Reporting data to the Incomes Register: monetary wages and items deducted from wages

This instruction describes

• the wage concept
• two methods of reporting monetary wages to the Incomes Register
• separation of wages and earnings from work in the Incomes Register
• deadlines for reporting monetary wages
• reporting items deductible from wages.

1 Reporting monetary wages

1.1 Wage concept

Wages are remuneration paid or agreed to be paid for work in an employment relationship (contractual or public-sector employment), or under a director’s agreement. Under the Public Sector Pensions Act, assignments, positions of trust and the tasks of carers and family carers are regarded as employment relationships subject to specified conditions. Accident and occupational disease insurance legislation also includes insurance provisions for accidents and occupational diseases concerning certain groups, according to which the groups in question may be insured in the same way as employees, but this does not make individuals belonging to these groups employees.

Because concepts of income often differ in the legislation applied by the Incomes Register data users, the concept of 'wages' is not identical for all data users. Some data users use the term ‘earnings from work’ for wages. The concept of income is broader for some data users than for others.

• From the perspective of tax legislation, wage is a broader concept than, for example, earnings from work, which forms the basis of earnings-related pension or unemployment insurance. In taxation, remuneration paid for work other than that performed in an employment relationship can be regarded as wages.
• Differences may also arise due to some data users assessing income based on the payment date, and some based on the earnings date.

For the above-mentioned reasons, the terms ‘wages’ and ‘earnings from work’ cannot serve as synonyms in all contexts. More detailed guidance on the interpretation of the wage concept is available on the websites of the Tax Administration, insurance companies and the Unemployment Insurance Fund, or by contacting the bodies in question directly.

1.2 Two methods of reporting monetary wages

The earnings payment report to be submitted to the Incomes Register replaces the various reports that data users must currently be provided with. Because data users have differing concepts of income, it is recommended that the payer reports wages in an itemised breakdown (reporting method 2). Wages must, however, be reported at least as a total amount (reporting method 1).

Itemised reporting of monetary wages (reporting method 2)

• The payer uses specific, complementary income types. With this reporting method, the wage is generated from the reported earnings, and the payer does not have to calculate the wage by adding up earnings.
• When the data is reported with the complementary income types (36), all parties using the data stored in the Incomes Register can use it in their operations.
• Reporting the data by means of reporting method 2 is subject to the same deadlines as mandatory data.

Reporting of monetary wages as a total amount (reporting method 1)

• The payer reports the monetary wages as a total amount. This information corresponds to the payment types ‘wages for primary job’ and ‘wages for secondary job’ in the Tax Administration’s annual returns.
• If the wages are reported as a total amount, some data users may have to request more detailed information, since a lower level of detail is not sufficient for all users. For example, Kela needs more detailed information on monetary wages when granting sickness allowances or parental allowances.

Reporting method 1 and reporting method 2 cannot be used simultaneously in the same report. However, you are free to change reporting methods between reports.

See below for examples of reporting data. The examples do not present all mandatory data, only the data necessary for processing the matter.  

Example 1:The income earner is paid a total of EUR 2,785 in wages. In addition to the normal monthly wage (EUR 2,100), the wages consist of a bonus (EUR 500) and an evening shift allowance (EUR 185). 

The payer can report the monetary wages in two ways: either by reporting the wages as a total amount or by itemising them in more detail using complementary income types:

When reporting method 2 is used, the income earner’s wages comprise the total amount of the reported income types. The payer does not need to give the total amount of the reported income types.

1.3 Separating earnings from work and wages in a report

The above describes how the concept of income is wider for some data users than for others. The terms used for income also differ: some use ‘earnings from work’ and others ‘wages’. With the Income Register’s earnings payment report, payers can use a single report to notify various social insurers of the income on which contributions are based, even if the income amounts differ.

The reporting method 1 for monetary wages (income type ‘Total wages’) includes the total of wages and earnings from work subject to the various social insurance contributions of employers and employees (earnings-related pension, health, unemployment and accident and occupational disease insurance contributions).

• If some part of the payment made is not remuneration paid for work and thus not the grounds for one of the above-mentioned social insurance contributions, notification that the income is not subject to the insurance contribution in question is added to the Total wages income type, using the Insurance information type data group.
• In addition, the payer must separately report the part of the income that constitutes the grounds for the social insurance contribution in question with the separate income subtypes related to reporting method 1:
  • Total wages subject to social insurance contributions
  • Total wages subject to earnings-related pension insurance contributions
  • Total wages subject to health insurance contributions
  • Total wages subject to unemployment insurance contributions
  • Total wages subject to accident and occupational disease insurance contributions

If none of the reported income is subject to social insurance contributions, the payer uses the Insurance information type data to report that the amount is not subject to social insurance contributions. In such a case, the payer does not need to confirm data, using income subtypes, from all of the social insurance contributions.

Example 2: The income earner is paid an initiative fee of EUR 1,000. The default value of the Initiative fee income type under reporting method 2 is that the payment is subject to social insurance contributions.  However, the initiative for which the fee is paid to the income earner is not connected to the duties agreed in the employee's employment contract, for which reason the income is not subject to social insurance contributions in such a situation.

The payer reports the income under either the Total wages income type (reporting method 1) or the complementary Initiative fee income type (reporting method 2). Reported in either way, the payer must use the Insurance information type data to specify that the income is not subject to social insurance contributions.

Example 3: The income earner is paid EUR 600 compensation for acting in a position of trust. Compensation for acting in a position of trust is income subject to a health insurance contribution, but it is not income subject to an earnings-related pension, unemployment or accident and occupational disease insurance contribution. Compensation for acting in a position of trust also constitutes income subject to contributions other than a health insurance contribution only if the income earner is in an employment relationship with the payer of the compensation. In this example, the income earner is not in an employment relationship with the compensation payer. However, because the payer has taken out voluntary earnings-related pension insurance for the person acting in a position of trust, the pension is based on the income.

The payer reports:

By default, Compensation for acting in a position of trust income type as per reporting method 2 is not subject to earnings-related pension, unemployment or accident and occupational disease insurance contributions. However, the income type is subject to a health insurance contribution. Based on this information, the health insurance contribution and earnings-related pension insurance contribution are collected from the payment, but not the unemployment insurance contribution or the accident and occupational disease insurance contribution. When the payer uses the Compensation for acting in a position of trust income type, the default payments do not need to be confirmed.

When using reporting method 1, the income is subject to social insurance contributions by default. In such a case, when reporting the compensation for acting in a position of trust, the payer must use the Insurance information type data to confirm that the income is not subject to unemployment or accident and occupational disease insurance contributions. 

If the payment made is partially the inverse of the default value, separate data on the income type must be submitted for payments that have and those that do not have the default value.

Example 4: A person is paid EUR 1,700 in partial pay during sick leave. The partial pay during sick leave income type is subject to social insurance contributions by default. However, the paid amount includes EUR 200 that is not subject to social insurance contributions.

The payer can report the income with either reporting method 1 or reporting method 2:

Based on the data submitted, social insurance contributions are paid on EUR 1,500, but not on the separately reported EUR 200, for which separate “Insurance information type – No” data has been included. The amount of the income earner’s taxable wages is EUR 1,700.

By default, the complementary income types in reporting method 2 for wages contain data on whether or not the income type is subject to social insurance contributions. The default value for some income types can be changed, if necessary. Information on income types and their default values is available in the document Descriptions of income types and items deducted from income on the Documentation page.

Example 5: The employee’s monetary wages are EUR 5,000. The amount comprises EUR 4,700 of time-rate pay and EUR 300 of waiting time compensation. The time-rate pay is subject to social insurance contributions, but the waiting time compensation is not.

The payer reports the income data according to reporting method 1, by using the Total wages income type (EUR 5,000). Because the waiting time compensation is not subject to social insurance contributions, the payer also uses the “Total wages subject to social insurance contributions” income subtype related to reporting method 1 to separately report the sum of EUR 4,700. The payer also enters the Insurance information type data in the Total wages income type (EUR 5,000) and selects “Subject to social insurance contributions – Grounds for insurance contribution – No”.

The payer reports the data according to reporting method 1 or, alternatively, using the complementary income types of reporting method 2, in which case payments subject to social insurance contributions do not need to be separately itemised:

Based on reporting method 1, the data is distributed in the correct amounts to the data users: the income earner is taxed for EUR 5,000 in wages, but the social insurance contributions are determined based on EUR 4,700. Although, under the Total wages income type, the earnings are subject to social insurance contributions by default, social insurance contributions are not paid on EUR 5,000, as the payer reports the Insurance information type data related to the income type (Subject to social insurance contributions – Grounds for insurance contribution – No).

It should also be noted, for example, that the Public Sector Pensions Act differs, in terms of earnings-related pension insurance, from the private sector’s Employees Pensions Act in relation to matters such as meeting fees, lecture fees and compensation for acting in positions of trust.

Depending on the situation, the grounds for social insurance contributions may differ for the same payer in regard of the following income types:

• initiative fee
• compensation for membership of a governing body
• monetary gift for employees
• kilometre allowance (taxable)
• meeting fee
• lecture fee
• compensation for acting in a position of trust
• other taxable benefit for employees
• other fringe benefit
• total wages
• compensation for employee invention
• stock options and grants
• partial pay during sick leave
• benefit arising from synthetic option
• employee stock option
• share issue for employees
• profit-sharing bonus.

The Insurance information type data related to the above-mentioned income types is also described in the instructions Reporting data to the Incomes Register: Insurance-related data (will be published later in English).

1.4 Deadlines for reporting data

Payment date and deadlines for reporting 

1. Monetary payments:

• The data must be reported to the Incomes Register no later than on the fifth calendar day after the payment date.
• The payment date is the date on which the payment is available for use by the income earner, i.e. the payday.
• Saturdays, Sundays and other holidays must be counted when calculating the five calendar days after the payment date, but if the report’s due date falls on a Saturday, Sunday or other holiday, the data can be reported on the following banking day (Act on Calculation of Prescribed Time Limits, section 5).
• Private individuals and death estates must report the data monthly no later than by the fifth day of the month following the payment day. If the individual or death estate is registered in the Employer Register as referred to in section 31 of the Prepayment Act the data must, however, be reported by the fifth calendar day after the payment date.

 2. Non-monetary benefits and payments, if the recipient is not paid a monetary payment at the same time:

• The data must be reported on a monthly basis by the fifth day of the calendar month following the month in which the benefit was received.
• Example: The income earner is paid only fringe benefits.

3. Non-monetary benefits and payments, if the recipient is paid a monetary payment at the same time:

• All data concerning the income earner must be reported no later than on the fifth day after the payment date.

The deadlines concern mandatory data, such as wage income and fees (Act on the Income Information System, sections 6 and 8).

The deadlines for reporting the data when the report concerns wages for insurance purposes, or wages paid by a substitute payer, are shown on the website Reporting data to the Incomes Register.

Reporting data in advance

Data can also be submitted to the Incomes Register before the date of payment, for example directly from the payroll run. Data can be reported no earlier than 45 days before the date of payment.

Data on the termination of employment can be reported in advance. Reporting is described in separate instructions Reporting data to the Incomes Register: employment details and Reporting data to the Incomes Register: absence data (will be published later in English).

Data submitted electronically and in paper format

The five-day deadline for monetary payments applies to data submitted electronically. The deadline for reports submitted in paper format is 8 calendar days instead of the usual 5. Data can be submitted in paper format only in special circumstances; for example, if filing an electronic report is impossible for an individual, estate, casual employer or foreign national due to technical obstacles. 

2 Reporting items deductible from wages

Several income types can be reported for one income earner on the same report. Even if several income types are reported, items deducted from wages can be reported as a total sum for all income types.

In addition to monetary wages, certain payments must be reported separately, under their own income types, if the payments in question are made. Income types to be reported separately include fringe benefits and tax-free reimbursements of expenses. The total amount of the payment made to the income earner consists of wages based on reporting method 1 or reporting method 2, and separately reported income items and items deducted from the income.

The reporting of income types to be separately reported, such as fringe benefits and reimbursements of expenses, is described in more detail in the instructions Reporting data to the Incomes Register: fringe benefits and reimbursements of expenses (will be published later in English).

The data on items deductible from wages can be submitted in connection with reporting method 1 (total wages) and reporting method 2 (complementary income types), and in connection with separately reported income types (1 and 2) in the same report.

 Items deductible from wages consist of

• compensation collected for car benefit
• withholding tax
• elected official fee
• tax at source
• tax at source deduction
• reimbursement collected for other fringe benefits
• other item deductible from net wage or salary
• employer-paid premium for collective additional pension insurance, employee’s contribution
• employee’s health insurance contribution
• employee’s pension insurance contribution
• employee’s unemployment insurance contribution
• reimbursement for employer-subsidised commuter ticket
• tax paid abroad
• distraint
• voluntary individual pension insurance premium
• deduction before withholding.

Example 6: The amount of the income earner's wages is EUR 3,650. The wages consist of EUR 2,700 in time-rate pay, EUR 650 in accommodation benefit and EUR 300 in overtime compensation.

The payer can report the monetary wages (EUR 3,000) in two different ways: either by reporting the monetary wages as a total amount or, alternatively, by itemising the wages in more detail using complementary income types:

The fringe benefits must be itemised by providing their data under separate income types. Fringe benefits paid are reported either using the “Other fringe benefit” income type, or by reporting the accommodation benefit under its own income type.

Withholding tax, employee’s pension insurance contribution and employee’s unemployment insurance contribution are reported as items deductible from wages. In addition, the income earner’s net wage or salary and the amount of wages paid can be reported on a voluntary basis.

If the income earner is insured under the Public Sector Pensions Act, only income types reported on the basis of the same registration can be reported on one earnings payment report. Further information on employment relationship registration is available in the instructions Reporting data to the Incomes Register: employment details (will be published later in English).