Instructions on how to report benefits is changing: How to deal with situations where a substitute recipient has been underpaid

Changes are coming to reporting practices, which should be taken into account when processing benefits.  

The changes apply to situations where a substitute recipient has been underpaid and the type of deduction is an after-tax deduction, for example Recourse for untaxed income.

The change also applies to a situation where the payer has ignored the enforcement injunction and the distraint is carried out on behalf of the income earner by the enforcement authority. 

What will change? 

In the detailed instructions on benefits, examples 30, 31 and 42 are being updated as follows: 

• No withholding tax is required on a payment made on behalf of an income earner to a substitute recipient. This means that no withholding tax needs to be added to the amount payable.  

The examples describe situations where: 

• Too little of the income earner’s benefit has been paid to the substitute recipient. 
• The payer remedies the situation by paying the missing payment to the substitute recipient on behalf of the income earner. 
• The overpayment is later recovered by the payer from the income earner. 

In these situations, the notifications on the missing payment paid to the substitute recipient and on the overpayment recovered from the income earner are made, for withholding tax, in the same way as in example 29 of the guidelines: Insufficient amount of benefit paid to a substitute recipient, the amount of taxable benefit does not change. 

New instructions can be followed immediately  

The changes will be published in the guide Benefits: reporting data to the Incomes Register  together with other changes in late 2025. However, the instructions can already be followed in 2025.  

The new instructions will officially enter into force on 1 January 2026.  

Reports already submitted to the Incomes Register do not need to be corrected to comply with the new instructions. 

Change based on Tax Administration instructions 

The change in reporting practices based on chapter 6.1.5 of the Tax Administration’s instructions on withholding taxInvoice paid on behalf of an employeec (in Finnish). The instructions concern payments related to wages, but also apply to benefits.  

According to the instructions, no tax is withheld from a benefit paid to a substitute recipient on behalf of an income earner, because the payer and the income earner have not agreed that the payer will be liable for the tax on the benefit. 

The Incomes Register customer service advises on reporting 

• Telephone +358 29 497 550 
• Opening hours: weekdays from 9 a.m. to 4 p.m