Reporting income data: penalty fees

These instructions replace the earlier instructions titled Reporting income data: penalty fees.

The following additions and clarifications have been made to the instructions:

• Clarified the determination of the late-filing penalty when data on fringe benefits is reported late in Section 2.1.
• Added the guidance of the determination of a punitive tax increase to Section 3.1.
• In addition, technical specifications have been added to the instructions.

1 General

It is important that the data reported to the Incomes Register is reported on time and that the data is correct. This ensures that insurance contributions related to payments can be collected and payments to tax recipients made on time. If the reporting obligation is neglected, penalty fees will be imposed. The purpose of penalty fees is to encourage the reporting of correct information at the right time.

The Tax Administration will impose penalty fees related to reporting to the Incomes Register. The penalty fees will ensure that the payers fulfil their reporting obligation. All data users will benefit from correct information being submitted on time. The penalty fee for reports submitted late to the Incomes Register is a late-filing penalty based on the act on the incomes information system (laki tulotietojärjestelmästä 53/2018). The penalty fees for failure to fulfil the reporting obligation to the Incomes Register with regard to taxation data include a tax increase in accordance with the act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016) and the third-party-information provider’s negligence penalty in accordance with the act on assessment procedure (laki verotusmenettelystä 1558/1995). Other sanctions may be imposed by the data users of the Incomes Register.

Data reported to the Incomes Register will be used to replace various reports filed for the payment of wages and benefits. For this reason, the regulation of penalty fees imposed as a result of reporting failures has been reformed to correspond to the needs of the Incomes Register’s reporting procedure.

1.1 Application of sanction provisions regarding late-filing penalties

The deployment of the Incomes Register on 1 January 2019 has brought changes to the payer’s reporting obligation and procedure. The changes will initially apply to the data reported by wage payers and, from 1 January 2021, to data reported by benefits payers.

Transition period for earnings payment data

Late-filing penalties for earnings payment data submitted late by payers to the Incomes Register will mainly be imposed only after the transition period. This means that late-filing penalties will not apply to payments made before 1 January 2021, unless failure to fulfil the reporting obligation demonstrates a clear disregard for reporting. In addition to payments, this applies to benefits granted or repayments made.

Transition period for benefits data

Benefits payment reports will be submitted to the Incomes Register as of 1 January 2021. If the late report is a benefits payment report, a late-filing penalty will only be imposed if the failure to fulfil the reporting obligation demonstrates a clear disregard for reporting. The transition period for late-filing penalties applies to reports concerning payments or repayments made before 1 January 2022. If the obligation to report benefits data to the Incomes Register is based on provisions other than those concerning the reporting obligation in tax laws, no penalty fees will be imposed for late reports even after the transition period.

If the data on withholdings and tax at source for pensions and other benefits paid in 2020 is submitted late on a tax return in accordance with the act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016), the Tax Administration can still impose a late-filing penalty for 2020. The Tax Administration may impose a late-filing penalty under the said act even after 1 January 2021 for the late filing of a tax return on the withholdings and tax at source of pensions and other benefits that do not have to be reported to the Incomes Register.

2 Late-filing penalty

2.1 Imposing a late-filing penalty

The Tax Administration will impose a late-filing penalty concerning reporting to the Incomes Register based on data obtained from the Incomes Register. The late-filing penalty will only be imposed for data that a payer subject to the reporting obligation reports late to the Incomes Register. The payer must be given the opportunity to provide an explanation for the reasons for the delay before the late-filing penalty is imposed, unless hearing the payer before imposing the penalty is clearly unnecessary. If the late-filing penalty is no more than EUR 200, the opportunity to provide an explanation will only be reserved if necessary on special grounds.  

The late-filing penalty will be imposed on the basis of the information reported for each calendar month. Data must generally be submitted to the Incomes Register no later than on the fifth calendar day after the payment date. The late-filing penalty, however, is not tied to this deadline. The Tax Administration will impose a late-filing penalty if mandatory data on payments is reported to the Incomes Register after the eighth day of the calendar month following the payment date. If the eighth day of the calendar month following the payment month is a Saturday or public holiday, the report can still be submitted on the next business day, and the late-filing penalty will only be incurred starting from the following day.

Data on fringe benefits provided by the employer must be submitted every month no later than on the fifth day of the calendar month following the fringe benefit’s accrual month. However, if monetary wages are paid for the fringe benefit’s accrual month during the calendar month following the accrual month, the fringe benefit can be reported as income for the calendar month following its accrual month. In this case, data on the fringe benefit must then be submitted no later than on the fifth day of the calendar month following the month as the income for which the fringe benefit was reported. A late-filing penalty will be imposed on reporting fringe benefit data late if the fringe benefit is reported after the eighth day of the month following the month for which the fringe benefit was reported as income.

Separate late-filing penalties are not imposed for earnings payment reports, employer's separate reports and benefits payment reports. In terms of penalties, the reports are considered a single reporting entity (see example 3). However, both the amounts reported late on an earnings payment report and benefits payment report can be taken into account when imposing a percentage-based late-filing penalty.

Late-filing penalties are only imposed for the late reporting of mandatory data as stipulated in sections 6, subsections 2–5 and 8 of the act on the incomes information system (laki tulotietojärjestelmästä 53/2018). Submitting the complementary data referred to in section 7 of the act is voluntary for the payers. As there is no deadline for submitting this data, no late-filing penalty will be imposed. No late-filing penalties will be imposed on the basis of data reported late by benefits payers if the obligation to report benefit data to the Incomes Register is based on provisions other than those concerning the reporting obligation in tax legislation (subsections 6 and 7 of section 6 of the act on the incomes information system).

The late-filing penalty will not be imposed if submitting the report to the Incomes Register was delayed for a reason beyond the payer’s control, or there is a justified reason or other special grounds for the negligence. Reasons beyond the payer’s control may include disruptions in the public data network, a failure in the incomes information system’s e-service or another similar reason.

Late-filing penalties are not imposed on natural persons or death estates. However, a late-filing penalty may be imposed if the natural person or estate engages in business activities, agriculture or forestry, and reports a related payment late.

A late-filing penalty will not be imposed if a third-party-information provider’s negligence penalty is imposed for a late report in accordance with the act on assessment procedure (laki verotusmenettelystä 1558/1995)..

The levying, collection and refunding of a late-filing penalty is subject to the provisions of the act on tax collection (veronkantolaki 609/2005) on the late-filing penalties provided for in the act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016).. The Tax Administration may refrain from collecting the late-filing penalty if the reporting was delayed for a reason beyond the control of a payer with a reporting obligation, or on other special grounds. Other special grounds may include lack of clarity as to which earnings-related pension act applies to the employment, or whether or not the payment constitutes earnings from work on which the pension is based and which must be reported to the Incomes Register.

2.2 Amount of the late-filing penalty

Late-filing penalties for reports submitted late to the Incomes Register are made up of two components: the daily amount of the late-filing penalty and the percentage based on the amount of payment reported late.

2.2.1 Daily late-filing penalty component

The amount of a payment or tax reported late does not affect the daily amount of the late-filing penalty. EUR 3 in daily late-filing penalties will be imposed for each day the report is late, until the data has been reported to the Incomes Register. The days for which the late-filing penalty is imposed are calculated from the day following the deadline for the late-filing penalty to the date on which the report is submitted. The daily late-filing penalty for reporting the payment month's wages is imposed for a maximum of 45 days, i.e. the maximum fee is EUR 135. 

Benefits payers report the pensions and other benefits they have paid to the Incomes Register on the benefits payment report. In addition, the benefits payers must report the payments made to employees in the earnings payment report and submit the employer's separate report. 

2.2.2 Percentage-based component of the late-filing penalty

If the first report of the payment month is more than 45 days late, the daily late-filing penalty component is EUR 135. A sum equalling 1 percent of the taxable payment or amount of earnings from work on which pension is based that was reported late, whichever is the greater, will be added to the daily component.

If the data was reported to the Incomes Register within the deadline, the data submitted for the calendar month can be corrected or supplemented for 45 days after the deadline without incurring a penalty fee. If the data for the payment month is corrected more than 45 days after the deadline, the late-filing penalty is 1 percent of the amount of the taxable payment or earnings from work on which pension is based that was reported late, whichever is greater.

No late-filing penalty will be imposed, however, if the amount of the taxable payment or earnings from work on which pension is based will not increase due to the correction. Correction in this case may mean new or replacement benefits payment reports, earnings payment reports or employer's separate reports submitted for the payment month. The cancellation of previously submitted reports and submitting a new report can also be regarded as a correction in the reporting of income data.

The percentage-based component of the late-filing penalty applies to wage and benefits data alike. It may be incurred separately both for earnings payment data submitted late and benefits payment reports submitted late.  The daily late-filing penalty component, however, is not imposed twice on data submitted for the same calendar month. The late fulfilment of the reporting obligation is treated as a single entity.

Based on the amount of the payment reported late, the late-filing penalty can amount to no more than EUR 15,000 for a calendar month. The maximum amount is reached if an amount of EUR 1,500,000 in taxable payments or earnings from work on which the pension is based is reported for the calendar month more than 45 days late. When the daily late-filing penalty is calculated based on this amount, the late-filing penalty can amount to no more than EUR 15,135.

The percentage-based late-filing penalty based on the payment amount will be adjusted if the payment amount is reduced due to the correction of data or the adjustment of a decision, an appeal or for another similar reason. The daily late-filing penalty imposed for the first report of the calendar month will not be adjusted due to the above-mentioned reasons, even if the payment amount decreases as a result of the change.

Figure 1: Determination of the late-filing penalty

2.3 Appeal

The procedure, decision and appeal process regarding late-filing penalties are subject to the provisions of the act on the incomes information system (laki tulotietojärjestelmästä 53/2018), as well as the provisions related to late-filing penalties in the act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016). The applicable provisions include the provisions on the claim for adjustment procedure, appeals submitted to the Administrative Court or to the Supreme Administrative Court, and the notification on the decision. 

The payer may appeal against the Tax Administration’s decision concerning the late-filing penalty or the decision on the claim for adjustment. The appeal may also be submitted by the party liable for the late-filing penalty under the act on tax collection (veronkantolaki 609/2005) or other tax law. The Tax Recipients' Legal Services Unit may appeal against the claim for adjustment or the decision issued on the claim to the extent that the Tax Administration’s decision regarding the late-filing penalty has been changed or repealed. When determining the deadlines for imposing the late-filing penalty and the appeal, the tax period for the data reported to the Incomes Register is considered to be a calendar month. The claim for adjustment must be submitted within three years from the beginning of the year following the calendar year including the calendar month for which the tax should have been reported and paid. If the taxpayer’s accounting period is not a calendar year, the three-year deadline is calculated from the beginning of the year following the end of the accounting period including the calendar month for which the tax should have been reported and paid.

3 Penalty fees imposed on the basis of tax legislation

3.1 Tax increase

The tax increase provided for in section 37 of the act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016) is imposed if the tax-related information reported to the Incomes Register is incomplete or incorrect, or is not reported at all. A tax increase is also imposed if taxes have not been withheld or tax at source has not been collected by the deadline.

Imposing a tax means that the Tax Administration imposes the missing tax to be paid by the taxpayer. The tax is also imposed if the taxpayer has not reported enough taxes, or not enough taxes have been paid for some other reason. Imposing a tax also refers to situations in which the tax is imposed to be paid by the payer due to the full or partial non-withholding of tax, or tax has been withheld but not reported or paid. In these situations, a tax increase is imposed in addition to the tax.

If the payer fails to report data on payments made during a calendar month despite a request, the taxes withheld and other employer contributions are imposed for payment by the payer based on an assessment. If tax is imposed on the basis of an assessment, the tax increase is 25 percent of the assessed amount of taxes. The Tax Administration can cancel the assessment and tax increase if the taxpayer later submits a report on this information, and the data in it is reliable. In such a case, the report is considered a report submitted late, and a late-filing penalty is usually imposed on the taxpayer under the act on the incomes information system (laki tulotietojärjestelmästä 5372018). If the taxes to be paid are not specified in the report, only a daily late-filing penalty will be imposed.

If the payer submits a report late, but the punitive tax increase is imposed based on a reason other than late reporting, the punitive tax increase plus a late-filing penalty due to late reporting will be imposed on the payer under the act on the incomes information system.

If a taxpayer submits a tax return or adjusts the amount of tax with the apparent intent of avoiding a late-filing penalty or punitive tax increase, a punitive tax increase will be imposed on the tax-payer instead of a late-filing penalty under section 37, subsection 2 of the act on assessment procedure for self-assessed taxes.

Further instructions on the imposing, calculation and appeal of a tax increase are provided in the Tax Administration guidelines (in Finnish) Penalty fees in self-assessed taxation.

3.2 Negligence penalty for a third-party-information provider

Penalty fees are also imposed for failure to fulfil the obligation to report data to the Incomes Register when the negligence does not concern the payer’s obligation to pay a tax or payment.

The Tax Administration can impose a negligence penalty for a third-party-information provider for failure to fulfil the reporting obligation in accordance with section 22 of the act on assessment procedure (laki verotusmenettelystä 1558/1995) in the following cases:

• there is an omission or error in the data reported to the Incomes Register
• the data is reported to the Incomes Register late
• the data is not reported to the Incomes Register in a manner other than that laid down by law or determined by the Tax Administration
• the data is not reported at all
• the data is only submitted after a request.

Negligence penalties are not imposed on natural persons or death estates. However, a negligence penalty may be imposed if the natural person or estate engages in business activities, agriculture or forestry.

Data to be reported to the Incomes Register that is within the scope of the third-party-information provider’s reporting obligation is subject to the provision on late-filing penalties in the act on the incomes information system. If a late-filing penalty in accordance with the act on the incomes information system is imposed for reporting data late, no further negligence penalty will be imposed for the late reporting and correction of data subject to the third-party-information provider’s reporting obligation. This is because no overlapping penalty fees are imposed with regard to the same matter.

The negligence penalty may be fully waived or its amount reduced if the taxpayer has a justified reason for the negligence. Such a justified reason could be that the failure to fulfil the reporting obligation is minor given the circumstances.

Information on grounds for the negligence penalty imposed due to errors and defects in data reported to the Incomes Register is provided in the instructions (in Finnish) Negligence penalty for Incomes Register reporting.