Reporting data to the Incomes Register: rewarding employees, payments made to an entrepreneur and other special circumstances

These instructions are intended for payers of contributions. The instructions use examples to describe the reporting of data to the Incomes Register, when the data concerns

• rewarding an employee with, for example, an employee stock option;
• seafarer’s income;
• payments made to companies and entrepreneurs;
• compensation for use; or
• a payment based on a separate task, such as a payment made to an athlete or a performing artist.

The monetary wages paid must always be reported to the Incomes Register at least as a total amount (the minimum level of detail for reporting, or the so-called reporting method 1). If the payer wishes, it can report the monetary wages it has paid more specifically than required by the mandatory reporting method, using the separate complementary income types intended for this purpose (the higher level of detail for reporting, or the so-called reporting method 2). Reporting methods 1 and 2 cannot be combined in the same report. The method of reporting monetary wages does not affect the reporting of all the payments described in these instructions. Many of the payments described here must always be itemised regardless of the reporting method for monetary wages chosen by the payer.

The examples in these instructions describe reporting data both as a total amount and in an itemised manner. The examples do not present all data whose submission is mandatory, only the data necessary to reporting the special circumstances described in these instructions. The reporting of withholding, for example, is not separately described. The monetary amounts used in the example are illustrative in nature, and the amount of social insurance contributions, the withholding rate and tax-exempt reimbursement of expenses must be checked annually. The withholding is determined based on the earner-specific withholding rate.

The amounts of the earnings-related pension and unemployment insurance contributions used in the examples are at the 2023 level. The amounts valid for each year are presented on the insurance information page. The amount valid for employees under 53 years of age and employees over 62 years of age has been used as the amount of the employee’s earnings-related pension insurance contribution.

When these instructions discuss tax-exempt reimbursements of travel expenses, including daily, kilometre and meal allowances, their maximum amounts are in accordance with the decision valid in 2023. The amounts valid each year are presented in the Finnish Tax Administration’s decision on tax-exempt allowances for business travel.

These instructions describe reporting in domestic situations. Reporting data to the Incomes Register in international situations is described in the instructions Reporting data to the Incomes Register: international situations. Questions related to substitute payers and wage security are discussed in the instructions Reporting data to the Incomes Register: payments made by substitute payer.

These instructions replace the previous instructions, Reporting data to the Incomes Register: rewarding employees, payments made to an entrepreneur and other special circumstances. The following additions and changes have been made to the instructions:

• Section 1.1 and its subsections include updated instructions and examples of situations where an employee stock option is paid in money. In addition, a new Section, 2.1.3 Employee stock option paid in money, has been added.
• The instructions in Section 1.1.1 on reporting undervalued employee stock options have been clarified.
• Section 1.2.1 includes updated instructions and examples of situations where a stock grant is paid in money.
• Section 1.3, Synthetic option, has been transferred to Section 1.1.4.
• The instructions in Section 3.1 on reporting non-wage compensation for work have been clarified.
• Instructions on situations where a payer subject to the Public Sector Pensions Act (Julkisten alojen eläkelaki 81/2016) pays an employee via an invoicing service have been added to Section 3.1.2.
• The instructions and heading of Section 3.2.3 have been supplemented. Instructions on how to process a shareholder’s wage receivables when the company is insolvent have been added.
• The instructions in Section 3.4 on using an invoicing service when an employment relationship is formed between the employee and the client have been clarified. In addition, instructions on situations where legislation prevents working when not in an employment relationship or self-employed have been added.
• A new example on a situation where a payer subject to the Public Sector Pensions Act reports income invoiced through an invoicing service to the Incomes Register has been added to Section 3.4.1. An example of a situation where a work performer using an invoicing service has a self-employed person’s pension insurance policy (YEL) has also been added to this section. In addition, instructions on when to use the new type of additional income earner data ‘Individual with no business ID using an invoicing service’ is to be used have been added to this section.
• The examples in Sections 3.4.1–3.4.3 have been clarified with the effects of decision 2023:42 of the Supreme Administrative Court on the amount of taxable income. In addition, the new type of additional income earner data ‘Individual with no business ID using an invoicing service’ has been added to the examples.
• New instructions on how to use the new income type ‘Copyright royalties, earned income (366)’ have been added to Chapter 4. Furthermore, the instructions in this chapter on the situations in which the income types ‘Compensation for use, earned income (313)’, ‘Compensation for employee invention (326)’ and ‘Royalty paid to a non-resident taxpayer (362)’ must be used have been clarified. The structure of the chapter has also been clarified by adding new Sections 4.1 and 4.2. The number of the former section has been changed to 4.3.
• Additional income earner data type ‘Athlete’ has been added to the examples in Section 5.1.
• Instructions on situations where the fee is paid to the athlete’s company have been added to Section 5.1.2.
• In Sections 5.5 and 5.6, the body responsible for the arrangement of a private caretaker’s fee has been changed to the wellbeing services county.
• Section 5.11.1 has been supplemented by stating that the procedure applies to referees in addition to judges, and the instructions on reporting meeting fees have been clarified. In addition, the income type to be used for reporting telephone expenses and other similar taxable reimbursements of expenses paid by an entity promoting for the public good or public sector organisation to volunteers has been changed.

Otherwise, the contents of these instructions match the previous instructions.

1 Rewarding an employee

1.1 Employee stock option

An employee stock option is a remuneration given in the form of the employer company's stock option. An employee stock option benefit is an employment-based right to receive or obtain shares in an organisation at a price lower than the market value under predetermined conditions. The benefit is based on a convertible bond, optional bond, right of option, or other such agreement or commitment equivalent to these.

In the case of an employee stock option, the data needed for insurance purposes and the data needed for taxation purposes differ from each other in some situations. For this reason, data related to employee stock options is reported using two different income types, if necessary: Employee stock option with a subscription price lower than the market price at the time of issue (361) and Employee stock option (343), Synthetic option (222) and Employee stock option paid in money (368). 

1.1.1 Employee stock option with a subscription price lower than the market price at the time of issue

An undervalued employee stock option, i.e. an option whose subscription price is substantially lower than the market price of the share on the option issuance date. The time of issue means the time when the employer gives the employee stock option benefit to the employee, or the time when the employee receives the employee stock option. A benefit received from an undervalued employee stock option is only considered to be wages subject to social insurance contributions in situations where the option is exercised within one year after it has been issued to the employee. If an undervalued employee stock option is only exercised more than one year after receiving it, the benefit received from the option is not considered to be wages subject to social insurance contributions.

When the option is exercised, the employer must identify

• whether the subscription price of the share agreed when giving the option was substantially lower than the fair value of the share on the option issuance date, i.e. the market price
• whether the undervalued employee stock option is exercised before one year has elapsed from its issuance.

If these conditions are met, the amount of the benefit received from the undervalued employee stock option must be reported to the Incomes Register using two income types. This situation concerns employee stock option benefits in which both the granting and exercise of the stock option take place while the current provision is in effect, i.e. on 1 January 2021 or later.

• The benefit subject to social insurance contributions is reported to the Incomes Register using the income type Employee stock option with a subscription price lower than market price at the time of issue (361). The value of the benefit is calculated as follows: The subscription price is deducted from the market price on the option on the issuance date. If the employee has paid for the right of option, the amount paid by the employee is also deducted from the market price. The remaining amount of the benefit is reported under income type 361. Therefore, the amount of the benefit is estimated according to the option issuance date, but it is only reported to the Incomes Register when the option is exercised.
• The taxable benefit is reported under the income type Employee stock option (343). The value of the benefit is calculated as follows: The subscription price is deducted from the market price on the option at the time the stock option is exercised. The taxable benefit may therefore be different from the benefit subject to social insurance contributions.

The undervalue of the employee stock option and the fulfilment of the aforementioned conditions affect the income insurance obligation, but not the taxability of income. If the conditions for obligation to take out are met even if the conditions for taxation are not met, the income is considered earnings from work subject to social insurance contributions. 

If the subscription price of the option at the time of issue matches the current market price of the share (or is higher), the possible benefit from the employee stock options is formed (entirely) based on the share's price development. The work input of the employee (or that of the entire staff of the company) does not have a direct impact on the amount of benefit received. For this reason, the possible benefit gained from the increase in share price is not deemed remuneration for work, and the benefit is not included in the earnings from work on which social insurance contributions are based.Furthermore, even if the question was of an undervalued employee stock option, but the benefit was only used more than one year after its issuance, the benefit received will not be deemed earnings from work on which social insurance contributions are based. In these situations, the employee stock option must only be reported on the date on which it is exercised using the income type 343 Employee stock option. Reporting a benefit reported as an employee stock option is described in more detail in Section 1.1.2.

For more details, see the Employment Pension Legislation Service of the Finnish Centre for Pensions' application instructions Employee stock options and equivalent profit sharing arrangements (in Finnish) and the Tax Administration’s guidelines Taxation of employee stock options.

1.1.2 Employee stock option

When the employee exercises the employee stock option, tax is withheld from the gained benefit. The benefit from an employee stock option is not subject to social insurance contributions.

The benefit gained from the employee stock option is reported to the Incomes Register using the Employee stock option (343) income type. The value of the employee stock option is the market value of the share at the moment the employee stock option is exercised. The total price the employee pays for the share and the employee stock option is deducted from the value of the benefit. The employee stock option is reported in its entirety on the report for the pay period during which the employee has announced the exercising of the employee stock option.

The data is reported to the Incomes Register according to the payment principle. If a non-monetary payment is sporadic, tax can be withheld during the same calendar year in two ways: the entire payment is added to the amount paid in the payment period after the benefit was granted, or the payment is divided into four equal instalments and added to the amounts paid in the remaining payment months during the calendar year after the benefit was granted. If the value of a sporadic payment is no more than EUR 400 per year, tax may be withheld once a year, no later than in connection with the withholding from the last monetary payment in the calendar year (decree on tax prepayments, section 9 (ennakkoperintäasetus 1124/1996)). Employee stock options are reported in full when the option is exercised, even if tax is withheld over the same calendar year as described above.

The earnings period is voluntary complementary data that can be used to indicate the period during which the income was accrued. The employee stock option vesting period can be entered as the option earnings period. In this case, the earnings period begins from the granting of the option and ends at its vesting.

For more information on employee stock options, see the Tax Administration's Guidelines Taxation of employee stock options (in Finnish). The taxation of options amassed from work abroad is discussed in the instructions Taxation of employee stock options and share issues for employees in international situations (in Finnish). In addition, Reporting data to the Incomes Register: international situations, Section 2.3.6 describes the reporting of employee stock options for work abroad. The concept of employee stock options is different in earnings-related pension laws and taxation. For more details, see the Employment Pension Legislation Service of the Finnish Centre for Pensions' application instructions Employee stock options and equivalent profit sharing arrangements (in Finnish).

1.1.3 Employee stock option paid in money

Employee stock options can be implemented so that a portion of the options obtained from the arrangement are sold, and this sold portion is paid in money to cover taxes. The part of the benefit paid in money must be reported using the income type Employee stock option paid in money (368). The part received in shares must be reported using the income type Employee stock option (343). 

If the arrangement is considered an employee stock option in tax legislation but the interpretation is different in social security legislation, the social insurance contributions paid from the income must be checked separately and the appropriate income type (343, 361, 368) must be used in each case. If the subscription price of an employee stock option has been substantially lower than its market price on the option issuance date and the option is exercised within one year after its issuance, the employee stock option also establishes a benefit subject to social insurance contributions. The benefit subject to social insurance contributions is reported to the Incomes Register using the income type Employee stock option with a subscription price lower than market price at the time of issue (361).

If the employer pays the transfer tax on behalf of the employee, for example in a situation where a transferable right of option is transferred or old shares are subscribed on the basis of the right of option, the employer must report the amount of the transfer tax it paid to the Incomes Register using income type Other fringe benefit (317). The payment is not subject to social insurance contributions, so the employer uses the Type of insurance information data connected to the Other fringe benefit income type to report that the payment is not subject to social insurance contributions. The obligation to collect the health insurance contribution is determined as based on whether the original payment was subject to the health insurance contribution.

If an agreement on a right of option has been made with the employee so that the amount of money received by the employee is determined on the basis of the employer company’s share price development but the employee is not entitled to subscribe the shares underlying the option, the income type Synthetic option (222) must be used when reporting. For more information on reporting synthetic options, see Section 1.1.4.

For more information on employee stock options, see the Tax Administration's Guidelines Taxation of employee stock options and the Employment Pension Legislation Service of the Finnish Centre for Pensions’ application instructions Employee stock options and equivalent profit sharing arrangements (in Finnish).

1.1.4 Benefit arising from synthetic option

A synthetic option means a right of option based on which the employee receives a monetary remuneration determined on the basis of the development of the employer company's share price (net value settlement). The employee is not entitled to subscribe shares underlying the option. Instead of a synthetic option, this arrangement may be called a share-based bonus or reward system.

Tax is withheld from the benefit arising from a synthetic option, but no social insurance contributions are paid.

The synthetic option can be reported to the Incomes Register either using the income type Total wages (101) (reporting method 1) or the income type Benefit arising from synthetic option (222) (reporting method 2). If the synthetic option is reported using the Total wages income type, the Insurance information type entry must be used to separately report that the share of the synthetic option of the total amount is not subject to social insurance contributions. For more insurance information, see the guidance Reporting data to the Incomes Register: insurance-related data.

A dividend equivalent can be paid for synthetic options. The dividend equivalent is paid on the basis of a profit sharing system to an individual who is employed by the employer company but is not a shareholder. When the shareholders are paid dividends, the beneficiaries covered by the synthetic option system are paid dividend equivalents. The amount of the dividend equivalent is based on the amount of dividends paid to the shareholders. The dividend equivalent must be reported to the Incomes Register either using the income type Total wages (101) or, for example, the income type Other compensation (216). The dividend equivalent is subject to social insurance contributions.

The Synthetic option income type is not used to report synthetic stock options and grants. The employee's health insurance contribution and employer's health insurance contribution are both paid from synthetic stock options and grants. Synthetic stock options and grants can be reported to the Incomes Register either using the income type Total wages (101) (reporting method 1) or the income type Other compensation (216). The payments are a monetary benefit.

For more information on synthetic options, see the Finnish Centre for Pensions' application instruction Employee stock options and equivalent profit sharing arrangements and the Tax Administration's Guidelines Taxation of employee stock options (both in Finnish). The Tax Administration's guidelines also discuss the taxation of options accrued from work abroad.

1.2 Stock options and grants

Stock options and grants are a remuneration paid in shares of the employer company or, instead of the agreed remuneration, an amount paid in euros that equals the value of the shares.

In the case of stock options and grants, the data needed for insurance purposes and the data needed for taxation purposes differ from each other in some situations. For this reason, data related to stock options and grants can be reported using three different income types: Stock options and grants (320), Stock grant paid in money (367) and Conditional stock options and grants (365).

1.2.1 Stock options received as shares and paid in money 

Stock options and grants are a remuneration paid in shares of the employer company or, instead of the agreed remuneration, an amount paid in euros that equals the value of the shares. Stock options and grants are reported to the Incomes Register using the income type Stock options and grants (320) and Stock grant paid in money (367).

Tax is always withheld from stock options and grants. Social insurance contributions are not paid if the following conditions are met:

• Under the profit sharing system, the employee has the possibility of obtaining shares in the employer company, listed on a regulated market supervised by the authorities or a multilateral trading facility. . A company belonging to the same group or some other equivalent financial conglomerate is also considered to be an employer company.
• The value of the benefit depends on the development of the price of the shares in question over a time period between the promising and issuing of the remuneration, which is at least one year in length.

Stock option and grant schemes are often implemented so that a part of the shares received by the employee under the arrangement are sold immediately after receiving the shares to cover the taxes paid for the stock options or grants. Another typical model is that the amount of the stock options and grants is defined in shares, but a part is paid in money without the shares being sold. In both cases, the information is reported to the Incomes Register according to the same principles. The Stock options and grants (320) income type is used to report the amount granted in shares. The part of the benefit paid in money must be reported using the income type Stock grant paid in money (367). Stock options and grants received from unlisted companies are also reported as described above. 

Otherwise, the remuneration is income subject to social insurance contributions. For example, if the time between being promised the remuneration, gained from a company listed on the stock exchange, and receiving it is less than one year, the remuneration is subject to social insurance contributions. In such a situation, if a part of the stock options and grants is paid in money to cover taxes, this share of the payment must be reported using the the Stock grant paid in money (367) income type. Social insurance contributions are paid from the income. The share of the stock options and grants that was not paid in money is reported under the income type Stock options and grants (320). The employer reports the insurance information using the separate Insurance information type entry. For more information on insurance information, see the instructions Reporting data to the Incomes Register: insurance-related data.

If the company is listed and the vesting period is less than a year, the share paid in money is reported as in example 5.

If the terms of the stock options and grants scheme stipulate that taxes are to be covered by a separate monetary payment made by the employer in addition to the stock options and grants, such a monetary payment constitutes regular monetary wages. If a payment made in money is not subject to some social insurance contribution, the income type Other compensation (216) is used to report the payment, and the insurance information for the income type can be specified in a manner suitable for the situation. However, if the payment made in money is subject to social insurance contributions, any income type for monetary wages suitable for the situation can be used in reporting.

If the employer pays the transfer tax related to a stock option on behalf of the employee, the employer must report the amount of the transfer tax paid to the Incomes Register using income type Other fringe benefit (317). If the payment is not subject to social insurance contributions in this kind of situation, the employer uses the Type of insurance information data connected to the Other fringe benefit income type to report that the payment is not subject to social insurance contributions. The obligation to collect the health insurance contribution is determined as based on whether the original payment was subject to the health insurance contribution. Correspondingly, if the employer pays the taxes related to a payment that is income from work on which pension is based on behalf of the employee, the taxes paid by the employer are also considered to be income from work on which pension is based.

For more information on stock options and grants, see the Tax Administration's Guidelines Taxation of employee stock options and the Employment Pension Legislation Service of the Finnish Centre for Pensions' application instructions Stock options and grants (both in Finnish).

1.2.2 Conditional stock options and grants

In some situations, stock options and grants may involve a share assignment restriction and a conditional refund obligation. If, in this case, the value of the benefit received from the stock option does not depend, deviating from the original plan, on the development of the value of the shares between promising and transferring, which is at most one year in duration, the stock option may become income subject to social insurance contribution.

Such a situation may arise if the conditions change, for example, in such a way that an employee’s employment relationship ends during the period of one year and they can keep part of the shares. At the same time, an obligation to pay social insurance contributions arises. Such a stock option is only considered to have been given, from the perspective of social insurance contributions, when burdens concerning the stock option end and the stock option remains in the person’s ownership or is otherwise made available to them. Considering taxation, a conditional stock option is, however, considered to have been given already when the person receives the right of ownership to the shares.

The amount of the stock option must be reported using the income type Conditional stock options and grants (365) for determining social insurance contributions. The stock option to be reported using this income type is not income paid to the income earner in concrete terms, but this information is used as the basis of social insurance contributions. The benefit received by the income earner and the tax withheld from it were already reported using the income type Stock options and grants (320) when the income earner received the right of ownership to the stock option. This information is used in taxation, for example.

The income type Conditional stock options and grants is only used when the stock option involves both a share assignment restriction and a conditional refund obligation. If the stock option only involves one of these two burdens, it must be reported similarly to regular stock options using the income type Stock options and grants (320).

1.3 Personnel funds, performance bonuses and profit-sharing bonuses

1.3.1 Transferring funds into a personnel fund

The personnel fund receives funds from the employer's performance bonus and profit sharing systems as personnel fund contributions or their supplements, and the returns from the investment of these contributions. A personnel fund may also receive funds as donations. Each member of the personnel fund holds a share in the assets in the fund (their own fund shares). Transfers to a personnel fund are not reported to the Incomes Register.

If an employer pays an employee in cash instead of transferring the amount to a personnel fund, the payment is reported as regular wages and social insurance contributions are collected from it.

1.3.2 Share of reserve and surplus drawn from personnel fund

An employee can withdraw fund units or contributions from the personnel fund in cash. Twenty percent of a fund unit withdrawn from a personnel fund is tax-exempt income and 80% is taxable earned income. For taxation purposes, surplus withdrawn from a personnel fund is treated in the same way as a fund unit withdrawn from a personnel fund. For more information, see the Tax Administration's Guidelines Taxation of income from a personnel fund (in Finnish).

The taxable share withdrawn from a personnel fund is reported to the Incomes Register using the income type Share of reserve and surplus drawn from personnel fund (taxable 80%) (309). Only items withdrawn from a fund as fund units or surplus are reported using this income type. Tax is withheld, but social insurance payments are not paid from the amount withdrawn from the fund. The tax-exempt part is not reported to the Incomes Register. If the payment was withdrawn in cash, it is reported to the Incomes Register as regular wages, for example using the income types Total wages, Time-rate pay or Other compensation.

1.3.3 Performance bonus

Performance bonus is a remuneration paid based on meeting or exceeding the organisation's performance target agreed in advance.

Tax is withheld and social insurance contributions paid from a performance bonus, unless the performance bonus is transferred to the personnel fund. The performance bonus is reported to the Incomes Register either using the income type Total wages (101) (reporting method 1) or the income type Performance bonus (223) (reporting method 2). If the performance bonus is transferred to a personnel fund, it is not reported to the Incomes Register (see Section 1.4.1).

1.3.4 Profit-sharing bonus

Profit-sharing bonus is a remuneration distributed among employees without an advance plan, by a decision of the annual general meeting and determined based on the company's profits.

Tax is withheld from all profit-sharing bonuses other than those transferred into a personnel fund. The profit-sharing bonus can be paid directly to the employee instead of being transferred into a personnel fund, in which case no social insurance contributions are paid from the bonus. If the company does not have a personnel fund as described in the Act on Personnel Funds, no social insurance contributions are paid from the profit-sharing bonus if it is paid as a distribution of profits or in cash. The exemption from social insurance contributions also requires that the cash profit-sharing bonus is paid to all personnel and is not an attempt to replace a system of remuneration required by the collective bargaining agreement or the employment contract. Furthermore, the basis for determining a cash bonus must be in accordance with the Employees' Pensions Act, the Workers' Compensation Act and the Act on Personnel Funds, and the amount of the company's free capital must be greater than the total amount of the cash-based profit-sharing bonus and the dividend paid to shareholders as decided by the annual general meeting.

The profit-sharing bonus is reported to the Incomes Register either using the income type Total wages (101) (reporting method 1) or the income type Profit-sharing bonus (233) (reporting method 2). If the profit-sharing bonus is transferred to a personnel fund, it is not reported to the Incomes Register (see Section 1.3.1).

1.4 Monetary gift for employees

A gift from the employer received as cash or a comparable payment is reported to the Incomes Register using the income type Monetary gift for employees (310).

A monetary gift is deemed taxable income subject to withholding. No social insurance contributions are paid from a monetary gift if the monetary gift was given due to the employee's anniversary or for some other personal reason of this kind. If the monetary gift was not given on the employee's anniversary, for example, if the employee was paid 13th month pay, a Christmas bonus, a monetary company anniversary gift, or a monetary retirement gift, social insurance contributions must be collected from the payment.

By default, this income type is subject to social insurance contributions.

If the monetary gift given is not subject to social insurance contributions, the employer must report this separately using the Insurance information type entry. For more information on insurance information, see the instructions Reporting data to the Incomes Register: insurance-related data. However, when a gift such as a gift card is given as a reward for the performance of work, i.e. as remuneration for work, it is reported using the Other fringe benefit (317) income type.

1.5 Other taxable benefit for employees

A non-monetary taxable benefit collectively granted to personnel by the employer is reported to the Incomes Register using the income type Other taxable benefit for employees (315).

If the benefit has been granted collectively to all personnel, it is not subject to social insurance contributions. By default, for this income type the benefit is not subject to social insurance contributions. Tax is withheld from the income.

If the benefit has only been granted to some personnel, it is taxable in its entirety and subject to social insurance contributions. In such a case, the employer reports the insurance information by using the Information insurance type entry. For more information on insurance information, see the instructions Reporting data to the Incomes Register: insurance-related data.

Tax-exempt personnel benefits such as exercise and culture benefits given to an employee are not reported to the Incomes Register. However, if the amount of the exercise and culture benefit exceeds the tax-exempt annual maximum amount laid down in law (EUR 400), the part exceeding the tax-exempt benefit is taxable income and is reported to the Incomes Register. If a taxable benefit was given collectively to the entire personnel, the taxable part is reported using the income type Other taxable benefit for employees (315), in which case the payment is not subject to social insurance contributions. If only part of the personnel is given the benefit, the payment is subject to social insurance contributions. The Type of insurance information data is then included with the Other taxable benefit for employees income type to report that the payment is subject to social insurance contributions.

1.6 Share issue for employees

A share issue for employees is a share issue targeted at the company's personnel. The income taxation of a share issue for employees is bound to the relationship between the share's subscription price and market price: If the subscription price matches the market value, no taxable benefit is created for the employee subscribing the shares. If, however, the subscription price is lower than the share's market value or mathematical tax value, it is a case of benefit granted on the basis of employment, can be deemed earned income of the employee received at the time of subscription. The subscription benefit also applies to shares in an organisation. More information on the taxation of a share issue for employees can be found in the Finnish Tax Administration’s guideline Taxation of employee offerings

Only the amount of a benefit established as taxable earned income is reported to the Incomes Register using the income type Share issue for employees (226). The benefit is not subject to social insurance contributions. If the benefit is not available to the majority of personnel, the entire discount received is regarded as wages subject to social insurance contributions. The payer will then report the entire payment using the income type Share issue for employees (226) and enter the Type of insurance information indicating that the income is subject to social insurance contributions. For more information on insurance information, see the instructions Reporting data to the Incomes Register: insurance-related data.

Tax is withheld from the income reported with the income type Share issue for employees (226), but by default, the income is not subject to social insurance contributions.

2 Seafarer's income

Seafarer's income is wage income paid for work performed on board a vessel, related to the maritime traffic of the vessel. The vessel must have a gross capacity of no less than 100 register tons. The work is performed while in the employment of the shipowner, and must meet the requirements laid down in the income tax act (tuloverolaki 1535/1992). The wage income can be paid as a monetary remuneration or as a benefit worth money. This provision applies to both Finnish and foreign vessels. For more information, see the Tax Administration's Guidelines Taxation of seafarer's income (in Finnish).

Seafarer's income is reported to the Incomes Register just like regular wage income, with the addition of the Payment is seafarer's income and, if necessary, Time of cross trade and Withdrawal period entries. If the wages paid to the employee are deemed to be seafarer's income, the Payment is seafarer's income entry must be separately made for all payments made to, benefits given to, and items deducted from the income of the employee. The seafarer's income information is entered for all income types used on the report; also including reimbursements collected from fringe benefits and withholding, for example.

If the employee works on board a vessel that does not visit Finnish territory during the month in question, the employee is entitled to a cross trade deduction in their taxation. The shipowner paying the seafarer's income reports the time of cross trade as full months for the purpose of granting the cross trade deduction. If the pay period is not a calendar month, information on the time of cross trade is not submitted on an earnings payment report until the payer knows that the grounds for the cross trade deduction have been fulfilled for the month in question. The time of cross trade is reported by specifying the number of months for which the employee is entitled to the cross trade deduction.

Seafarer's income is income for the year during which it was paid or recorded in the employee's account, regardless of during which calendar year the wages were earned or from which period it was accrued. Seafarer's income is reported to the Incomes Register as earnings from the date on which it has been actually paid to the employee monetarily.

• If, however, the income has been available for withdrawal under maritime labour legislation and an agreement complementing it prior to the actual payment date, the withdrawal period details must be reported for the payment: Withdrawal period, start date and Withdrawal period, end date. In such a case, the payer must submit the report according to the withdrawal period (not the actual date of payment). The payment date on the report must be the date of withdrawal.
• If the income has not been available for withdrawal under maritime labour legislation and an agreement complementing it prior to the actual payment date, the withdrawal period is not specified for the payment.

3 Payments made to companies and entrepreneurs

3.1 Non-wage compensation for work

Non-wage compensation for work is remuneration for work, a task or service not paid as wages. The work is performed based on a commission relationship, i.e., the employee is not in an employment relationship with the payer. Payments for work commissioned from an outsider have traditionally been considered non-wage compensation for work. This means that trustee’s fees, allowances to witnesses, official notary public’s fees and recruitment fees, among others, are therefore usually non-wage compensation for work, unless paid to the company’s own employee. Non-wage compensation for work is taxable income, and tax is withheld from it if the recipient is not registered in the prepayment register.

Only payments made to a worker not registered in the prepayment register must be reported to the Incomes Register (certain exceptions to this are discussed in Section 3.1.2), so tax must be withheld from them. These payments are reported using the income type Non-wage compensation for work (336). A report must be submitted even if the recipient of the non-wage compensation for work is not a natural person – for example, a limited liability company, general partnership or a limited partnership. The Type of additional income earner data: Organisation information is submitted to the Incomes Register if the income earner is a general partnership, limited partnership, limited liability company, cooperative, association, foundation, or some other legal person governed by civil law. If the income earner is a business operator or a self-employed person, such as a self-employed person working under a business name, Organisation data must not be used as a type of additional income earner data when reporting.

The share of value added tax included in the non-wage compensation for work is not reported to the Incomes Register. In other words, the amount paid VAT excluded is reported in the earnings payment report. The share of materials and supplies is not reported either if they have been itemised on the invoice.

As a rule, social insurance contributions are not paid for non-wage compensation for work, with the exceptions described later in Section 3.1.2. By default, this income type is not subject to social insurance contributions. If the non-wage compensation for work is, however, subject to any social insurance contribution, the payer must use the separate Type of insurance information entry to report that the income is subject to the specified insurance contribution. See also Section 3.1.2. A payer subject to the public sector pensions act, and the instructions Reporting data to the Incomes Register: insurance-related data.

3.1.1 Reimbursement of expenses related to non-wage compensation for work

If the remuneration or other payment was paid as a non-wage compensation for work, no tax-exempt reimbursements of expenses can be paid to the recipient (with the exception of an athlete's and competition judge's fees; for more information, see Section 5.1.2, Athlete's fees and 5.11, Reimbursement paid by a non-profit organisation and public sector organisations to volunteers). Reimbursements of expenses related to non-wage compensation for work are added to the amount of income as a total sum with the other remuneration and then reported to the Incomes Register.

Reimbursements of expenses related to work cannot usually be deducted from the non-wage compensation for work before tax is withheld. The only exception is the reimbursement of travel expenses paid to natural persons with no Business ID. Tax does not need to be withheld from this reimbursement of expenses if the grounds and amounts of the travel expenses are in accordance with the tax-exempt allowances for business travel laid down in the annual decision issued by the Tax Administration. These allowances are not tax-exempt either, so they are reported in the total amount of the non-wage compensation for work. Reimbursement of expenses is not reported using the income type Deduction before withholding (419).

Recipients of non-wage compensation for work can request that travel expenses be deducted in their taxation. However, if the recipient of non-wage compensation is a business operator or a self-employed person, they must deduct travel expenses in their accounting.

Non-wage compensation for work paid to a company with a limited tax liability must be reported, if the payer has collected tax at source from the payment. Non-wage compensation for work paid to a natural person with a limited tax liability must always be reported regardless of whether or not tax at source has been collected.

3.1.2 A payer subject to the public sector pensions act

A payer covered by the public sector pensions act (julkisten alojen eläkelaki 81/2016) must pay the employer's earnings-related pension insurance contribution based on a private person's commissioning agreement if the income earner is not insured in accordance with the self-employed persons' pensions act (yrittäjän eläkelaki 1272/2006).

The payer must indicate that the income serves as the basis of a pension insurance contribution by attaching the Insurance information type to the Non-wage compensation for work income type regarding the income subject to the earnings-related pension insurance contribution. In addition, the payer must provide the detailed information required by the earnings-related pension provider, such as information about the earnings-related pension policy, the Business ID and the pension policy number. The data must be reported to the Incomes Register, and it does not matter whether the income earner is registered with the prepayment register or not. When the payer is covered by the public sector pensions act, a Finnish personal identity code must always be provided regarding the income earner. We recommend not reporting the self-employed person’s Business ID to the Incomes Register in these cases. The payer of the non-wage compensation for work collects the employee's earnings-related pension insurance contribution from the non-wage compensation for work. The employee's earnings-related pension insurance contribution is not reported to the Incomes Register at all. This is regardless of the entrepreneur not being registered in the prepayment register, and the non-wage compensation for work and the tax withheld from it being reported to the Incomes Register. The entrepreneur can report the collected earnings-related pension insurance contribution in his or her accounting, or request a deduction in his or her own taxation.

Non-wage compensation for work must also be reported when a payer subject to the public sector pensions act (julkisten alojen eläkelaki 81/2016) pays non-wage compensation for work to a natural person who is registered in the prepayment register but is not insured in accordance with the self-employed persons’ pensions act (yrittäjän eläkelaki 1272/2006). The payer must also specify the earnings-related pension provider code and pension policy number on the report. In the case of a payer covered by the public sector pensions act (julkisten alojen eläkelaki 81/2016) who is under obligation to provide insurance for a non-wage compensation for work, the new type of additional income earner data Self-employed person, no obligation to take out YEL or MYEL insurance, is not used in reporting – even if the person is not under obligation to take out insurance. The additional data is not used when a non-wage compensation for work is paid.

If work paid by a payer covered by the Public Sector Pensions Act is invoiced through an invoicing service, see the additional instructions in Section 3.4.1. 

For more information on insurance information, see the instructions Reporting data to the Incomes Register: insurance-related data.

Earnings payment reports submitted according to the public sector pensions act must include the following data on pension insurance:

• Keva’s company identifier and pension policy number
• suborganisation identifier in accordance with Keva codes
• identifier in accordance with Keva’s occupational titles
• Keva's grounds for registration
• the start date of the employment relationship can be entered on the report as employment relationship information and the payment date can be entered as the end date.
• the reason for the termination of employment is entered according to the reason for termination in Keva codes

If a payer subject to the public sector pensions act pays reimbursement of expenses in connection with non-wage compensation for work to a natural person who is not insured according to the self-employed persons’ pensions act and is not registered in the prepayment register, the reimbursements of expenses must be reported to the Incomes Register. The payer can report the data on a single report by adding the Insurance information type to the income subject to earnings-related pension insurance, according to which the income serves as the basis of the pension insurance contribution. The data is not entered in the share of expense allowances. The share of reimbursement of expenses does not need to be reported if the recipient is registered in the prepayment register.

3.1.3 Dividends/profit surplus based on work effort (non-wage)

Dividend or profit surplus based on work effort can be wages or non-wage compensation for work, depending on whether or not the recipient is in an employment relationship with the payer company. This section discusses a situation where a dividend/profit surplus based on work effort is paid to a person who is not in an employment relationship with the payer company. The payment is non-wage compensation for work. If the payment is considered wages, it is reported to the Incomes Register using the income type Dividends/profit surplus based on work effort (wages) (339) (see Section 3.2.2).

The income type Dividends/profit surplus based on work effort (non-wage) (340) is used to report the dividend or profit surplus paid to an income earner as non-wage compensation for work, the distributive basis of which is the work effort of the recipient of the dividends or of a person within their sphere of interest. The data is also reported to the Incomes Register when the income earner is registered in the prepayment register.

The person on whose work effort the distribution of the dividends or profit surplus is based is reported to the Incomes Register as the recipient of the dividends/profit surplus based on work effort (name and personal identity code). This also applies to a situation where the actual recipient of the dividends or profit surplus is a holding company owned by the taxpayer. When the holding company further distributes the dividends to a shareholder, the holding company submits the annual information return 7812 for the dividends paid during the distribution. The dividends paid are not reported to the Incomes Register.

Tax is withheld from the dividends based on work effort (non-wage), unless the recipient is registered in the prepayment register. If tax has not been withheld from the dividends based on work effort because the recipient is a person other than the one in whose taxation the work effort dividends are deemed income, nothing is reported with the income type Withholding tax (402).

No social insurance contributions are paid from the payment.

3.2 Wages of a YEL/MYEL insured self-employed person

A self-employed person must report to the Incomes Register any wages he or she has withdrawn from his or her company, as well as information on the applicable earnings-related pension insurance.

• Pension insurance for farmers (MYEL) is selected, if the income earner is insured in accordance with the farmers' pensions act (maatalousyrittäjän eläkelaki 1280/2006). Insurance under the farmers' pensions act is the earnings-related pension insurance for farmers, forest owners, fishers and reindeer breeders, and their family members. Scholarship recipients are also covered by earnings-related pension provision under MYEL.
• Pension insurance for the self-employed (YEL) is selected if the income earner is insured in accordance with the self-employed persons' pensions act (yrittäjän eläkelaki 1272/2006). The insurance is mandatory when the self-employed person fulfils the requirements for being covered by the self-employed persons' pensions act. The insurance must be taken out within six months of the beginning of the period of self-employment.

Self-employed persons covered by the self-employed persons' pensions act (YEL) include:

• Entrepreneurs or self-employed persons with a business name, i.e. business name entrepreneurs.
• a partner in a general partnership and a general partner in a limited partnership;
• a shareholder in a limited liability company acting in a leadership position, individually holding over 30% of the company or its votes, and a shareholder who, together with family members, holds over 50% of the company or its votes. The calculation of the ownership share also takes account of indirect ownership via other organisations or conglomerates, if a person alone or together with family members owns over 50% of said other organisation or conglomerate, or has an equivalent dominant influence.
• Self-employed “light entrepreneurs” who invoice their customers through an invoicing service company: a light entrepreneur is covered by the Self-employed Persons’ Pensions Act if the other criteria for insurance are met (including work input).

Additionally, the following information must be reported to the Incomes Register:

• Type of exception to insurance: No obligation to provide insurance (earnings-related pension insurance)
• Type of exception to insurance: No obligation to provide insurance (unemployment insurance)
• Type of exception to insurance: No obligation to provide insurance (accident and occupational disease insurance)

If the information in question is not used to report the wages of the self-employed person, the social insurance contributions may be levied twice.

The self-employed person's earnings-related pension and health insurance contributions are determined based on the confirmed YEL or MYEL income from work. The YEL and MYEL income from work confirmed by the pension provider is the income on which earnings-related pension insurance and health insurance contributions are based, and replaces the wages received by the self-employed person as the basis for the earnings-related pension and health insurance contributions. Income from work data is not reported to the Incomes Register, but the wages received by the self-employed person are reported for taxation purposes. The employer's health insurance contribution is determined based on the wages paid.

If the income earner is a joint owner with the payer, i.e. involved in the company or participates in its operations through invested capital, report Type of additional income earner data: Joint owner with payer. This data is voluntarily submitted complementary data that can be used when the income earner alone owns at least 30% of the company's shares, or if a person working in a leading position in some other organisation possesses a comparable control of the organisation. This information does not need to be entered if the income earner is a shareholder in a listed company.

3.2.1 Partial owner

Partial owners of a company pay a lower employee's unemployment insurance contribution than employees. The concept of a partial owner is defined in the unemployment security act (työttömyysturvalaki 1290/2002). Information on partial ownership is submitted to the Incomes Register by reporting Type of additional income earner data: Partial owner.

A person's status as a partial owner or an employee of the company is affected by the ownership share, votes or other dominant influence of the person and their family members, as well as the person's position in the company or organisation.

If the income earner works for the company or organisation but is not in a leadership position, the income earner is a partial owner when either of the following conditions is fulfilled:

• the income earner holds at least 50% of the share capital, votes or other means of control of the company or organisation in question, or

• the income earner, together with their family members, holds at least 50% of the share capital, votes or other means of control of the company or organisation in question.

If the income earner works in a company or organisation in a leadership position but is not an entrepreneur, the income earner may be a partial owner when either of the following conditions is fulfilled:

• the income earner holds at least 15% of the share capital, votes or other means of control, or
• the income earner together with their family members holds at least 30 % of the share capital, votes or other means of control.

More detailed information about the definition of a partial owner prior to 1 July 2019 is available on the Employment Fund’s website.

Leadership position: managing director, chairman of the board of directors, member of the board or an equivalent position. A deputy board member is in a leadership position only if the member participates in board meetings regularly enough to be deemed to hold, in practice, the same decision-making power as actual board members.

Family member: spouse or common-law spouse and relatives in lineal ascent or lineal descent living in the same household (such as children, parents or grandparents).

Self-employed persons are not obligated to pay unemployment insurance contributions, and they are also not partial owners with respect to an unemployment insurance (see unemployment security act, chapter 1, section 6(1)). A person is deemed a self-employed person or a farmer if he or she fulfils the conditions laid down in the self-employed persons' pensions act (yrittäjän eläkelaki 1272/2006) or the farmers' pensions act (maatalousyrittäjän eläkelaki 1280/2006).

For more information on partial ownership, see the Employment Fund website.

3.2.2 Dividends/profit surplus based on work effort (wages)

This income type is used to report dividends paid to a shareholder as wages, the distribution basis of which is the work effort of the recipient of the dividends or of a person in their sphere of interest.

The person on whose work effort the distribution of the dividends or profit surplus is based is reported to the Incomes Register as the recipient of the dividends/profit surplus based on work effort (name and personal identity code). This also applies to a situation where the actual recipient of the dividends or profit surplus is a holding company owned by the taxpayer. When the holding company further divides the dividends to a shareholder, the holding company submits the annual information return 7812 for the dividends paid during the distribution. The dividends paid are not reported to the Incomes Register.

Tax is withheld from dividends based on work effort and, the employer’s health insurance contribution and other social insurance contributions must also be paid from them.

If tax has not been withheld from the dividends based on work effort because the recipient is a person other than the one in whose taxation the work effort dividends are deemed income, nothing is reported with the income type Withholding tax (402).

If the income earner is a YEL/MYEL-insured self-employed person, the insurance information described in Section 3.2 related to the wages of a YEL/MYEL-insured self-employed person must also be reported to the Incomes Register.

3.2.3 Shareholder’s wage receivables 

The wage receivables of a shareholder in a limited liability company and the reimbursement of expenses of a shareholder in a general partnership or a limited partnership, handled in payroll accounting and invested in the company as a private investment, are reported to the Incomes Register on an earnings payment report. A shareholder's wage receivables are reported using wage income types, and reimbursement of expenses using an income type appropriate for the reimbursement in question. The reporting obligation begins when the wage receivable or reimbursement of expenses is entered into the books as a private investment. The five-calendar-day deadline for reporting is counted from this moment. The payer will report the day on which the payment was entered into the books as the payment date.

If a wage receivable is entered in the company’s accounts as an expense but cannot be paid due to the company’s insolvency, it must be treated as wage debt. At this stage, the wage debt is not to be reported to the Incomes Register. The information must be reported to the Incomes Register when the wages are paid. If the company’s solvency is restored before the wages are paid, the wage debt must be reported to the Incomes Register when the company’s solvency is restored.

3.3 Self-employed person not obligated to take out YEL or MYEL insurance

If an income earner who is a self-employed person is not under obligation to take out insurance, enter Self-employed person, no obligation to take out YEL or MYEL insurance as Type of additional income earner data. This data is submitted of an income earner who meets the requirements laid down in section 3 of the self-employed persons' pensions act (yrittäjän eläkelaki 1272/2006) but who is not under insurance obligation, pursuant to section 4 of the self-employed persons' pensions act. This data is also submitted of an income earner who meets the requirements laid down in section 3 of the farmers' pensions act (maatalousyrittäjän eläkelaki 1280/2006), but is not under insurance obligation pursuant to said act. This situation can occur when, for example, the business is so small in scale that the self-employed person is not under obligation to take out YEL or MYEL insurance, or the self-employed person is younger or older than the age limits laid down in law. The additional income earner information ‘Self-employed person, no obligation to take out YEL or MYEL insurance’ is used on reports submitted regarding wages paid after 1 January 2020. The additional information is not reported if non-wage compensation for work is paid to a self-employed person.

If income is paid to a self-employed person not obligated to take out YEL or MYEL insurance, the following information must also be reported to the Incomes Register:

• Type of exception to insurance: No obligation to provide insurance (earnings-related pension insurance)
• Type of exception to insurance: No obligation to provide insurance (health insurance)
• Type of exception to insurance: No obligation to provide insurance (unemployment insurance)
• Type of exception to insurance: No obligation to provide insurance (accident and occupational disease insurance
  • The aforementioned information can be submitted using information ‘No obligation to provide insurance (earnings-related pension, health, unemployment, or accident and occupational disease insurance)’.

If the information in question is not used to report the wages of the self-employed person, the social insurance contributions may be levied twice.

Section 3.4 includes examples on reporting these kinds of payments.

3.3.1 Voluntary YEL or MYEL insurance of a self-employed person

If a self-employed person has taken out a voluntary YEL or MYEL insurance policy and the requirements of the obligation to take out insurance are not met, the following data is reported on the income earner:

• Earnings-related pension insurance information: Pension insurance for the self-employed (YEL) or Pension insurance for farmers (MYEL).
• Type of additional income earner data: Self-employed person, no obligation to take out YEL or MYEL insurance.
• Types of exception to insurance:
  • Type of exception to insurance: No obligation to provide insurance (earnings-related pension insurance)
  • Type of exception to insurance: No obligation to provide insurance (health insurance)
  • Type of exception to insurance: No obligation to provide insurance (unemployment insurance)
  • Type of exception to insurance: No obligation to provide insurance (accident and occupational disease insurance)
    • The aforementioned information can be submitted using information ‘No obligation to provide insurance (earnings-related pension, health, unemployment, or accident and occupational disease insurance)‘.

3.4 Invoicing service

In recent years, several service providers have been established, so-called invoicing services who are committed to handling the invoicing, tax withholding and insurance contributions of their clients (performers of the work) for a fee. These companies use different names for the service they provide, such as an invoicing service, invoicing channel or remuneration service. In these situations, the individual performing the work is often called a self-employed ‘light entrepreneur’.

However, it should be noted that if an employment relationship under labour law is established between the client and the individual performing the work, it is not possible to avoid obligations under labour law by using an invoicing service. There are also cases where legislation prevents the performance of certain work duties when not in an employment relationship or self-employed. For more information, see the Finnish Tax Administration's guideline Tax issues related to invoicing service companies and their users (in Finnish), Section 10.4 Lainsäädäntö estää laskutuspalvelun käyttämisen (Legislation prevents using an invoicing service).

3.4.1 Reporting compensation for work

In tax assessment practice, the following approach has been adopted for invoicing service companies:

1. The invoicing service company and the individual performing the work agree whether the compensation paid for work is wages or non-wage compensation for work for tax assessment purposes.
2. The individual performing the work carries out the work and invoices it from their customer through the invoicing service company.
3. The party who ordered the work, i.e. the customer, pays the invoicing service company non-wage compensation for work.
4. The invoicing service company forwards the payment made by the customer to the individual who performed the work. For tax assessment purposes, the payment is wages or non-wage compensation for work, depending on what has been agreed.

If it has been agreed that the amount paid by the invoicing service company to the individual who performed the work is wages from the perspective of the Tax Administration, the invoicing service company has the normal employer obligations with respect to the Tax Administration, i.e. the company must withhold taxes from the wages it pays and pay the employer’s health insurance contribution.

If the individual performing the work does not have a Business ID, the invoicing service must use the type of additional income earner data Person with no Business ID using an invoicing service when reporting.

However, from the perspective of earnings-related pension insurance providers, unemployment insurance and accident and occupational disease insurance, it is not an employment relationship. In most cases, insurance providers consider individuals handling their invoicing through an invoicing service company to be self-employed, and the work must be insured according to the Self-employed Persons’ Pensions Act (YEL).

Some invoicing service companies give the performers of the work the option to accrue their wage amount from several invoices, so that the wages are only paid later at a time chosen by the performer of the work. If the performer of the work can choose whether to take wages immediately or accrue them from several invoices, this is a case of disposition of wages. In such a situation, the performer of the work is deemed to have already received the wages at the time that the invoicing service could have paid the wages. For this reason, the invoicing service company must submit the report at the time that the wage could have been withdrawn, even if the wages are paid later in accordance with the wishes of the performer of the work. The invoicing service company will calculate the employer's health insurance contribution based on the wage payments the employer has made over the month, and submit it using the employer’s separate report.

The Supreme Administrative Court has issued decision KHO 2023:42 on invoicing service companies and self-employed light entrepreneurs. According to the Supreme Administrative Court’s decision, the taxable wages of a light entrepreneur who uses an invoicing service include the compensation paid for work from which the fee charged by the invoicing service company and the employer’s health insurance contribution have been deducted. The amount to be reported to the Incomes Register is the amount from which the fee and the employer’s health insurance contribution have been deducted. If the individual is not obliged to take out self-employed person’s pension insurance (YEL), there is no obligation to pay the employer’s health insurance contribution from their wages. In such a case, taxable non-wage compensation for work includes compensation from which the invoicing service company’s fee has been deducted. Read more on the Finnish Tax Administration’s website: The Supreme Administrative Court’s decision changes the tax treatment of light entrepreneurs.

If the person performing the work is not under obligation to take out insurance due to, for example, the small amount of business income or the person's age, the invoicing service company reports Self-employed person, no obligation to take out YEL or MYEL insurance as Type of additional income earner data. The data is reported when paying wages that would be subject to the employer's health insurance contribution in a normal situation. In these situations, the payer is not obligated to pay the employer's health insurance contribution from the income earner's wages, but the Tax Administration will impose a health care contribution of health insurance to the worker, based on the person's income. The payer reports Self-employed person, no obligation to take out YEL or MYEL insurance as the Type of additional income earner data, and also reports that there is no obligation to provide insurance (not even health insurance) with respect to the income earner's income. Because the income earner is a self-employed person, there is no obligation to provide insurance from the income with respect to earnings-related pension, unemployment, or accident and occupational disease insurance. No earnings-related pension insurance information is then specified. If the ‘No obligation to provide insurance’ information is not provided, the social insurance contributions may be levied twice.

There may be an exceptional situation where several parties are obligated to report a single income to the Incomes Register. Such a situation may exist if the performer of the work do not have YEL insurance and the invoicing service company pays wages to them. If the work is commissioned by a party subject to the public sector pensions act that regards the performer of the work as a self-employed person, the payer subject to the public sector pensions act must submit a report to the Incomes Register on the non-wage compensation for work paid to the performer of the work operating through the invoicing service. Correspondingly, the invoicing service company reports the income paid to the performer of the work as wages. In these situations, the payer subject to the Public Sector Pensions Act must use the special income type Earnings from work paid by a JuEL employer and invoiced by the individual performing the work through an invoicing service company (369) when reporting. This income type may only be used by payers subject to the Public Sector Pensions Act. 

If the performer of the work and the invoicing service company have not made an agreement on paying wages for the work , the amount paid to the performer of the work is non-wage compensation for work, see Section 3.1, Non-wage compensation for work. The invoicing service company must report the non-wage compensation for work at the time that the non-wage compensation for work can be withdrawn. If the performer of the work is registered in the prepayment register, the non-wage compensation for work need not be reported to the Incomes Register. For more information, see the Tax Administration's Guidelines Tax issues related to invoicing service companies and their users (in Finnish). The Type of additional income earner data Self-employed person, no obligation to take out YEL or MYEL insurance is not used when paying non-wage compensation for work.

The reporting of services and work performances ordered via various applications and platforms is described in Section 5.15.

3.4.2 Reporting reimbursements of travel expenses

Reimbursements of travel expenses which are decreed to be tax-exempt in the Income Tax Act and paid by the employer are the only tax-exempt reimbursements of expenses. These can be paid either in addition to the agreed wages or as part of the total wages. It is accepted in tax assessment practice that an invoicing service company may also pay tax-exempt travel expenses against a travel expense report if the invoicing service company and the individual performing the work have agreed on payments for the work to be paid as wages. Another requirement is that the individual performing the work has agreed with their customer on the reimbursement of travel expenses. For the invoicing service company to be able to verify what has been agreed between the individual performing the work and their customer, the reimbursement of travel expenses agreed between the individual performing the work and their customer must, in practice, be itemised in the invoice sent to the customer.

If the performer of the work and the customer have agreed, as specified above, that reimbursements of travel expenses will be paid in addition to the invoiced remuneration, the invoicing service company must submit a report to the Incomes Register using the income types for tax-exempt travel expenses: Daily allowance (331), Meal allowance (303) and Kilometre allowance (tax-exempt) (311). This requires that the travel expenses are in accordance with the Tax Administration’s decision on tax-exempt reimbursements of travel expenses. If reimbursements not in compliance with the time and kilometre limits set in the decision of the Tax Administration have been paid, they are wages. For more information, see the guidance Reporting data to the Incomes Register: fringe benefits and reimbursements of expenses, Chapter 2 Reimbursements of expenses, and the Tax Administration’s guidance on reimbursement of travel expenses paid by invoicing service companies in preassessment and income taxation (in Finnish).

Alternatively, the individual performing the work and the customer may agree on reimbursements of tax-exempt travel expenses as part of the agreed total wages (Decision 2022:72 of the Supreme Administrative Court). Also in such cases, the reimbursement of travel expenses is tax-exempt if the grounds and amounts of the reimbursement are in accordance with the decision of the Tax Administration on expenses.

3.4.3 Reporting expenses directly incurred in the performance of work

In addition to travel expenses, an individual performing work may incur other expenses directly related to the performance of the work, as provided for in section 15 of the Preassessment Act (Ennakkoperintälaki 1118/1996). Expenses directly incurred in the performance of work include but are not limited to expenses from the tools, materials and supplies of the individual performing the work, as well as travel and representation expenses.

The individual and the customer may agree that these expenses will be reimbursed either in addition to the agreed compensation for the work or as part of the agreed total wages for the work. The invoicing service company can only treat such expenses as expenses under section 15 of the Preassessment Act if both of these criteria are met:

• The invoicing service company pays the agreed sum to the individual performing the work as wages
• The individual performing the work and the customer have agreed on the reimbursement of the expenses

Thus, the invoicing service company and the individual performing the work cannot decide on the payment of the expenses or their treatment in preassessment and income taxation without making an agreement with the customer.

4 Royalties and copyright royalties

Royalty is compensation laid down in the tax prepayment act (ennakkoperintälaki 1118/1996), paid for the use, right of use or sale of the right of use of a copyright, photograph-related right or an industrial property right such as a patent or trademark.

A copyright royalty is compensation paid for the assignment of a copyright or the right to use a copyright to a written or artistic work.

4.1. Income types for royalties and copyright royalties 

Royalties and copyright royalties must be reported on the earnings payment report using the following five income types, depending on the situation: Compensation for use, earned income (313), Compensation for use, capital income (314), Compensation for employee invention (326), Copyright royalties, earned income (366) and Royalty paid to a non-resident taxpayer (362).

A royalty or copyright royalty can be taxable earned income or capital income.

• If a copyright has been transferred as an inheritance or through a will, or it has been bought, the compensation received from its use is taxable capital income. A royalty that is capital income is reported using the income type Compensation for use, capital income (314). Tax is withheld at the capital income rate. Any value added tax or reimbursement of expenses are not deducted from the amount of compensations for use reported.
• In other cases, the royalty is taxable earned income. Tax is withheld in the same manner as from non-wage compensation for work. Tax is not withheld if the payment recipient is registered in the prepayment register. A royalty that is earned income is reported using a different income type based on the situation.

The income type Compensation for use, earned income (313) is used when paying compensation for the use, right of use or sale of an industrial property right such as a patent, design, business name or trademark. This income type is also used to report any royalties paid to a partnership, corporation or benefit under joint administration whether it be copyright royalties or other compensation for use.

The income type Copyright royalties, earned income (366) is used to report other copyright royalties that are earned income. These include royalties paid to a natural person for the assignment of a copyright or the right to use a copyright to a written or artistic work. Copyright royalties can be paid for rights to a literary work, piece of art or photograph, for example. Royalties can also be paid for the assignment of a right related to a copyright or for the use of an object protected by related rights. A copyright can be assigned in full or in part based on an agreement. This income type is only used to report copyright royalties paid to natural persons with unlimited tax liability. Please note that copyright royalties paid to a natural person must always be reported; for more information, see Section 4.2.

Royalties paid to a non-resident taxpayer are reported using Royalty paid to a non-resident taxpayer (362) income type. If the royalty, i.e. compensation for use, was paid to a natural person who is a non-resident taxpayer, the data must be reported to the Incomes Register even if the income earner is registered in the prepayment register and no tax at source was collected from the payment. This income type is used to report both copyright royalties and other royalties. When the payer reports a royalty paid to a non-resident taxpayer using the income type 362, no other payments are to be included in the same report. 

Compensation paid for an employee invention is reported using the income type Compensation for employee invention (326). If the duties of the employee who receives the compensation do not include inventions, the compensation for employee invention will be handled as royalty, i.e., no social insurance contributions are to be paid from the compensation. In such a case, tax must be withheld from the compensation for the employee invention, unless the recipient of the compensation is registered in the prepayment register.

If the income earner’s duties agreed in the employment contract include inventions, the compensation will be treated as wages, i.e., in addition to tax being withheld, social insurance contributions must be paid from the compensation. By default, the Compensation for employee invention income type is not subject to social insurance contributions. If a payment reported using this income type differs from the default, the payer must report it by specifying insurance information in connection with the income type.

4.2 Royalties and copyright royalties to be reported

The reporting obligation of a royalty or copyright royalty depends on whether tax has been withheld and whether the income earner is registered in the prepayment register.

• Whenever a royalty or copyright royalty is paid to a natural person, it must be reported. The royalty must be reported even if tax/tax at source has not been withheld or even if the natural person is registered in the prepayment register.
• When a royalty or copyright royalty is paid to a general partnership, a limited partnership, a limited liability company, a co-operative or a benefit under joint administration, it must be reported if tax has been withheld or if the recipient is not registered in the prepayment register. The compensation must be reported as a royalty whether it be a copyright royalty or another royalty. The information must be reported to the Incomes Register using the income type Compensation for use, earned income (313) or Compensation for use, capital income (314). The Type of additional income earner data: Organisation must also be reported.

No social insurance contributions are paid on royalties. Social insurance contributions are not usually paid on copyright royalties either. However, if such compensation is based on a copyright established in an employment relationship and the compensation is subject to a social insurance contribution, the payer must indicate this by providing insurance information in connection with the income type. Changing the insurance information is possible in the case of income types Compensation for employee invention (326) and Copyright royalties, earned income (366).

4.3. Reimbursement of expenses related to royalties and copyright royalties 

The reimbursement of expenses related to compensations for use are included in the amounts of the income types Compensation for use, earned income (313) and Compensation for use, capital income (314), and they are not separately reported. This is because reimbursement of expenses paid by parties other than the employer is not tax-exempt.

Recipients of royalties and copyright royalties can request that travel expenses be deducted in their taxation. However, business operators must deduct travel expenses in their accounting.

Reimbursement of expenses related to work cannot usually be deducted from compensation for use before tax is withheld. The only exception to this is the reimbursement of travel expenses paid to natural persons. Tax does not need to be withheld from this reimbursement if the grounds and amounts of the travel expenses are in accordance with the tax-exempt allowances for business travel laid down in the annual decision issued by the Tax Administration. These allowances are not tax-exempt either, so they are reported in the total amount of the compensation for use.

5 Other payments based on separate tasks

5.1 Athlete

5.1.1 Athlete's wages

Wages paid to an athlete mean wages paid for sports activities based on an athlete contract. An athlete contract is equivalent to an employment contract. The athlete's wages are typically wages paid to a member of a sports team based on a player contract. The amount of the wages does not include wages transferred to an athletes' special fund.

The athlete's statutory insurance premium is based on the athlete's wages in accordance with the act on athletes' accident and pension insurance (laki urheilijan tapaturma- ja eläketurvasta 276/2009). The act lays down provisions on the athlete's minimum level of earnings. Once this minimum level has been reached, the sports employer must take out accident and pension insurance for the athlete. An athlete's pension contribution is not paid for the same pension insurance as other wage earners. However, athlete's pension contributions collected from the athlete are also reported to the Incomes Register using the income type Employee's earnings-related pension insurance contribution (413), so that the payment data is relayed to taxation.

The income is subject to employer's health insurance contribution.

In addition, the following information must be reported to the Incomes Register:

• Type of exception to insurance: No obligation to provide insurance (earnings-related pension insurance).
• Type of exception to insurance: No obligation to provide insurance (unemployment insurance).

Type of additional income earner data: Athlete is reported for the wages paid to an athlete. In addition, the Athletes (34210) code value must be reported as the occupational class in accordance with Statistics Finland’s classification of occupations (TK10). Otherwise, the wages are reported using wage income types, such as the income types Total wages (101) or Time-rate pay (201). The wage income types are used to report only the wages directly paid to the athlete. If the payment is made into an athletes' special fund, see Section 5.1.3, Wages transferred to athletes' special fund.

In certain situations laid down in the law, the payer can deduct such costs from the athlete's wages before withholding that were paid by the athlete himself or herself and that were directly incurred from sports. Such a deduction made by the payer is reported using the Deduction before withholding (419) income type. The share of the deduction must also be included in the wages reported using a wage income type. The maximum amount of deduction that can be reported is the amount of the payment even if the expenses incurred by the athlete are greater than the wages.

If the payment is made from athletes' special fund, see Section 5.1.4, Wages paid from athletes' special fund.

5.1.2 Athlete's fees

Fees paid to athletes include competition prizes, fees based on advertising and sponsorship agreements, participation fees and other fees based on their status as an athlete, where the recipient is not in an employment relationship with the payer. As a rule, grants and scholarships received by an athlete are taxable earned income. They are taxed as the athlete’s fees regardless of whether the athlete is an amateur or a professional. An exception to this rule are top-ranking athletes designated by the Ministry of Education and Culture, who may receive tax-exempt coaching and training grants from State funds.

Competition prizes received for a sporting performance are athlete's fees regardless of whether the athlete is an amateur or a professional. Competition prizes can be awarded on the basis of a sporting performance either directly or indirectly. However, a competition prize is usually not reported if it cannot be considered as wages, non-wage compensation for work or royalty, and if the total value during a calendar year is at most EUR 100 (read more about reporting competition prizes in Section 5.14).

Athlete's fees are typically paid to athletes involved in individual sports. When reporting these fees to the Incomes Register, specify Type of additional income earner data: Athlete. Athlete's fees are reported using the income type Non-wage compensation for work (336). Tax is usually withheld from the athlete’s fee, and the fee is reported to the Incomes Register.

Fees paid to an athlete’s company when the athlete pursues their sporting activities solely in the name of the company are an exception to this rule. In such a case, the fee is income from business operations. If the company is registered in the prepayment register, no tax is withheld from the fee and it is not reported to the Incomes Register.

Reimbursements of travel expenses paid to a recipient of athlete's fees have not been decreed to be tax-exempt (however, see Section 5.11, Reimbursement paid by a non-profit organisation). In taxation practice, however, it has been established that reimbursements of travel expenses paid to recipients of athlete's fees are accepted as tax-exempt on the same conditions as those of wage earners. If a kilometre allowance is paid to an athlete, the Type of additional income earner data: Athlete must be specified. The amount of tax-exempt kilometre allowance is reported using the income type Kilometre allowance (tax-exempt) (311). Also specify the Number of kilometres. For more information, see Sections 2.1.1, Kilometre allowance (tax-exempt), 2.1.3, Daily allowance, and 2.1.4, Meal allowance, of the Guidelines Reporting data to the Incomes Register: fringe benefits and reimbursements of expenses.

In certain situations laid down in the law, the payer can also deduct such costs from the athlete's fee before withholding that were paid by the athlete himself or herself and that were directly incurred from sports. Such a deduction made by the payer is reported using the Deduction before withholding (419) income type. The share of the deductions must also be included in the fee reported using the Non-wage compensation for work income type. The maximum amount of deduction that can be reported is the amount of the payment even if the expenses incurred by the athlete are greater than the fee.

If an athlete's fee is paid from an athletes' special fund, this is also reported using the income type Non-wage compensation for work (336) and by specifying Type of additional income earner data: Athlete. If an athlete withdraws funds from a training fund without receipts, the training fund will report the payment using the income type Non-wage compensation for work (336) and by specifying Type of additional income earner data: Athlete.

International situations are described in the guideline Reporting data to the Incomes Register: international situations.

5.1.3 Wages transferred to athletes' special fund

An athlete can transfer his or her income from sports to a national training fund or athletes' special fund linked to a foundation appointed by the Ministry of Finance. The transfer to the athletes' special fund is intended to secure the athlete's post-career livelihood.

Income from sports can comprise the athlete's wages or fees. The income type Wages transferred to athletes' special fund (350) is used to report to the Incomes Register only the wages transferred to the fund. Additionally, specify Type of additional income earner data: Athlete. If an athlete's fee is transferred to the athletes' special fund, this is not reported to the Incomes Register.

The employer's health insurance contribution is paid from the athlete's wages transferred to the fund. The athlete does not pay tax for the income until the income is paid out from the fund. Tax is not withheld from the funded wages until the wages are paid to the athlete from the fund.

The funding of income from sports does not affect the payment of the insurance premiums specified in the act on athletes' accident and pension insurance.

5.1.4 Withdrawals from athletes' special fund

The fund withholds tax from the athlete's wages and fees withdrawn from the athletes' special fund when the athlete makes a withdrawal.

Items withdrawn from the fund must be itemised into wages and fees, because they are subject to different deductions in taxation. The income type Wages paid from athletes' special fund (351) is only used to report to the Incomes Register the wages paid from the fund. An athlete's fee paid from the fund is reported using the income type Non-wage compensation for work (336). All payments must also include Type of additional income earner data: Athlete.

Tax is withheld from the funded wages and the employee's health insurance daily allowance contribution is paid when wages are paid to the athlete from the fund. The employer's health insurance contribution is paid when the income is transferred to the athletes' special fund.

5.1.5 Training fund

Athlete's fees can be transferred to a training fund. During a tax year, tax-exempt funds can be drawn from the fund against a receipt to cover sports and training expenses. Such withdrawals are not reported to the Incomes Register.

The part of funds in a training fund during a certain tax year not used during the same tax year is deemed to be the recipient's income for the tax year. The part exceeding EUR 20,000 of income is taxable (act on income tax (Tuloverolaki 1535/1992, section 116 b). This taxable share is reported to the Incomes Register using the income type Non-wage compensation for work (336), also specifying the Type of additional income earner data: Athlete. Similarly, the taxable payments drawn during the tax year are also reported.

According to a decision by the Tax Administration, the training fund must report the tax-exempt training costs paid to athletes during the year. These mean tax-exempt reimbursements of travel expenses paid from the training fund against a travel invoice, reported to the Incomes Register in the manner described in Section 5.1.2, Athlete's fees.

Funds can also be transferred from the training fund to the athletes' special fund. These transfers are not reported to the Incomes Register. The reporting of an athlete's fee drawn from the athletes' special fund is described in Section 5.1.4, Withdrawals from athletes' special fund.

An athlete can draw funds from the training fund based on the wages he or she pays to a trainer or on a non-wage compensation for work (invoice). The training fund does not report these payments to the Incomes Register; instead, the athlete submits the report, because he or she acts as the trainer's employer (wages) or service recipient (non-wage compensation for work).

5.2 Performing artist

Performing artists include stage and film actors, radio and television performers, and musicians.

When payments made to a performing artist for work in this role are reported to the Incomes Register, also specify Type of additional income earner data: Performing artist.

If the payment of a performing artist's remuneration is based on an employment relationship, and the remuneration is related to duties agreed in the employment contract, such remuneration is treated as wages, i.e., tax is withheld and social insurance contributions are paid from it. The income is reported using wage income types, for example Total wages (101) or Contract pay (227).

If a performing artist performs based on a commission relationship, the remuneration paid to the artist is reported using the income type Non-wage compensation for work (336). Tax must be withheld from such compensation, if the recipient is not registered in the prepayment register. No social insurance contributions are paid from the income unless the payer is a public sector payer and the income earner is not insured in accordance with the self-employed persons' pensions act. For more information, see Section 3.1, Non-wage compensation for work. Non-wage compensation for work, paid to a performing artist, is not reported to the Incomes Register if the income earner is registered in the prepayment register.

5.3 Compensation for the Managing Director and for membership of a governing body

Compensation paid for work performed in an employment relationship is deemed wages. Compensation for membership of a governing body and compensation for the Managing Director are regarded as wages in accordance with the tax prepayment act (Ennakkoperintälaki 1118/1996), even if an employment relationship is not established. In addition to monetary wages, the payer can grant fringe benefits deemed wages to the Managing Director and a member of a governing body (such as company car, meal and telephone benefit) and pay tax-exempt reimbursement of travel expenses.

Social insurance contributions must be paid from the Managing Director's compensation. The compensation is reported to the Incomes Register either using the income type Total wages (101) (reporting method 1) or one of the income types of reporting method 2, for example the income type Time-rate pay (201).

Compensation paid for membership of a governing body is reported to the Incomes Register using the income type Compensation for membership of a governing body (308). The default for this income type is that the compensation for membership of a governing body is not subject to social insurance contributions.

If the employee's earnings-related pension insurance contribution does not need to be paid from the compensation under the employment pension act applicable to the member of a governing body, neither are other social insurance contributions paid from the compensation. If the recipient of the compensation is in an employment relationship with the payer, the compensation paid is subject to social insurance contributions. In such a situation, the payer reports the insurance information using the separate Insurance information type entry, specifying Subject to social insurance contributions: Yes. If voluntary earnings-related pension insurance has been taken out for a member of a governing body, no other social insurance contributions need to be paid. In such a case, the Insurance information type entry is reported as Subject to earnings-related pension insurance contribution: Yes.

If compensation for membership of a governing body is paid by a public sector organisation, the earnings-related pension insurance contribution and the employer's health insurance contribution are paid. In such a situation, the payer reports the insurance information using the separate Insurance information type entry, specifying Subject to health insurance contribution: Yes and Subject to earnings-related pension insurance contribution: Yes.

5.4 Family day care provider's wages and reimbursement of expenses

The wages paid to a family day care provider are reported to the Incomes Register in the same way as any other wages. The income type Time-rate pay (201) can be used, for example, if the wages are paid based on time used (such as a monthly salary). The entire amount of the monetary wages is reported as the wages, and no deductions are made from it before tax withholding.

The income type Reimbursement of family day care provider's expenses (329) is used to report the taxable reimbursement to the Incomes Register of expenses paid to a family day care provider in an employment relationship to cover the direct expenses incurred by childminding. The reimbursement of expenses paid to a family arranging three-family day care is also reported using the income type Reimbursement of family day care provider's expenses (329). Reimbursed expenses include, for example, expenses incurred from meals. Each year, the Association of Finnish Local and Regional Authorities issues a recommendation on the reimbursement of family day care providers' expenses to municipalities.

Tax is not withheld from the reimbursement of expenses paid to a family day care provider, and no social insurance contributions are paid either.

5.5 Private caretaker's fee and reimbursement of expenses

A wellbeing services county uses the income type Private caretaker's fee (328) to report to the Incomes Register the fee paid to a private caretaker for arranging treatment, upbringing or other around-the-clock care in the caretaker's private home or in the home of the person cared for.

The private caretaker's fee is based on a commissioning contract between the wellbeing services county and the private caretaker. An earnings-related pension insurance contribution is paid from the private caretaker's fee, but no other social insurance contributions are paid. However, the wellbeing services county must insure the carer for accidents in such work. Provisions on a private caretaker's accident insurance are laid down in the separate legislation on private caretakers.

If the private caretaker is not registered in the prepayment register, the wellbeing services county must report the private caretaker's fee to the Incomes Register using the Private caretaker's fee (328) income type. In addition, the wellbeing services county must report the employee's earnings-related pension insurance contributions collected from the private caretaker using the Employee's earnings-related pension insurance contribution (413) income type. The fee is also reported when the income earner is a natural person who is registered with the prepayment register, and the payer is an employer covered by the public sector pensions act (julkisten alojen eläkelaki 81/2016), but the income earner does not have insurance under the self-employed persons' pensions act (yrittäjän eläkelaki 1272/2006). In these situations, the payer does not report the collected employee's earnings-related pension insurance contribution to the Incomes Register, but enters the earnings-related pension provider code and the pension policy number on the report. If the private caretaker is registered in the prepayment register and has insurance under the self-employed persons’ pensions act, the fee is not reported to the Incomes Register.

The private caretaker's fee is handled as non-wage compensation for work from which tax is withheld, if the recipient of the fee is not registered in the prepayment register.

The income type Reimbursement of private caretaker's expenses (327) is used to report to the Incomes Register the taxable reimbursement of expenses paid to a private caretaker to cover the expenses incurred by the care and upkeep of foster home care patients. Reimbursement of a private caretaker's expenses is based on a commissioning contract between the wellbeing services county and the private caretaker. Such reimbursement covers items such as meal, accommodation and health care expenses, as well as start-up expenses. While tax is withheld from the reimbursement of expenses, no social insurance contributions are paid.

Reimbursements of travel expenses based on a travel invoice paid in connection with the private caretaker’s fee are not tax-exempt. However, the payer does not need to withhold tax from the reimbursement of travel expenses, if the grounds and amounts of the reimbursements are in accordance with the tax-exempt allowances for business travel laid down in the annual decision issued by the Tax Administration. If the private caretaker is not registered in the prepayment register and is not insured in accordance with the self-employed persons’ pensions act, the wellbeing services county must report such reimbursements of travel expenses to the Incomes Register that the wellbeing services county pays separately based on a travel invoice in connection with the private caretaker’s fee. In this case, the reimbursement of travel expenses and the caretaker’s fee can be reported on the same report, but they must be entered as separate income types. Both are reported using the income type ‘Private caretaker’s fee’ (328)’, but the Type of insurance data must be entered for the amount of reimbursements of expenses if the amount is not included in one of the default social insurance contributions. The share of reimbursement of expenses does not need to be reported if the recipient is registered in the prepayment register.

5.6 Kinship carer's fee

The income type Kinship carer's fee (319) is used to report to the Incomes Register a fee paid by the wellbeing services county to a kinship carer for arranging treatment and care for an elderly, disabled or ill person at home. The kinship carer's fee is based on a commissioning contract between the wellbeing services county and the kinship carer, and its amount is determined by how binding and demanding the care is.

The kinship carer's fee is handled as non-wage compensation for work from which tax is withheld if the recipient of the fee is not registered in the prepayment register. The kinship carer's fee must be reported to the Incomes Register if the income earner is not registered with the prepayment register. The employee's earnings-related pension insurance contributions collected from the kinship carer are then reported using income type Employee's earnings-related pension insurance contribution (413).

The fee is also reported when the income earner is registered with the prepayment register but does not have insurance under the self-employed persons' or farmers' pensions acts. In these situations, the wellbeing services county does not report the collected employee's earnings-related pension insurance contribution to the Incomes Register, but the earnings-related pension provider's company ID and pension policy number must be entered into the report.

An earnings-related pension insurance contribution is paid from the kinship carer's fee, but other social insurance contributions are not. However, the wellbeing services county must insure the carer for accidents during such work, under the special law applied.

5.7 Lay helper

Lay helper activities can be voluntary work for which a fee, reimbursement of expenses, or both can be paid. The purpose of the lay helper is to support the growth and development of a child. The lay helper can also provide support to the entire family. A fee paid to a lay helper for voluntary work is reported to the Incomes Register using the income type Non-wage compensation for work (336). The lay helper’s fee must be reported to the Incomes Register if the income earner is not registered in the prepayment register. If the payer is subject to the public sector pensions act, earnings-related pension insurance contributions charged from the fee are reported using the income type Employee's earnings-related pension insurance contribution (413). The earnings-related pension provider code and the pension policy number must be entered on the report. A fee paid for lay helper activities is also reported when the income earner is registered in the prepayment register but does not have insurance under the self-employed persons' act and the payer is subject to the public sector pensions act. In this case, the payer does not report the collected employee's earnings-related pension insurance contribution to the Incomes Register, but enters the pension provider code and the pension policy number on the report. For the reimbursement of expenses related to the fee, see Section 3.1.1, Reimbursement of expenses related to non-wage compensation for work.

In support family activities, the supported person participates in normal life in the support family and stays nights with the support family during weekends of holidays, for example. The support family incurs expenses from these activities that are usually reimbursed for the support family. Typically, the support family is paid a fee and reimbursement of costs, and possibly travel expenses separately against a travel invoice. The fee paid to the support family and separately paid reimbursement of travel expenses are reported using the income type Private caretaker’s fee (328). The reimbursement of costs paid to the support family is reported using the income type Reimbursement of private caretaker’s expenses (327). For more information, see the Tax Administration’s statement Tukihenkilö- ja tukiperhetoiminta verotuksessa.

5.8 Elected official fee

The Elected official fee (403) income type is used to report to the Incomes Register fees that collected from certain elected officials’ meeting fees and paid to political parties. The elected official fee applies to individuals who act as an elected official in a municipality, joint municipal authority, wellbeing services county, or joint authority for health and wellbeing. Only these parties can report the elected official fee.

The remuneration paid to a person in a position of trust is reported using the Meeting fee (210), Compensation for acting in position of trust (215) or Total wages (101) income types, depending on the grounds of the payment.

If the income earner acting in a position of trust has paid the elected official fee directly to a political party, the fee is not reported to the Incomes Register. The political party reports the fee straight to the Tax Administration.

The elected official fee is not reported if it is associated with a position of trust other than one in a municipality, joint municipal authority, wellbeing services county, or joint authority for health and wellbeing, such as a membership of a board of directors of a limited liability company or another civil law corporation.

5.9 Reimbursement of costs, paid to conciliator

The income type Reimbursement of costs, paid to conciliator (335) is used to report to the Incomes Register a taxable reimbursement of costs paid to a voluntary conciliator to cover the costs incurred from the conciliation process. Conciliator means a conciliator as defined by the Act on Conciliation in Criminal and Certain Civil Cases.

No tax is withheld or social insurance contributions are paid from the reimbursement of costs.

5.10 Allowance to witness

An allowance to witness is paid for appearing in court as a witness. The allowance is a non-wage compensation for work, unless an agreement has been made to pay it as wages. Tax is withheld from such compensation if the recipient is not registered in the prepayment register. No other social insurance contributions are paid. The allowance to witness is reported to the Incomes Register using the income type Non-wage compensation for work (336); for more information, see Section 3.1, Non-wage compensation for work.

The reimbursements of expenses paid in connection with non-wage compensations for work are taxable. No tax is withheld or social insurance contributions are paid from these compensations. The reporting of the compensations to the Incomes Register is described in Section 3.1.1, Reimbursements of expenses related to non-wage compensation for work. Reimbursements for the costs of taking evidence, paid from State funds, are tax-exempt. They are not reported to the Incomes Register.

If an allowance to witness is paid as wages, it is reported to the Incomes Register using, for example, the income type Total wages (101).

5.11 Reimbursement paid by a non-profit organisation and public sector organisation to volunteers

Non-profit organisations include labour market organisations, youth associations, sports clubs, and organisations supporting science and arts. For more information on the definition of a non-profit organisation, see the Tax guide for non-profit organisations (in Finnish).

A non-profit organisation can pay certain compensations to a person who volunteers for unpaid work without an employment relationship. The organisation can pay a tax-exempt kilometre allowance equivalent to commuting for the use of a car that is owned by the person or is in his or her possession, and a domestic full or partial daily allowance or an international daily allowance. However, a meal allowance is not tax-exempt. For the reimbursement of travel expenses to be tax-exempt, the requirement is that the trip was made for the benefit of the organisation at its commission and it was properly agreed in advance. For example, an instructor's trips on training locations, representative missions to congresses, trips to pick up goods for a sale and an athlete's competition and training trips can entitle a person to a tax-exempt reimbursement if they are not paid compensation for work. The reimbursed trip can begin from the recipient's home. Membership of the organisation is not a requirement for payment.

As of 2019, it has also been possible for public sector organisations to pay tax-exempt reimbursements for travel expenses to volunteers. Public sector organisations include the state, municipalities and parishes. The volunteer work must be voluntary and free of remuneration. The work performed by volunteers must directly benefit the appropriate non-profit or social activities of the organisation, and the volunteers may not perform work against wages or any other compensation.

There are limits to tax-exempt reimbursements: in one calendar year, one person may receive a tax-exempt daily allowance for no more than twenty days and a tax-exempt kilometre allowance of no more than EUR 3,000. These limitations do not apply to reimbursements of accommodation expenses or travelling on public transport. The grounds for paying the daily allowance and the kilometre allowance are determined according to the annual decision of the Tax Administration on the tax-exempt reimbursements of travel expenses.

Tax-exempt reimbursements of travel expenses can be paid to recipients of an athlete's or competition judge's fees based on the above-mentioned grounds and limitations, even if they also receive a separate fee as a non-wage compensation for work. The competition or event must be related to the activities of the non-profit organisation.

The payer only keeps track of the amounts it has paid. It cannot know the reimbursements possibly paid by other non-profit organisations. If a non-profit organisation or a public sector organisation pays more reimbursements of travel expenses than decreed in the income tax act (tuloverolaki 1535/1992) or on grounds more lenient than those subject to the decision of the Tax Administration, the excess part is reported as non-wage compensation for work. However, no tax is withheld from this amount if the recipient is a natural person.

Social insurance contributions are not paid for tax-exempt or taxable reimbursements.

5.11.1 Reporting expenses and fees paid to volunteers

The amount of tax-exempt kilometre allowances paid by a non-profit organisation or public sector organisation is reported to the Incomes Register using the income type Kilometre allowance paid by non-profit organisation (357). Kilometre allowances paid to competition judges and referees can also be reported using this income type up to the tax-exempt limit. The number of kilometres is not reported. If the volunteer worker made the trip on public transport, the reimbursement paid is not reported to the Incomes Register. However, if the volunteer worker made the trip in a vehicle s/he owns or has in his/her possession, but is reimbursed for the travel in an amount lower than actual expenses – for example, as based on the price of a public transport ticket – the payment must be reported to the Incomes Register using the income type Kilometre allowance paid by non-profit organisation (357).

The amount of tax-exempt daily allowances paid by a non-profit organisation or public sector organisation is reported to the Incomes Register using the income type Daily allowance paid by non-profit organisation (358). Daily allowances paid to competition judges and referees can also be reported using this income type up to the tax-exempt limit.

The taxable amount exceeding the tax-exempt kilometre allowance or daily allowance paid by a non-profit organisation or public sector organisation is reported to the Incomes Register as non-wage compensation for work using the income type Non-wage compensation for work (336).

Telephone expenses and other similar taxable reimbursements of expenses paid by a non-profit organisation or public sector organisation to volunteers are reported using the income type Other taxable income (316) and the tax withheld is reported using the income type Withholding tax (402). Income earners can request that expenses be deducted in their taxation.

Training wear, other similar equipment and benefits paid by a non-profit organisation to its members are reported using the income type Other taxable income (316).

Additionally, a non-profit organisation or public sector organisation can pay reimbursements for travel expenses to volunteers against a receipt from a transport operator. These reimbursements are not reported to the Incomes Register.

Meeting fees paid by a non-profit organisation to its members are reported to the Incomes Register using the Meeting fee (210) or Total wages (101) income type.

If the income type Total wages (101) is used to report the meeting fee, whether the recipient is in an employment relationship and whether the meeting fee is subject to social insurance contributions must be taken into account. If the recipient is not in an employment relationship and the meeting fee is thus not subject to social insurance contributions, Type of insurance must be used for income type 101 to report that the fee is not subject to social insurance contributions. By default, the income type Meeting fee (210) is not subject to social insurance contributions.

If a recipient of a kilometre allowance or a daily allowance is in an employment relationship with a non-profit organisation, or is otherwise paid wages, e.g. meeting fees or other taxable remuneration by the organisation, the kilometre allowance and daily allowance are reported in connection with the payments in question according to the relevant instructions (Reporting data to the Incomes Register: fringe benefits and reimbursements of expenses, Section 2.1, Tax-exempt reimbursement of travel expenses paid to an employee).

For the reimbursement of travel expenses and other expenses, like telephone expenses, paid by a non-profit organisation, see the Tax Administration's Guidelines Prepayment questions for the volunteering of non-profit organisations and public sector organisations (in Finnish).

5.12 Lump sum payment made by a registered association

Due to the change that entered into force at the beginning of 2020, a registered association can report lump sum payments of no more than EUR 200 to the Incomes Register monthly, no later than on the fifth day of the following calendar month. The lump sum can include, for example, wages, non-wage compensations for work or reimbursements of expenses. All various items such as fees and reimbursements of expenses paid at the same time to the income earner are included in the amount of the lump sum payment.

A lump sum payment means a random individual income item that will be paid only once according to the information available at the time of payment. Income can be a lump sum payment even if it is paid again later, if there was no information on the new payment at the time of payment based on an agreement, commitment or decision. If a payment is made at regular intervals, it is not a lump sum payment, even if the payments are made infrequently.

Although the reporting deadline has been extended, the data on a lump sum payment must be reported to the Incomes Register separately for each payment date. Thus, if two payments have been made on different days of the same month, separate reports must be submitted to the Incomes Register for both payments.

A registered association means an association entered in the register of associations. Unregistered associations or foundations, for example, must continue to report payments to the Incomes Register no later than on the fifth calendar day from the payment date.

5.13 Voluntary perquisite

Voluntary perquisites include perquisites paid to waiters or restaurant doormen (tip, extra) by their customers.

If the perquisite is based on work performed in an employment relationship, the employer reports the perquisite to the Incomes Register using the income type Total wages (101) or, for example, the income type Other compensation (216). The employer does not need to withhold tax from the income, because the income is subject to pre-assessment. However, the employer must pay the employer's social insurance contributions.

If the recipient of the perquisite is not in an employment relationship and is not registered in the prepayment register, the service recipient reports the voluntary perquisites to the Incomes Register using the income type Non-wage compensation for work (336) and the amount of tax withheld using the income type Withholding (402). A payment made to someone registered in the prepayment register is not reported to the Incomes Register.

5.14 Competition prizes and other taxable earned income

The obligation to report a competition prize to the Incomes Register depends on the value of the prize and the type of income the prize is deemed to be. A competition prize does not need to be reported to the Incomes Register if the recipient of the prize is not in an employment relationship with the giver of the prize, and the value of the prize is no more than EUR 100. This limit applies to both monetary prizes and prize objects. The value of competition prizes awarded as goods is estimated according to their fair value. The value of the prize is the amount that could be received for the goods if they were sold immediately.

If an employer gives a prize to its employee and the prize is related to an employment relationship, it is deemed to be wages and must always be reported to the Incomes Register. The prize is reported using, for example, income type Other compensation (216) if it was awarded as money, or income type Other fringe benefit (317) if it was a non-monetary prize.

If the recipient of a competition prize is not in an employment relationship with the giver of the prize but the value of the prize exceeds EUR 100, it is reported to the Incomes Register using income type Other taxable income deemed earned income (316). If this kind of a prize is a non-wage compensation for work or a compensation for use, use income types Non-wage compensation for work (336) and Compensation for use, earned income (313).

If the same person wins several prizes in one competition, the reporting obligation is determined as based on the total amount of the prizes.

When the prize is awarded to a team, the reporting obligation is determined as based on the player or member specific value of the prize.

Even if the competition organiser is not obligated to report a prize to the Incomes Register, the prize can still be taxable income for its recipient. A competition prize is taxable income for its recipient if either of the following conditions is fulfilled.

• the competition prize is deemed to be wages, non-wage compensation for work or compensation for use referred to in the tax prepayment act (ennakkoperintälaki 1118/1996), or
• the same person wins several prizes during the same year with a total value exceeding EUR 100.

If the value of competition prizes exceeds EUR 100 during the tax year, the prizes are taxable income for their recipient in their entirety. Thus, a competition prize worth EUR 500, for example, is taxable income for its recipient in its full amount, not just the part exceeding EUR 100. In such a situation, the income earner him/herself must report the income for his/her taxation, as well as to other data users needing the data.

Reporting taxable competition prizes applies to competitions where a separate competition organiser gives the prize to the winner. This means that prizes given in competitions between friends do not need to be reported.

In its own instructions, the Tax Administration has stated that symbolic objects with insignificant trade value such as trophies, medals, pennants, bags of candy, coffee packets, or minor prize objects such as caps given with a promotional purpose are not deemed to be taxable competition prizes. Tax-exempt competition prizes are not reported to the Incomes Register.

A payment reported using income type Other taxable income deemed earned income (316) is subject to withholding but not to social insurance contributions. From the perspective of reporting, it does not matter whether or not tax was withheld from the income. Tax cannot be withheld from a prize object.

If a prize is received from a sports competition and the recipient of the prize is not in an employment relationship with the competition organiser, information about the prize must be reported using the income type Non-wage compensation for work (336) and Athlete must be specified as additional income earner information. Such a situation also exists when a prize is won by a person who performed with an animal, such as a jockey, harness racing driver or rider. If the recipient of the prize is the owner or trainer of the animal, information about the prize is reported using the income type Other taxable income deemed earned income (316). If the owner or trainer pays a certain percentage of the prize money or a specific fixed monthly fee, for example, to the person who competes as a pair with the animal, the question is of a payment paid by the owner or trainer to the athlete, which is reported as wages or non-wage compensation for work, depending on whether the recipient is in an employment relationship with the payer. In addition, the payer specifies the additional income earner detail ‘Athlete’. For more information on reporting competition prizes, see Section 5.1 Athlete.

In addition to competition prizes, the income type Other taxable income deemed earned income (316) is used to report other taxable occasional remunerations when the recipient is not in an employment relationship with the giver, and the payment is not non-wage compensation for work or compensation for use. These include, for example, a benefit granted to a member of a customer company's personnel or otherwise based on a customer relationship (e.g. a trip, gift voucher or object), a finder's fee, and a so-called vigilance fee paid by a bank.

It must also be taken into consideration that the EUR 100 reporting limit only applies to competition prizes. Other taxable payments do not have a lower euro limit. For example, a finder's fee must therefore be reported, even if it is less than EUR 100.

5.15 Services ordered via a platform (so-called platform economy)

Services can be offered or ordered via various mobile applications and online platforms. The services can involve any kind of work, such as renovation work, cleaning services, pet grooming or walking, making deliveries for various restaurants, or organising experiences for tourists. For more information on this subject, see the Tax Administration's website.

Employment services and ordering of services via applications and platforms may involve various responsibilities applying to the worker, the application maintainer, or the client, i.e., the party who purchases a service or commissions work via an application or a platform. Some applications and platforms may mostly act as electronic bulletin boards, meaning that the worker and the client must agree on the terms and conditions of the work between them. Some applications and platforms, however, function so that an employment relationship is automatically formed between the worker and the client, but the platform handles the payment traffic. An employment relationship can also be formed between the worker and the platform. The obligation to report the payments to the Incomes Register depends on what has been agreed between the application or platform, the worker and the client.

If an employment or a commission relationship is formed between the client and the worker, the client must report the payments they make to the Incomes Register either as wages or non-wage compensation for work, depending on what has been agreed. Non-wage compensation for work must be reported if the payment recipient is not registered with the prepayment register. The date on which the client made the payment to the platform or other application is entered as the payment date.

5.16 Voluntary individual pension insurance premium

An employer can supplement an employee’s statutory pension cover by taking out a voluntary individual pension insurance policy for the employee. The pension insurance policy can be continuous or a single-premium policy.

The employer must report the premiums to the voluntary individual pension insurance taken out for the employee using the income type Voluntary individual pension insurance premium (418). Similarly, the premiums must also be reported of an individual pension insurance policy taken out for a partner in a general partnership, a general partner in a limited partnership or a shareholder in a limited liability company who does not have employment pension insurance.

If the premiums of a voluntary individual pension insurance policy taken out by the employer exceed EUR 8,500 per year, the excess is taxable income from which social insurance contributions must also be paid. The employer must report the part exceeding EUR 8,500 as other fringe benefits using the income type Other fringe benefit (317).

In some cases, the employer may not be informed of the amount of premiums paid during a calendar year for each income earner until after the end of the calendar year, for example at the beginning of the following year. In such a case, the employer must correct the December report and enter the amount of the premiums so that the data will be transferred to the income earner’s tax assessment for the correct year. Alternatively, the employer may submit a new report of the premium for December.

The income type Voluntary individual pension insurance premium is only to be used to report the premiums of a voluntary individual pension insurance policy. If the employer has paid the premiums of mandatory pension insurance premiums, unemployment insurance premiums and the premiums of a voluntary pension insurance policy taken out by the employee on the employee’s behalf, these must be reported using the income type Other fringe benefit instead of the income type Voluntary individual pension insurance premium.

Tax-exempt premiums for life insurance taken out by the employer for an employee are not to be reported on an earnings payment report.

5.17 Damages or contractual penalties paid by employee

In some cases, an employee may have to pay damages or other contractual penalties to the employer if the employee does not comply with an agreed period of notice, for example. If the claim is based on an employment relationship, the employer’s right to offset the claim from gross wages is limited. Damages and contractual penalties are subject to a limited right of setoff, which means that they must be deducted from the net wages. This means that they do not reduce the individual’s gross wages and it is not a question of the recovery of a payment. For this reason, reporting damages and contractual penalties separately to the Incomes Register is not mandatory.

The employer must report the employee’s gross wages in the normal way. The employer must also withhold tax from the gross wages and pay social insurance contributions in the normal way. The employer may choose to report the amount deducted from the net wages using the income type Other item deductible from net wage or salary (408).

If the employer cannot recover the full amount from the net wages, it can be recovered from the employee by invoice at a later date, for example. Such a recovered amount is not to be reported to the Incomes Register. It is not a salary adjustment, but compensation for damages, which does not reduce the gross wages.