in Section 2.4 of the Government Decree on the Safety of Construction Work (205/2009). Pursuant to this decree, the project supervisor means the main contractor appointed by the customer, or an employer using the main authority, or where there is no such employer, the
customer. Ultimately, the reporting requirement thus applies to the constructor themselves, unless the constructor has appointed a project supervisor for the site.

The main contractor usually acts as the project supervisor. The project supervisor gives out access passes, or permissions to enter the site. In connection with the new information reporting requirement in the construction sector, a duty to keep a list of persons working at a shared construction site is imposed on the project supervisor in Section 52 b of the Occupational Safety and Health Act (738/2009). The persons on this list are the ones required to wear a visible photo ID with a tax number entered in the tax number register. These are the persons on whom information must be reported to the Tax Administration every month. The list must be kept up to date, and the authorities must be given easy access to it. On the other hand, the list of persons working at the site to whom access passes have been granted is shorter than the list of employees whose information must be submitted to the Tax Administration.

Each company operating at the site has the duty to submit to the project supervisor a list of their employees. Self-employed workers are also required to submit this information for their own part. The information must be provided before the work is initiated. In addition, the project supervisor must be informed without delay of any changes in this information to allow them to correctly meet their own reporting requirements to the Tax Administration.

Section 15 b of the taxation procedure act (1558/1995) contains the following provision on the project supervisor's obligation to report information and the obligation of other companies operating at the site to provide information to the project supervisor:  

Section 15 b

The duty of the site's project supervisor to provide information on the employees

The main contractor or other project supervisor of a shared construction site referred to in Section 7 of the Occupational Safety and Health Act (738/2002) must, for the purposes of tax control, every month report to the Tax Administration the necessary identification and contact information of the employees, self-employed workers and leased employees, including employers and customers using leased employees working at a shared construction site, as well as as information on the employer's home country, the nature of the employment relationship or contractual relationship, and information on working, residence and insurance in Finland. This information need not be provided on persons delivering goods to the site on a temporary basis, however.

A company operating at a shared construction site must submit the information referred to in Subsection 1 on their employees working at the site to the main contractor or project supervisor of the site. Self-employed workers must submit similar information on themselves. The information must be provided before the work is initiated, and notification of any changes in it must be given without delay.

What is said in this Section about the main contractor or other project supervisor shall apply to the constructor, if the site has no main contractor or other project supervisor.

The party subjected to the reporting requirement referred to in this Section must keep on file the information and documents in which information covered by the reporting requirement can be found for six years from the end of the year in which work at the site was completed, unless a longer filing period than this is laid down elsewhere in the law.

More detailed orders on the information to be reported, the time and method of reporting the information and the right to refrain from reporting the information referred to in this Section in situations that have minor financial or tax control relevance will be issued by the Tax Administration.

3.2 For what type of work must information be reported?

3.2.1 A shared construction site

The project supervisor has the duty to submit information to the Tax Administration on persons working at a shared construction site. Under Section 2.1 of Government Decree on the Safety of Construction Work, a shared construction site means a workplace where work referred to in the scope of application of the decree is carried out and where more than one employer or self-employed worker operate simultaneously or successively.

If the work is performed by the employees of a single company (e.g. painting or other surface treatment work), the duty to report the employee information to the Tax Administration does not apply. In this case, too, it should be noted that the customer must report the contract information concerning such painting work to the Tax Administration.

The grounds for providing contract information and employee information are different. Contract information must be provided on construction services referred to in the Value Added Tax Act. Employee information, on the other hand, should be provided on all those who work at a shared construction site. Employee information may also need to be reported when the requirement to report contract information does not apply to the work in question. The reporting requirement applies to all those working at a shared construction site, even if the person in question is not engaged in actual construction. The details of officer workers, cleaners, security guards and trainees from educational institutions, for example, should thus be reported to the Tax Administration.

The decree does not set limits to the existence of a shared construction site that results in a reporting requirement, for example in terms of the duration of site operation or the volume of work carried out, which would have to be exceeded in order for the site to be deemed a shared site. The crucial factor is that at least two different companies are engaged in the work. Even a relatively minor renovation site may thus become a shared site if, in addition to surface treatment work carried out by a painting company, installations are being performed by electrical contractors.

For the existence of a shared site, the essential factor is the knowledge that work at the site in question was planned to be carried out by more than one employer. This is true regardless of the fact that when the site is launched, only one employer is active at it, and the subsequent employers only join in at later work stages. The reporting requirement commences as soon as the first employer starts working at the site.

If work at the site was planned to be carried out by a single employer but, while the work is in progress, employees in the service of several different employers end up working there, it becomes a shared site. The reporting requirement begins from the date on which the site becomes a shared site.

3.2.2 What does construction work at a shared construction site mean?

As construction work referred to in Government Decree on the Safety of Construction Work (205/2009) is regarded new buildings,  renovations and maintenance to a building and other structure that takes place under or above the ground or in the water, and related installations, demolition, civil engineering and construction-related planning, as well as the preparation and planning of a construction project involving any of the above.

The intention was that the decree could be applied to construction in rather a broad sense. All activities associated with construction are within the decree's scope of application.

Based on the decree's scope of application, construction work comprises building construction and, for example, the construction of such structures as bridges, dams, harbours, quays, canals, roads, streets, railways, airports and district heat networks, and the construction of and repairs to raw water pumping stations and treatment plants, sewers, all types of water supply and other pipe systems and other similar structures. The decree also applies to foundation engineering, for example digging an excavation, backfilling and embankment construction.

In the area of subterranean construction, there is a clear line between construction technical excavation and mining. Construction work comprises rock excavation for a traffic route, subterranean storage, a section of a raw water supply network, a sewer pipeline or facilities for other similar use. Work carried out to exploit minerals, on which provisions are contained in the Mining Act (621/2011), is excluded from the scope of the decree and also from the concept of construction work.

Construction work in water includes dredging a shipping lane or other fairway, dam construction and underwater excavation. The Decree on the Safety of Construction Work also applies to the construction of various pipeline networks. Maintenance to a road, a street or similar, and even partial repairs to the paving, repaving or other similar activities whose object is a structure fall within the decree's scope of application.

The object of repairs, maintenance and installations referred to in the decree must be buildings or other structures. Building maintenance referred to in the provisions includes painting the façade, replacing or repairing the roofing, replacement of plumbing, heating and ventilation equipment and similar work.

Installations are considered construction work when they are related to construction and maintenance. For example, this applies to installations of machinery at power stations and paper mills. These installations also typically coincide with the construction work. Similarly, the decree applies to the installation of various plumbing, heating and ventilation systems, as well as the installation of elevators and similar equipment in connection with the building, renovation and maintenance of a building or other structure.

The application of the Government Decree on the Safety of Construction Work is supervised by the occupational health and safety administration of the Regional State Administrative Agencies. The Regional State Administrative Agencies have issued a guideline on the concepts of a shared site and construction work, which describes in greater detail how a shared site comes into existence and what comprises construction work, and discusses sample cases.

3.2.3 The site of a household

Even if a photo id were not required at a site where a building or its part is being constructed or repaired for the personal use of a private individual in the role of the constructor, the employee information must be reported every month if the site has a contractor to be regarded as the project supervisor, for example a construction company or a house manufacturer.

The alleviated reporting requirement for a natural person is not relevant to the requirement to submit monthly reports applicable to contractors working at a single-family house site. The reporting requirement of a natural person does not cover the employee information that the project supervisor has the duty to report on the employees at a site. Each contractor is thus also obliged to submit information to the project supervisor on their employees at a single-family house site.

The household's reporting requirement concerning employees having performed construction work is determined pursuant to  Section 15 d of the taxation procedure act before the final inspection. The household's reporting procedure does not apply to construction for which no construction permit need be applied under the Land Use and Building Act (132/1999).

3.3 For what type of work do you not need to report employee information?

3.3.1 Persons delivering goods to the site on a temporary basis

Persons delivering goods to the site on a temporary basis are excluded from the scope of a shared site, and the reporting requirement thus does not apply to them.

If the delivery of goods is associated with even minor construction or installation work, the information must be reported. This also applies if the deliveries to the site are regular. Visits to the site are regular if they take place at least twice a month during two successive months. Visits to the site rarer than this are considered temporary.

3.3.2 Maintenance related to keeping a process running

A guideline issued by the Ministry of Social Affairs and Health / Regional State Administrative Agency excludes maintenance related to keeping a process running from the scope of application of the Government Decree on the Safety of Construction Work (205/2009). Maintenance of machinery and instruments at industrial production plants and replacement of machinery parts, for example, are thus excluded from the reporting requirement.

Work requiring downtime, on the other hand, materially comprises such repairs, maintenance and installations of the production plant or its structures that this work is deemed to be included in the reporting requirement.  

3.3.3 Limiting the requirement to report employee information by a Tax Administration decision

Under the law, the Tax Administration may by its decision limit the reporting requirement in situations where the information is of minor relevance for tax control.

If the total value of the project per site is at maximum EUR 15,000 excluding VAT, there is no need to report the information. If the total value exceeds EUR 15,000, the project supervisor or constructor must advise the other employers operating at the site of this to allow them to meet their own requirement of providing information to the project supervisor.

If the value of the main contract exceeds EUR 15,000, the main contractor must notify the other companies operating at the site of the threshold being exceeded. If the value of the main contract is EUR 10,000, on the other hand, and the value of the auxiliary contracts of three constructors are EUR 2,000 each, the constructor must notify the main contractor and the other companies of the threshold being exceeded. If it is already known that the threshold will be exceeded at the time of concluding the contract, the parties can be informed of the reporting requirement in the contract document. If the threshold is exceeded while the work is in progress, on the other hand, the reporting requirement begins from the month in which the threshold is exceeded.

It should be noted, however, that if work carried out for a customer or the results achieved are based on several successive contracts that are uninterrupted or continue with small interruptions only, these should be considered a single contract when calculating the threshold.

The Tax Administration will confirm the aforementioned threshold in Euro in its decision on the general requirement to report information to be issued at the turn of the year  2013‒2014.

3.4 Content of the report on employee information

Before starting to work at a site, each company operating at a shared site is required to submit information on their employees to the site's project supervisor, who has the duty to collect this information and report it to the Tax Administration. If no project supervisor has been appointed for the site, the reporting requirement applies to the constructor.

If an employee is not working at a site during a certain month, for example because he or she has been transferred to another site for two months, he or she will not be included at all in the employee information of the site.

For more detailed descriptions of the information, see the record descriptions. The record descriptions indicate whether the information is mandatory, voluntary or conditionally mandatory; in the latter case, the information is only mandatory in certain situations. In conditionally mandatory sections, filling in the information or the result of a calculation determines whether some other information is mandatory.

General information:

• Type of report
  • When you are reporting the information for the period in question for the first time, enter basic report (perusilmoitus, P). The basic report may contain all the information for all sites the reporting unit has, or basic reports can be decentralised and submitted by various sites. As a basic report is submitted, the Tax Administration assigns it a report ID, which can be used to amend or delete the information.  
  • If you wish to amend your report, you must submit a correction report (korjausilmoitus, K). In a correction report, all information must be re-completed, after which it will replace the earlier report. A correction report cannot be submitted without a basic report ID for the same month.
  • If, exceptionally, the reporting unit wishes to cancel the entire file submitted earlier, they should submit a deletion report (poistoilmoitus, D). A deletion report cannot be submitted without a basic report ID for the same month.
• Reporting year
• Reporting month
  • As the reporting month is given the month which the information concerns; for example, the information for October is submitted in December. In that case, the reporting month is 10 (October).
  • The information cannot be submitted in advance. In other words, you can only submit the information of the reporting month. For example, for the basic report for February to be submitted at the correct time, it should be submitted between 1 February and 5 April.

Provide the following information on the reporting unit:

• Name
  • Always give the name of the party to whom the reporting requirement applies, i.e. the project supervisor (the main contractor, the employer using the main authority or the constructor).
  • The Tax Administration will have been notified of an authorised provider of information (e.g. consultants, accountants or a management company) through the Katso system authorisation, and the authorisation holder should thus never be given as the reporting unit.  
• Business ID or personal identity code
  • If the reporting unit is a Finnish organisation, the information cannot be submitted without a business ID. If the reporting requirement applies to you, you must thus apply for a business ID.
• A foreign identification  
  • You can give a foreign identification when the reporting unit does not have a Finnish business ID. If a foreign reporting unit has a Finnish business ID, the Finnish ID should be given.
  • If necessary, the authorities will take the initiative in assigning a business ID to a foreign reporting unit. If the reporting unit is assigned a Finnish business ID, they will be notified of this. In the future, the reporting unit must use the Finnish business ID assigned to them to submit their reports.
• Type of foreign identification, numbered in the order of priority:
  • 1=Value-added tax ID (so-called VAT number)
  • 2= a foreign identification corresponding with a trade register entry
  • 3=TIN (foreign taxpayer identification number)
  • 4=Foreign personal identity code
  • If the unit has no VAT number, you should give a foreign identification corresponding with a trade register entry. If you do not have this, either, you should give your TIN and, as the last alternative, a foreign personal identity code.
• Home country
  • Give the country code of the reporting unit's home country. For a Finnish company, this is FI. The record description has a link to a list of all country codes.
  • If the name of your home country cannot be found on the country codes list, you must write the entire name.
• Address details in Finland and in the home country (in case of a foreign reporting unit)
  • The Tax Administration particularly recommends that you give the address of you main offices.
• Contact person name, telephone number, e-mail address and address in Finland
• Information on the party for whom the reporting unit works as a contractor
  • Voluntary section. However, the Tax Administration recommends that you provide this information, as it makes it easier to trace the subcontracting chain and improves the possibilities for tax control.

Provide the following information on the site:

• Site ID (työmaa-avain)
  • If the company uses the veronumero.fi service to submit the reports, give the site ID issued by the service
• Site number
  • We recommend that you use the project supervisor's site number. If there is no project supervisor site number, give the customer's own site number for the site that the contract concerns
  • The Tax Administration recommends that you give both the site ID and the project supervisor's site number
• Site location
  • Address and municipality
  • If the site does not yet have an address, give a freely worded description of the site's location, for example an area or a site name
  • If the site does not yet have a site ID or a site number, the Tax Administration recommends that you give the exact postal address of the site. This way, the reporting unit can avoid receiving requests for information from or being contacted by the Tax Administration.

Provide the following information on an employee:

• Employee personal identity code
  • The Tax Administration recommends that you use personal identity codes when submitting the report
• Employee tax number and date of birth
  • Entering the tax number and date of birth is an alternative for the personal identity code. The Tax Administration recommends that you use personal identity codes when submitting the report.
• Employee's first names and last name
• Employee's telephone number
• Address details in country of residence
• Does the person have an A1 certificate or other posted employee certificate showing that he or she has been insured in his/her home country?
• Nature of the employment or service relationship
  • Is the employee  1= in an employment relationship, 2= a leased employee, 3 = self-employed or similar (e.g. goods inspector or an evaluator of a competence-based examination), 4 = trainee or 5 = voluntary worker.
• Start date of working at the site
  • Information received from the project supervisor
  • In format ddmmyyyy
• Estimated end date of working at the site
  • Information received from the project supervisor
  • In format ddmmyyyy
  • Do not report the employee's information for months during which he or she has not in fact been working at the site
• Working hours and days completed
  • Voluntary information. Can be given if known.
  • In the working days section, enter the number of days on which the employee was at the site in the month in question
  • In the working hours section, enter the number of hours for which the employee was at the site in the month in question
• Employer
  • The company that pays the employee's wages
  • For a self-employed worker , enter self-employed
• Employer's business ID or personal identity code
  • For a Finnish organisation, the business ID is mandatory
• A foreign identification
  • To be given if the employer does not have a Finnish business ID
  • If necessary, the authorities can take the initiative in assigning a business ID to a foreign company.
• Type of foreign identification, numbered in the order of priority:
  • 1=Value-added tax ID (so-called VAT number)
  • 2= a foreign identification corresponding with a trade register entry
  • 3=TIN (foreign taxpayer identification number)
  • 4=Foreign personal identity code
  • If the unit has no VAT number, you should give a foreign identification corresponding with a trade register entry. If you do not have this, either, you should give your TIN and, as the last alternative, a foreign personal identity code.
• Employer's home country
  • Give the country code of the home country. For a Finnish company, this is FI. The record description has a link to a list of all country codes.
  • If the name of your home country cannot be found on the country codes list, you must write the entire name.
• Name, telephone number and address of a representative of the employer
• Employer's address, if no representative has been appointed
• Name and business ID or personal identity code of the customer purchasing leased labour
• Foreign identification and ID type of the customer purchasing leased labour
• Home country of the customer purchasing leased labour
• Not active - entry for individual sites
  • Enter if 1 = work at the site has been interrupted or 2 = work at the site has been concluded
• No employee report received from the employer (employer's failure)
  • Enter if 1 = all employee information is missing  or 2 = part of the employee information is missing

4 When must the information be reported?

4.1 Reporting time of the information

Both contract and employee information must be submitted to the Tax Administration on a monthly basis. The report should be submitted at the latest on the fifth day of the second month following the reporting month; for example, the information for January should be submitted at the latest on the 5th of March. The correct time for submitting a basic report is from the beginning of the reporting month until the fifth day of the second month after the reporting month. If the due date falls on a weekend or other public holiday, it is postponed until the following working day.

You cannot report the information in advance; for example, the information for February cannot be reported in January. You may know in advance that the company will not be active at the site in certain months, or that an employee will not be working at the site during certain months. The Not active report cannot be submitted in advance even in these situations.   

4.2 Commencement of the reporting requirement

The reporting requirement will apply to information to be reported for 1 July 2014 or later. Even if the site had been launched before 1 July 2014, information on work carried out by an employee, jobs completed and contract payments made after the 1st of July must be reported.  

The reporting requirement on contracts and employees commences as the site is launched. Construction work will be deemed to have started when the actual work at the site begins, for example by clearing the construction site. This also applies if no permissions have yet been obtained or notifications given, but the first jobs are being carried out at the site. The commencement of the reporting requirement on contract information will be examined by individual contracts.

The information must be provided even if the work has not yet been invoiced.

If the customer makes advance payments before work is initiated, this must also be reported, even if the work had not been started. The record descriptions have a separate section for advance payments. For months following an advance payment (so-called interim months) during which the work has not yet been initiated, no information need be reported. During the contract performance, advance payments are reported in the invoiced amount section.

4.3 Ending of the reporting requirement

The site will be deemed as having been completed when the work has been received and handed over to the customer. Usually, the site administration at the site is also dismantled at this stage. This date also marks the ending of the reporting requirement on employees and contracts, even if warranty period work after the handover and repairs were still performed.

The ending of the reporting requirement on contract information will be examined by individual contracts. A subcontractor hands over the work to the main contractor, whereas a main contractor and an auxiliary contractor hand it over to the constructor. A foundation engineering contract may be handed over years before the main contract is handed over to the constructor.   

If the work has already been concluded but invoices for contract performances carried out in the period before the site was finished continue to be invoiced, these must be reported to the Tax Administration.

5 How should the information be reported?

A company may comprise several units that submit contract or employee information, or the reporting can be centralised to a single unit.

Each reporting unit submits their report containing the information for the reporting month in a so-called basic report (perusilmoitus, P). After the basic report has been submitted, it is assigned a unique report ID and the the unit is notified of the date on which the report was submitted. The ID relates to a single report, regardless of whether the report contains the information of one or several sites. The basic report ID is re-issued every month, even if the reporting unit (and sites) were the same. If you wish to amend the information at a later date, you must give this report ID (see section 6, Amending the information).

You should also use the basic report if you are reporting the information for the first time after the deadline has expired.

5.1 Electronic reporting

In order to guarantee real-time tax control, information on the contract and employees can only be submitted to the Tax Administration in the electronic format. You can either submit the information in an online form using the suomi.fi service or the Ilmoitin.fi service.

The Ilmoitin.fi service can be used to submit software files. The Ilmoitin.fi service checks that the information is formally correct following the record description. The service can either be used through a browser or a software interface. The unit subject to the reporting duty can as a rule use their previous report as a template for the following one.

Those submitting reports for a company or an organisation need to have a Katso ID to log in to electronic services. Private persons, including self-employed workers or primary producers, may also use their online banking IDs or a personal identity card with a microchip. For more information and instructions on using Katso IDs, visit www.tax.fi/katso. If you log in using Katso identification, you must give a business ID in your report. If you log in using your personal ID, you should enter your personal identity code in the reports.

5.1.1 Submitting data through the Ilmoitin.fi service

Complete the following two steps to submit your data:

Step 1: Login

Before you can submit the data, you have to log in. To log in, you have to use your Katso ID, personal online banking IDs or a personal identity card with a microchip. On the login page, enter the required identification details.

Step 2: Submitting data

After a successful login, the data must be checked. To check the material, click on the "Selaa (Browse)" button and then the "Tarkasta aineisto" (Check data) button. The Ilmoitin.fi service will check the data and print it on the screen for verification. For more information see: Instructions for reading verification results.

If the data contains formal errors, it cannot be submitted to the Tax Administration. The Ilmoitin.fi service will give an error message and instructions for further steps. For example, the error may be arise from the fact that the user does not have authorisation to submit the data, or the personal identity code or business ID is incorrect.

Once the result of data verification is valid, press the Lähetä (Submit) button to submit the data.

After a successful submission, the system will give you an acknowledgement of the received data. The acknowledgement will contain the original file name, file name used to receive the data, a report ID and the date and time of reception. The acknowledgement will also show an itemisation of the data contents, or the type and number of reports the data contained. At a later date, you can browse the acknowledgements in the Ilmoitin.fi service archives. The service will keep the data on file for 1.5 years. The archive will show successfully submitted reports for the user ID used at login, attachment files and reports in Excel format. For more information see: Instructions for reading the archive.

For more information on the Ilmoitin.fi service, visit www.ilmoitin.fi.

5.1.2 Using an online form to report information through the Suomi.fi service

You can log on to the Suomi.fi service to complete an online form. A link will be set up at the Vero.fi site that gives you access to completing the form. You will have to prove your identity to use the online form. The form will open up after you have completed the identification.  On the online form, you can base a new report on the information submitted in a previous report.

After you have completed the form, click on the Lähetä (Submit) button to send the form directly to the Tax Administration's electronic system.

The Tax Administration will draw up detailed instructions for submitting the data using the online form.  

5.2 Katso roles for reporting

To submit electronic reports to the Tax Administration, you have to use a Katso ID when reporting for a company or an organisation.  

There are two Katso roles for reporting information on contracts and employees. A Master User can authorise a user to use a separate role related to meeting the reporting requirement in construction (Comparison data filer). Users with this role may only report contract and employee information to the Tax Administration.

In order to lighten the administrative burden, the information can also reported using the role of Periodic tax return filer, in which case separate authorisation will not be required, if the person submitting the report already has this role.

5.3 A foreign reporting unit

It is currently not possible to set up a Katso ID for a company that does not have a Finnish business ID. Neither can an accountable officer with a right to sign who does not have a Finnish personal identity code be set up as a Master User (e.g. a company registered in Finland whose accountable officers are not Finnish citizens).

At the moment, the only procedure available for foreigners is the following:

• An agent (e.g. an accounting firm) who has a Katso ID can create an online power of attorney for approval by a company that has a Finnish business ID and whose representative is a foreigner.

During 2013, the Katso service will be developed to make it possible for foreign companies and persons to set up a Katso ID

• for a company registered in Finland whose officers with a right to sign are foreigners.
• for a company registered abroad whose officers with a right to sign may be either foreign or Finnish.

6 Amending the information

If the reporting unit needs to amend the information reported, they must submit a correction report (korjausilmoitus, K) for the month in question. When submitting a correction report, the reporting unit will enter the report type as a correction report. You must always re-complete all your information in a correction report, even if it contained correct information for several sites.

You must always give the report ID issued for your basic report when submitting a correction report. A correction report cannot be submitted without a basic report ID for the same month.

The reporting unit can amend the information in arrears during the 12 months following the reporting month.

The correct time for submitting a basic report is from the beginning of the reporting month until the fifth day of the second month after the reporting month. If a unit has reported the information in a basic report before the expiry of the deadline and wishes to amend the information before the deadline expires, a correction report citing the report ID of the basic report must be used, even if the new information were submitted before the expiry of the deadline.

The information can be amended in the report for the following month, eliminating the need to submit a correction report, except in case of

• incorrect identification data
  • business ID
  • personal identity code, taxpayer identification number, date of birth or a foreign identification
  • site number
• for contract information, amounts invoiced (or paid)
• type of assignment
• whether reverse charge VAT liability has been applied
• in employee information, the type of employment relationship

The information listed above must be corrected in the report for the original month. All other information can be corrected in the report for the following month. Contact details, for example, can be changed and amended in the following month's report.

The information must be amended electronically using a correction report. Information cannot be corrected by telephoning the Tax Administration.

In exceptional cases, a submitted file can also be cancelled completely. To do so, use a deletion report (poistoilmoitus, D). In that case, too, the reporting unit must enter the report ID assigned to them when submitting the basic report.

To correct (K) or delete (D) information, use the same reporting channel as you did for the original data.

7 Consequences of failing to submit a report

If a unit subject to the reporting requirement fails to submit a report, under Section 22 a of the taxation procedure act, a maximum penalty of EUR 15,000 can be imposed. A penalty can also be imposed if a unit subject to the reporting requirement submits the information using the wrong media, for example on paper.

No penalty will be imposed on a project supervisor if the information reported by the project supervisor in compliance with Section 15 b is deficient or incorrect due to the negligence of an employer or a self-employed worker referred to in Section 15 b, paragraph 2. In this case, the precondition for being released from the penalty is that the project supervisor reports the employer's negligence to the Tax Administration.

When fulfilling their reporting requirement, project supervisors are in practice obliged to rely on information provided by the employer. Without placing an unreasonable administrative burden on project supervisors, it is not possible to  impose on them an extensive duty to check the correctness of the information submitted by employers and self-employed workers. Project supervisors thus cannot be expected to fulfil a duty to investigate in order to establish that the information submitted to them is correct, and in principle their role consists of passing on the information. In practice, the project supervisor mainly has the possibility of reporting a negligence by an employer or a self-employed worker when an employer fails to submit information on an employee, or a self-employed worker fails to provide information on him/herself either totally or in part, or when it is obvious to the supervisor that the information submitted is incorrect, for example because it is clearly inconsistent with other information at the project supervisor's disposal. A penalty will thus not be imposed if the information, because of a reason within the control of an employer or a self-employed worker, is incomplete or incorrect, and the project supervisor cannot reasonable be expected to be aware of this.

8 Period for keeping the information on file

Pursuant to Section 15 b Subsection 4 of the taxation procedure act, the filing period for information covered by the reporting requirement is six years after the year in which the site was completed. The same period also applies to contract information referred to in Section 15 c of the taxation procedure act. The information can also be kept on file in the electronic format.

If the unit subject to the reporting requirement uses the Ilmoitin.fi service, the service archives the information for 1.5 years.

Assistant Director Mari Tuomolin 

Senior Adviser Sari Wulff