Benefits: reporting data to the Incomes Register

The instructions have been updated:

• Clarified the definition of a benefit payer in Section 2.1.
• Corrected the earnings period of original benefit into the original earnings period in recovery examples.
• Specified the instructions for reporting employee contributions in Section 3.6.
• Specified the instructions for reporting in Section 4.6 regarding situations where the income changes retroactively (Income type changed, new income type code).
• Added new reporting examples 20 and 21 to Section 4.6.
• Specified the instructions for reporting insurance losses and tax-exempt capital in Section 4.7.
• Transferred Section 5.4.6 ‘Payments returned to the payer by the enforcement authority’. Corrected the amounts in the tables in example 34. Added example 47 to Section 5.7.
• Added Section 5.8 ‘Corrections related to employee contributions’.

1 General information on reporting

1.1 Reporting obligation for benefits payment data

This document describes, on a general level, the reporting of Incomes Register benefits payment data on benefits and pension income (or benefits payment data in short) to the Incomes Register. The document uses examples to describe the most common Incomes Register reporting situations. The examples do not take all the data to be submitted into consideration, only the data that is relevant for resolving the matter in question. In the examples, the values of different data items do not correspond to the technical forms allowed in benefits payment reports – income types, for example, are given using names instead of codes. Data-related checks are described in more detail in the document 'Technical interface – Submitting data to the Incomes Register' and in the benefits payment report schema.

Only benefits and pension income paid on 1 January 2021 or later are reported to the Incomes Register, along with any corrections made to such income. If data on benefits paid prior to 2021 is corrected, the corrections are reported directly to each data user; for example, on a replacement annual information return to the Finnish Tax Administration. The exceptions are recovery and recourse deduction performed on 1 January 2021 or later. These must be reported to the Incomes Register even if the original income was paid prior to 2021. The Benefits: recovery and recourse instructions describe the reporting of recoveries and recourse deductions to the Incomes Register in more detail. The Benefits: recovery and recourse in international situations instructions provide a more detailed description of recoveries in international situations.

A benefits payment report submitted to the Incomes Register contains the data on pension and benefits income reported to the instances specified as data users in section 13 of the act on the incomes information system (laki tulotietojärjestelmästä 53/2018) in order that they could perform the duties decreed to them in the section. The data can be disclosed only to the data users specified in the law. The Incomes Register will forward data submitted to the Incomes Register to data users entitled to receive it in accordance with their individual statutory right to receive information. The Incomes Register does not create new data access rights for data users.

The deployment of the Incomes Information System will change the benefit and pension payers' obligations to report and provide information. Several data streams submitted to the Tax Administration at different times and in different formats will be replaced by reporting taking place in one go and in a uniform format. The data streams entirely replaced by the benefits payment report from 2021 onwards are the itemisation of retroactive pensions (VSTAKELE), the unemployment benefits payment days (VSKORVPV) and the annual information return on the pension of benefits payer's contact person (VSELVYHT). The benefits payment report will partially replace the data streams non-resident taxpayer's annual information return (VSRAERIE), tax return on self-assessed taxes, and the itemisation of pensions and benefits (VSELERIE).

In addition to these, the data contents of the benefits payment report include data that an insurance company or other benefit payer should report to the Tax Administration under section 28 a of the act on inheritance and gift tax (perintö- ja lahjaverolaki 378/1940) for tax assessment purposes. When the data is reported to the Incomes Register, there is no need to report the same data separately to the Tax Administration. This means that from now on, insurance data under the act on inheritance and gift tax (E) must be reported to the Tax Administration via the Incomes Register.

The Incomes Register benefits data is used for example for the following purposes:

• tax assessment
• granting basic social assistance
• settling a claim
• investigating a recourse collection
• assistance in the determination and coordination of the right to benefits
• detection of disqualifying benefits
• identification of benefit periods to be bypassed;
• statistics
• determination and deciding of customer fees
• research.

The benefit payer reports the data to the Incomes Register once. The total amount of benefits and pensions paid during the tax year is no longer reported separately on the annual information return. The data users require the benefits payment data to be reported to the Incomes Register with a precision of one day. This accuracy requirement has been implemented in benefits payment reports by making the income earning period mandatory data. The earnings period is specified with a precision of one day. The amount of compensation granted for each hour, day or for example month in a benefit decision can be indirectly deduced from the Incomes Register data by comparing the data given for the payment in the Benefit unit data group with the reported euro amount of the payment. When reporting a recovery or income that is refunded unprompted, the original earnings period is reported in the ‘Additional repayment details’ data group. When reporting a recovery, the original earnings period must be reported with a precision of a calendar year. The original earnings period reported in the ‘Additional repayment details’ data group means the earnings period during which the income subject to recovery was originally paid. For more information, see the instructions Benefits: recovery and recourse, Section 2.

The paid benefits and pensions are reported to the Incomes Register separately for each income earner. A report refers to data on one payment transaction paid to a single income earner. Several income types can be reported for one income earner on the report for the same payment date. Even if several income types are specified, income types comparable to deductions can be reported as a total amount. These include tax withholding and tax at source (excluding tax withheld from pension paid to a non-resident taxpayer). Deductions that must be connected to an individual income item reported are itemised in more detail in the Deductions data group. More information available on more specific deductions, for example, in the ‘Benefit payment to a substitute recipient’ section of this guide.

1.2 The time of reporting data

1.2.1 Date of payment and reporting deadline

The data is reported to the Incomes Register in real time, that is, as a rule, no later than on the fifth day after the payment date. Saturdays, Sundays and other holidays are included in the five calendar days following the payment date. However, if the reporting deadline falls on a Saturday, Sunday or other holiday, the data can be reported on the following business day. The date of payment refers to the date on which the payment is available to the income earner, for example withdrawable from the income earner's account. The five-calendar-day deadline specified in the act on the incomes information system applies to the regularly reported mandatory data specified in sections 6 and 8 of the act. Possible losses from an insurance contract must be reported within five days of the date when the saved amount or the final amount of the death benefit is determined after the insurance expires.

Benefits and pension payments made on 1 January 2021 or later are reported to the Incomes Register, along with any corrections made to such income. The retention period of the benefits payment data submitted to the Incomes Register is based on the statutory rights of the Incomes Register's data users to receive information. The data is stored in the Incomes Register for ten years from the beginning of the year following the year in which the data was saved. After ten years, the data stored in the Incomes Information System will be deleted.

If the benefit has been paid in advance, each payment should be reported according to the payment date on which the benefit has become available to the income earner (see Example 3).

1.2.2 Date of reporting unjust enrichment and recovery

The obligation to report unjust enrichment is connected to the procedure used for correcting an incorrect benefit decision. If a factual error has occurred when making the benefit decision, the correction to this may require the income earner’s consent. Finding that a benefit is to be an unjust enrichment may also be preceded by the revocation or dismissal of the decision, for example by a judgement ruling of the Insurance Court. Information on unjust enrichment must be submitted no later than one month after the party's consent to the recovery of the unjust enrichment has been obtained or a decision has been issued on the dismissal of an incorrect benefit or compensation decision. Such decisions may be called, for example, revision decision, adjustment decision or termination decision.

In some situations, no decision on the termination of a pension or a benefit is issued even if there has been an overpayment, for example when the benefit recipient has died. If a recovery decision is the only decision to be made regarding the case, the time limit for reporting unjust enrichment is counted from the date the decision is issued.

Stating unjust enrichment is an independent occurrence. Reporting unjust enrichment is not influenced by whether the benefit is cancelled for some part or whether it can ever be recovered. Forgiving or modification of unjust enrichment is not reported to the Incomes Register. This is seen in the Incomes Register only indirectly when a recovery report is not submitted or the recovered amounts cover only part of the unjust enrichment.

In certain situations, the income earner may return a payment to which they were entitled. In such cases, the payment does not concern an unjust enrichment nor does it change to an unjust enrichment upon repayment. In such situations, the repayment is reported to the Incomes Register as an unprompted refund instead of an unjust enrichment.

When recovery proceedings are initiated, the amounts paid back must be reported no later than on the fifth day after the day of receiving a notification of the payment of the recovered amount, the payer and the benefit to which the payment relates and after the benefit payer has been able to allocate the recovery in its internal system. Correspondingly, an unprompted refund must be reported no later than on the fifth day after the day of receiving a notification of the payment of the unprompted refund, the payer and the benefit to which the payment relates and after the benefit payer has been able to allocate the unprompted refund in its internal system.

1.2.3 Reporting data in advance

The data can also be submitted to the Incomes Register before the payment date. Reporting data in advance is, however, limited in such a manner that payments can be reported to the Incomes Register no earlier than 45 days prior to the payment date. The values for the start and end date of the earnings period of the payments reported to the Incomes Register are not limited in this way. Thus, a payment far in the future can be reported if the payment is made within 45 days.

1.2.4 Electronic reporting only

Benefits and pensions cannot be reported to the Incomes Register on paper. If a taxable pension or benefit is exceptionally paid by a private person or some other payer that is not deemed a benefits payer in the act on the incomes information system, the payer must, as a rule, fulfil their reporting obligation by reporting their payments directly to the competent authority.

The electronic reporting methods used by the Incomes Register are the technical SFTP and Web Service interfaces as well as the e-service where data can be submitted via an online form or a separate record upload service. Submitting a benefits payment report via the e-service requires that the payer has specified themselves as the benefits payer in the service settings. This option is not available to private individuals. For more information on the concept of benefits payer, see the ‘Concepts’ section of this guide.

1.3 Regularly submitted mandatory data

The majority of the benefit data reported to the Incomes Register is mandatory to report; it must be reported, and it must be present in each record. The mandatory data includes the benefit payer’s identification information, the payment date and the technical record information. The last-mentioned data is mandatory when reported via the technical interface or by uploading a file. The reports contained in the record should also identify the income earners either by Finnish identifiers or, if they are not available, by other identification information.

See the benefits payment report schema for a more detailed description of what data is mandatory. As a rule, the mandatory data corresponds with the data currently collected by the Tax Administration. However, data is collected from a wider range of income types for the purposes of other data users.

1.4 Administrative consequences for neglecting to submit data

The penalty fee system provided in the act on the incomes information system applies to the data specified in sections 6 and 8 of the act, i.e. the mandatory data to be reported to the Incomes Register. The penalty fees are imposed by the Tax Administration.

A late-filing penalty replaces the benefit payer’s late-filing penalty laid down in the act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016) and the negligence penalty laid down in the act on assessment procedure (laki verotusmenettelystä 1558/1995) insofar as a late-filing penalty is imposed based on the late submission of data that must be reported to the Incomes Register.

According to the applicable act, a late-filing penalty is imposed only based on the mandatory data that a party with a reporting obligation reports late to the Incomes Register. If the benefit payer does not report any data to the Incomes Register of the taxable payments they have made, or if the data is incomplete, and the benefit payer does not correct the neglect of their own volition before taxes and contributions are levied, no late-filing penalty is issued. In such a situation, the consequences for neglecting the reporting obligation laid down in the provisions of the act on assessment procedure and the act on assessment procedure for self-assessed taxes, such as a punitive tax increase, are applied. The provisions of the tax laws on the consequences of neglect do not apply to tax-exempt benefits. If data reported to the Incomes Register has a deficiency or error that has no significance for the taxation of the income earner, no negligence penalty is imposed.

1.4.1 Late submission of the first report

The late-filing penalty for late submission of the first report containing data to be reported for a calendar month is, as a rule, determined based on how late the report is. Although as a rule the data must be submitted within five days of the payment date, the late-filing penalty is not linked to the same deadline. Under section 22(1) of the act on the incomes information system, a late-filing penalty is imposed based on the lateness of the reporting of benefits payment data, if data on the benefits paid during the calendar month is not reported by the eighth day of the next month.

According to the law, the consequence for a late submission of the first report would be EUR 3 for each day the report is late for a period of 45 days, or a maximum of EUR 135. If the report is submitted more than 45 days late, the late-filing penalty is EUR 135 plus one per cent of the amount of the taxable payment reported late.

1.4.2 Correcting submitted data

No late-filing penalty is imposed if data submitted on time is corrected within 45 days of the deadline. If previously submitted data is corrected more than 45 days after the deadline, a late-filing penalty of one per cent of the amount of the taxable payment reported late is imposed. However, no late-filing penalty is issued if the above-mentioned amount does not increase due to the correction. The percentage-based late-filing penalty imposed based on the payment amount is adjusted if the payment amount is reduced due to the correction of data, adjustment of a decision, appeal or other such reason.

2 Concepts

2.1 Benefit payer

‘Benefit payer’ means the following legal persons under public or private law as defined in the act on the incomes information system (Laki tulotietojärjestelmästä 53/2018):

• an actor who pays pensions, other benefits or comparable payments based on the law, a contractual relationship under private law or a decision they have made,
• an actor whose actions as the benefit payer is decreed to be supervised by a Finnish authority, such as the Financial Supervisory Authority, or
• an actor who is obligated to provide the data users defined in section 13 of the act on the incomes information system with information about the benefits they have paid.
  In addition to Finnish actors, a benefit payer may also be a similar foreign actor with a permanent establishment in Finland for the purpose of income taxation. The benefit payer is obliged to use for reporting the Incomes Information System and always have a Finnish Business ID due to the benefit payer’s obligation to register.

The benefits payment report submitted to the Incomes Register will replace the benefit payer's reports on benefits and pension payments currently required to be submitted to the Tax Administration. With respect to the payer's other obligations to provide information, the benefits payment reports are supplementary, not replacement data.

2.2 Income earner

In section 3 of the act on the incomes information system, income earner means a natural person, estate or a legal person to whom or which a payment has been made or who or which has received a non-monetary benefit, as referred to in this act. The benefits payment report’s income earner, i.e. the benefit recipient, must always be a natural person or a death estate. The benefit recipient can also be a foreign estate treated as an organisation in taxation. In the role of a benefit recipient, the income earner may only receive benefits paid in cash. In this guide, the benefit recipient is mainly referred to as an income earner.

2.3 Substitute recipient

The term ‘substitute recipient’ refers to the payment recipient in situations where the payment recipient is a party other than the benefit recipient. Substitute recipient is used for reporting, amongst other things, in recourse situations and situations in which the benefit recipient’s income is paid in full or in part to another party. In the benefits payment report, the substitute recipient may be, for example, Kela, the Employment Fund, an earnings-related pension provider, a non-life insurance provider, or the employer. The substitute recipient can also be the specific benefit payer.

No substitute recipient needs to reported when the benefit is paid to a trustee, a donee of a lasting power of attorney, a guardian or the estate instead of the benefit recipient. None of the data users of the Incomes Register needs this data in such situations and the payment can therefore be reported to the Incomes Register following the standard procedure but without including the substitute recipient details.

2.4 The concepts of pension and benefit

Statutory pensions that are based on an employment relationship or a voluntary pension insurance or paid from some other insurance, and other payments that are deemed to be pensions in legislation or in the established taxation and judicial practice and are paid by a benefit payer referred to in the act on the incomes information system, are reported to the Incomes Register.

A compensation or financial support (benefit) that is based on such a law, insurance, membership in a fund, decision of a public sector organisation or some other factor that is taxable as personal income or taken into account when basic social assistance is granted and that is paid in money by a benefit payer referred to in the act on the incomes information system to a party entitled to the benefit or to their substitute recipient, is also reported to the Incomes Register. Hence, tax-exempt income that does not have an effect on the social assistance is primarily not reported to the Incomes Register.

In addition, the following damages, payments and losses are deemed to be benefits stored in the Incomes Register:

• damages for personal injury under chapter 5, section 1 of the Tort Liability Act, with the exception of damages to cover medical costs and other necessary costs referred to in section 2 of chapter 5;
• payments to be reported to the Tax Administration referred to in section 28 a of the act on inheritance and gift tax, even if they are tax-exempt in income taxation and do not affect the granting of basic social assistance;
• losses from certain insurance-based investment products, such as a loss from an endowment insurance, a loss from a capital redemption policy, or a loss from a fixed-term pension insurance policy; and
• Reimbursements of expenses paid on the basis of the Act on Public Employment and Business Service (916/2012) or the unemployment security act (työttömyysturvalaki 1290/2002).

As an exception to the definitions above, a payment based on a long-term savings agreement or other agreement related to investment activities is not regarded as a benefit to be reported to the Incomes Register. Payments considered to be sensitive in nature, such as strike pay, disability allowance for a person of the age of 16 or over or social assistance, are also not deemed to be benefits to be reported to the Incomes Register.

The set of pensions and benefits to be reported to the Incomes Register is also limited by the concept of benefit payer in the act on the incomes information system. The instances that have an obligation to provide information on the payments they have made but that are not covered by the definition of payer (such as private persons) do not report pensions and benefits to the Incomes Register; instead, they report them directly to the competent authority.

The set of pensions and benefits to be reported to the Incomes Register is also limited by the fact that data used only by the data provider is not submitted to the Incomes Register. It would violate the principle of data minimisation relating to the processing of personal data to register data with no purpose of use for the data users. This exception mainly applies to some payments paid by Kela.

3 Basic reporting situations

Examples of basic situations of reporting data are given below. The examples do not include all mandatory data, only the data necessary for processing the matter.

3.1 Reporting pension income

All pensions paid by Finnish payers are reported to the Incomes Register. The benefits payment report can only be submitted electronically. The report includes information on the income earner, the payment and the grounds for the payment. One record may contain reports regarding pensions paid to many different income earners. Nonetheless, all reports in one record must have the same payment date.

3.2 Reporting benefits income

The Benefit unit data group is mandatory when unemployment benefits are reported in order that the days qualifying for unemployment benefits could be determined. The benefit payers must report to the Tax Administration the number of days in the tax year for which the taxpayer has been paid the unemployment benefits referred to in section 93(4) of the income tax act (tuloverolaki 1535/1992) (decision of the Tax Administration on information-reporting requirements). Unemployment benefits include the unemployment allowance and the labour market subsidy. The benefit unit data can also be reported for other types of benefit, and this is also recommended. When the benefit unit and benefit amount data has been specified, the Incomes Register data users can, for example, determine the daily amount of the benefit during the earnings period.

The unemployment benefit income types for which it is mandatory to specify the Benefit unit data group and on the basis of which the number of qualifying days is determined are listed in the Incomes Register's document Benefits – Income types – Codes. For these unemployment benefits, the benefit unit is day. The number of units entered is the number of qualifying days in the earnings period of the income type in question.

When reporting the above-mentioned unemployment benefit to the Incomes Register, the benefit payer must specify the income data separately for each year if the earnings period applies to several years. If, in Example 2, the benefit payer also paid a labour market subsidy to the income earner for the period between 2 and 3 January 2021, the benefit payer should specify a separate ‘General income type details’ data group for these days in the report. In this income type itemisation, the number of benefit units would be 2, and the amount paid would be the portion based on these days of the full amount paid. If the qualifying days specified in the report concern the year 2020, they must be reported in the 2020 annual information return on the days qualifying for unemployment benefits (VSKORVPV). In such cases, the number of qualifying days reported to the Incomes Register is, exceptionally, zero (0).

3.3 Advance and additional payment

It is not separately reported in the Incomes Register's benefits payment report if the reported amount is not equal to the final amount of the benefit decision. The Incomes Register is based on registering of payment transactions and contains only a limited amount of so-called benefit decision data.

The use of Incomes Register data for purposes defined in section 93 of the act on income tax and for other purposes requires that the benefit unit be not reported cumulatively. Attention to this must be paid particularly when a benefit accrued over a specific earnings period is paid in several instalments. Only such benefit units on which a payment is based that have not been previously reported are reported to the Incomes Register. If the benefit unit is a day, the total number of units on the same benefit payer’s reports must therefore not exceed 31 units per month or, for example, 7 units in a one-week period. On the other hand, an income earner may receive more than one pension during the same month. In this case, the different benefit payers use Month as the unit value and enter 1 as the number of units. 

3.4 Reporting the earnings period

When reporting income to the Incomes Register using the benefits payment report, the benefit payer must always specify the ‘Earnings period’ data for the income type. The actual uninterrupted earnings period is reported as the earnings period with an accuracy of one day. Only one ‘Earnings period’ entry can be made for each reported income type. When reporting a recovery or income that is refunded unprompted, the original earnings period is reported in the ‘Additional repayment details’ data group.

An earnings period is the period over which the income has been accrued. Payments made simultaneously on different earnings periods are thus reported in different income type itemisations. In recovery situations, the original earnings period to be reported is always the earnings period during which the income recovered or refunded was originally paid. In some cases, the earnings periods of benefits or pension income can be very long, for example over one year. 

If the advance lump sum applies to an indefinite moment in the future, the income payment date should be reported as the end date of the earnings period. If the period of time applicable to the one-off income paid in advance is known, it should be reported as the income earnings period.

When it comes to retrospective one-off income, the paid income should be allocated at the level of calendar year. It is recommended that the income type itemisations of a retroactive payment be always allocated to an annual level. Annual revisions and index raises to benefit amounts make it more difficult to use data in which the reported income is allocated to more than one year. The next section provides a more detailed description of the reporting of the ‘One-off remuneration’ data in situations where the income earnings period extends to the preceding tax year for a period of at least three months.

If the income earnings period cannot be defined, the payment date should be entered as the earnings period. Income that lacks the earnings period includes, for example, most types of compensation for a temporary or permanent functional limitation paid from personal insurances. No data is collected in the Incomes Register on the times of insurance events such as traffic accidents or deaths, so the payment date of the income is reported as the start and end date of the earnings period. The procedure is the same for one-off benefits such as baby money, funeral allowance, or surrender of insurance policy.

The payment date should always be entered as the earnings period for deduction-like income types. Such income types include, for example, ‘Withholding tax’ and ‘Tax at source’. The payment date can also be used as the earnings period, if unjust enrichment is reported to the Incomes Register using the ‘Unjust enrichment’ income type. There is more information about unjust enrichment in the ‘Reporting unjust enrichment and recovery’ section.

3.5 Reporting one-off remuneration data

The 'One-off remuneration' information has three purposes:

• occasional isolated income (so-called actual one-off remunerations such as funeral grant)
• retroactive income, with at least three months of its earnings period in the previous tax year
• income paid in advance, accrued over more than one year.

The 'One-off remuneration' information is specified for these types of income, because, for instance, the Finnish Tax Administration needs the information to carry out the income spreading (section 128 of the income tax act (tuloverolaki 1535/1992)) and deferral of retirement income (section 112 of the income tax act).

In case of occasional isolated income that is not recurring, ‘One-off remuneration – Yes’ is specified for the income type in addition to the earnings period. The earnings period of such random payment can be one day or, for example, one year.

A one-off remuneration is typically a payment paid only once, not on a recurring basis. In some situations, income may be a one-off remuneration even if it were paid again later. It is essential that there is no knowledge or decision of a new payment at the time of payment. Payments of a continuous nature, such as unemployment allowances or partial sickness allowances, are not one-off remunerations, even if the next payment is not yet known. Income types of a deduction type, such as withholding or distraint, are not one-off remunerations. A benefit paid once a year or at some other regular intervals is not a one-off remuneration because it is paid on a recurring basis. When paying a late payment increase, the 'One-off remuneration' information must always be used, because a late payment increase is a one-off remuneration by nature.

The one-off remuneration data should be used when paying retrospective income, if the earnings period applies to a period of three or more than three months preceding the tax year. The reviewed period may comprise individual months or a time period that does not last three consecutive months but as a whole exceeds the above-mentioned limit. If the earnings period of retroactive income extends to both the year before the tax year (for at least three months) and the current tax year, the retroactive income is divided in accordance with the tax years, and is reported as two payments. The ‘One-off remuneration’ information must be specified for both payments, also in cases where a benefit paid in the current year would be paid as a continuous benefit in the future.

The ‘One-off remuneration’ data should be used for income paid in advance, if the income paid in advance has accumulated for more than a year. In this case, a period exceeding one year refers to a period of time that is at least 12 months and one day.

When recovering ‘One-off remuneration’ payments, the ‘One-off remuneration’ entry must also be specified in connection with the recovery. The ‘One-off remuneration’ entry must also be specified when reporting a payment reallocation, provided that the data was also specified in the original report.

3.6 Deduction of employee contributions

A certain part of the total of the employee's earnings-related pension insurance contribution, the employee's unemployment insurance contribution and the daily allowance contribution of health insurance is deducted from the daily allowance under the Workers' Compensation Act. Employee contributions can also be deducted in a similar manner from patient injury insurance, motor liability insurance and liability insurance payments, and from the rehabilitation allowance under the Workers' Compensation Act. When the employee contributions are deducted from the work income on which a benefit is based before the amount of the benefit is confirmed, the deduction is not reported to the Incomes Register.

Even though most of the benefits data users need the post-deduction amount of employee contributions, some of the benefits data users require the amount before the deduction of the employee contributions. The deduction is reported by using the ‘Deductions’ data group where the amount of deduction is reported using a specific deduction type. When reporting a deduction of employee contributions, the gross amount from which employee contributions have not been deducted must always be reported as the amount of the income type being paid.

Income reported to the Incomes Register may also be subject to other calculated deductions similar to the deduction of employee contributions. Such deductions include Kela deductions and contributory deductions. There are no grounds for the data use of such deductions, so they are not reported to the Incomes Register. 

4 Other reporting situations

4.1 Payment reported under section 28 a of the act on inheritance and gift tax

When reports under section 28 a of the act on inheritance and gift tax are submitted to the Incomes Register, the details of the policyholder and the policy number or other identifier must be submitted in the report in addition to the income earner (insurance beneficiary). In situations where the payment reported to the Incomes Register is a gift as defined in Section 18 a of the act on inheritance and gift tax, the policyholder is the gift giver. If the policyholder is not insured under the insurance concerned and the report is submitted for the purpose of inheritance taxation, the details of the insured must be reported in the ‘Policyholder details’ data group. However, when reporting a death compensation or a funeral grant to the Incomes Register, the ‘Policyholder details’ data group is also used to enter the details of the insured when the payment is based, e.g. on the employer’s group life insurance policy.

By entering the inheritance and gift tax specifier for the ‘Taxability of benefit’ data, the benefit payer states that the income type in question including its data are subject to a report under section 28 a of the act on inheritance and gift tax. However, if part of the payment were taxable based on income taxation, the benefit payer should report the part subject to income tax in a separate income type itemisation using a different ‘Taxability of benefit’ entry (e.g. ‘Taxability of benefit – Capital income’).

If a payment belonging to a report submitted under section 28 a of the act on inheritance and gift tax is made to a pledgee instead of the beneficiary, the specifiers must also be entered as described above (see also Example 7). The details of the pledgee acting as a substitute recipient are specified in the report's ‘Deductions’ data group. Report ‘Deduction based on the right of pledge’ as the deduction type, enter the pledgee's details as the substitute recipient details, and report the substitute recipient type as ‘Other payment recipient’ (Example 7). Payments to substitute recipients are explained, for example, in the ‘Benefit payment to a substitute recipient’ section of this guide.

4.2 Remunerations paid to an income earner when the benefit payment is delayed

Should a benefit payment be late, the income earner can be paid late payment interest that is independent of the taxation of the main payment and taxed as capital income, or an increase for late payment that is taxed according to section 61 a of the act on income tax in the same way as the main payment. The late payment interest is not included in the data contents of the Incomes Register; it will continue to be reported to the Tax Administration on annual information return 7805, which includes interest income in accordance with the income tax act. Increases for late payment, however, are reported to the Incomes Register using the income type of the main payment and a special ‘Late payment increase – Yes’ entry on the report.

Sometimes, increases due to late payments also have to be paid separately from the main payment if, for example, the main payment has already been made and the need to pay the increase is not noticed until later. Even then, the late payment increase is reported according to the payment date. The main payment is always determined on the basis of the income type code. The ‘Late payment increase – Yes’ entry is used to report the amount of the late payment increase. When paying a late payment increase, the 'One-off remuneration' information must always be used, because a late payment increase is a one-off remuneration by nature.

4.3 Benefits payment to a substitute recipient

A substitute recipient is reported, for example, in case of recourse or when the income earner’s income is paid in full or in part to a party other than the income earner. On a benefits payment report, the type of substitute recipient can be specified as, for example, a municipality or a social welfare organisation, the employer, or the Patient Insurance Centre. The different substitute recipient types are listed in the ‘Application instructions on the data contents of a benefits payment report’ document. From the perspective of the Incomes Register, the National Enforcement Authority of Finland and the Finnish Tax Administration are not considered to be substitute recipients. Items paid to them (distraint, withholding) have their own income types.

The Deductions income type code is used to indicate the original income type to which the deduction applies. If part of the income is paid to a substitute recipient and it is not allocated to any previously paid income type, the same income type is used for the deduction and for the income. The earnings period of the ‘Deductions’ data group is also often the same as that of the payment’s income type. The reporting of deductions is illustrated in Example 10. The same income type is used for the deduction and for the income also when the benefit is paid to the employer. It is irrelevant whether the benefit paid to the employer concerns a continuing benefit or a retroactive payment. The procedure is the same in the case of one-off payments made to the employer.

If an instalment paid to a substitute recipient is assigned to a previously paid income type (in recourse situations, for example), the same income type is used for the deduction. The earnings period of the previously paid income type is reported as the earnings period of the ‘Deductions’ data group, and it can differ from that of the income type paid.

If there is no applicable income type code for the income type of the deduction, either ‘Other benefit’ or ‘Other pension’ can be used as income type for the deduction. This may be the case, for example, if the deduction applies to a previously paid income type that should not have been reported to the Incomes Register (such as social assistance or some other benefit of a sensitive nature).

The ‘Deductions’ data group is not meant to be used for reporting the income earner’s debt (e.g. unpaid insurance premiums) or for covering the income earner’s living expenses. The deduction types of the data group are used to report deductions paid to another benefit payer or the employer. If the income earner’s income is subject to a deduction for which a deduction type is not listed, it should be considered whether the deduction should be reported to the Incomes Register. The ‘Other deduction from taxable income’ and ‘Other deduction from net income’ deduction types should only be used to report deductions referred to in the benefit details instructions.

The Tax Administration uses the value given in the Type of deduction field to determine whether the deduction affects the income earner's taxable income. For example, if the deduction type is ‘MATA and MYEL collection’, the deduction is made from the net income, not the amount of taxable income.

The earnings period of original benefit and the period of calculation are not necessarily always the same time period. The period of calculation means the period of time from which income is transferred to a substitute recipient, or the period of time for which the substitute recipient was entitled to the income.

4.4 Reporting a partially taxable and partially tax-exempt benefit

The tax legislation decrees that in some cases, a certain euro amount or percentage of a benefit is tax-exempt. The full amount of such a benefit is still reported to the Incomes Register, because even the tax-exempt part can affect the basic social assistance.

If part of each benefit payment is taxable and part tax-exempt, the benefit is reported to the Incomes Register in two separate income type itemisations. The ‘Taxability of benefit’ data in the itemisations is used to indicate which part is tax-exempt and which is taxable. Such payments include one-off pension payments. If the benefit payer first pays the tax-exempt part of income that is partially taxable and then the taxable part, they must report accordingly.

The submitted reports should be corrected if the person dies before the annual tax-exempt income limit has been reached and the benefit payer deems that the income paid to that person should have been processed differently. The correction is made by way of a replacement report in which the information regarding the paid income types is provided and the ‘Taxability of benefit’ data is changed to correspond to the correct specifier. If the benefit payer refunds excessive tax withheld during the same year, a new report should be submitted to the Incomes Register for the refund. The refund is indicated by a negative amount in the new report.

4.5 Benefit changes to pension in taxation when more than one year has passed from the injury

Certain benefits automatically change to pension when more than one year has passed from the injury, even without a separate pension decision by the benefit payer. Before the year has passed, the benefit is reported to the Incomes Register using the income type for the paid benefit (for example, Compensation for loss of earnings) and taxed accordingly. Once the year has passed and the benefit has changed into a pension from the perspective of taxation, it is reported to the Incomes Register using the corresponding income type for a pension (for example, Compensation for loss of earnings over one year after the injury). The income can be taxed correctly based on the income type.

This practice applies to, for example, compensation for loss of earnings paid based on a motor liability insurance or patient injury insurance, which is considered to be a pension in taxation once one year has passed after the injury, even if no pension decision has been made. A payment can also be a pension earlier, if a separate decision of this has been made. In such a case, the compensation is reported after the decision was made using the income type for the pension, such as Disability pension (motor liability insurance). 

4.6 Income changes retroactively, and a benefit paid earlier is taken into account as a partial payment

In certain situations, income previously paid may change retroactively, but is not considered to be unjust enrichment or recourse. A decision is made for the income earner of a new benefit that is granted for at least partially the same period as the previously paid benefit. The previously paid income is taken into account as partial payment of the benefit paid later. The income earner has been entitled to the previously paid income, so the income was correct at the time of payment. The reported income type is therefore not corrected, because the income is taxed according to the originally reported income type. The ‘Income type changed, new income type code’ data must not be used if the income type was originally reported incorrectly and it needs to be corrected. This data can only be used when reporting income that has changed retroactively.

This kind of a situation occurs when, for example, an income earner receiving partial early old-age pension is granted a disability pension, years-of-service pension or old-age pension for the same period for which partial early old-age pension has already been paid. The previously paid partial early old-age pension is taken into account as partial payment of the pension granted later.

The retroactive change to the income is reported to the Incomes Register on a replacement report. Specify 'Income type changed, new income type code' for the original income type, and enter the new income type code as its value. This allows the data users to be informed that the previously paid income has been taken into account as partial payment of the later payment. However, the income is taxed according to the original income type, for which reason the original income type must not be changed in these situations.

A retroactive change to income must also be reported to the Incomes Register using a replacement report when income previously reported under two income types must from now on be reported under a single income type due to a change to the income. In such a case, the payer specifies the ‘Income type changed, new income type code’ entry for the original income types and enters the new income type code as its value.

4.7 Reporting insurance losses to the Incomes Register

In the case of voluntary insurances (capital redemption policies included), the following data must be reported to the Incomes Register using a benefits payment report: the amount of taxable payments made on the basis of a voluntary insurance, the share of the payments deemed taxable income, and the amount of losses deemed tax-deductible. However, payments made based on or losses from an insurance related to agriculture, forestry or business activities do not need to be reported. 

Losses deemed tax-deductible are reported to the Incomes Register using the following income types:

• Loss from a capital redemption policy (1389)
• Loss from endowment insurance, saved amount (1387)
• Loss from endowment insurance, surrender value (1388)
• Loss from an insurance contract (1396)
• Loss from a voluntary fixed-term pension insurance policy (1397)

Possible insurance losses must be reported within five days of the date when the saved amount, surrender value or final amount of the death benefit is determined after the insurance expires. The reporting deadline is the same even if it was known in advance that that the insurance will expire with a loss. When reporting insurance losses, the ‘One-off remuneration’ entry must always be specified for the income type.

When reporting losses, the insurance contract end date must always be reported as the payment date. The loss is deductible in the taxation of the policyholder in the same year when the insurance contract expires. Therefore, the insurance contract end date must be specified as the payment date to ensure that the loss is allocated to the correct tax year.

When losses arise from life insurance, the taxation of the payment and the data to be reported to the Incomes Register vary depending on the situation. Taxation and reporting are affected by whether the income earner is the policyholder, the income earner laid down in section 34 of the act on income tax (Tuloverolaki 1535/1992) or an external person.

The Benefits – Descriptions of income types and items deducted from income document provides more information about each income type and their reporting to the Incomes Register.

When the insurance reaches maturity and generates losses, the losses and the amount of tax-exempt capital paid as a loss to the policyholder must be reported to the Incomes Register. The losses are calculated so that the premiums paid by the policyholder are deducted from compensation received from insurance. Losses must be reported even if the amount of compensation was less than 100% of savings. The amount of tax-exempt capital must be reported in full. On the report concerning the capital, the date on which the capital is paid must be entered as the payment date.

As a rule, insurance losses and the amount of tax-exempt capital paid to the policyholder are reported to the Incomes Register on separate reports. The reason for this is that the report’s payment date is the insurance contract end date for losses and the actual payment date for capital. The payments can also be reported on a single report if they have the same payment date. If the payment dates are not the same, two separate reports must always be submitted.

5 Correcting benefits payment data in the incomes register

5.1 General information on correcting information

According to section 4 of the act on the incomes information system, the benefit payer is responsible for the accuracy and correction of any data they have submitted to the Incomes Register. If incorrect information in the Incomes Register is based on the benefit payer’s report, the income earner must submit a correction request to the benefit payer in question. The benefit payer thus has an obligation to correct any incorrect information it has reported.

Replacement has been selected as the data correction method. This means that the original report is corrected by resubmitting all the report data, both the data that was correct in the original report and the new and changed data. The replacement report replaces the report of the payment date that the error concerns.

If the type of action is 'New report', the report does not replace a previously submitted report. Because the income earner can have several valid reports with the same payment date, it must be possible to allocate a correction to the correct report. For this reason, the Incomes Register uses report references, which allow corrections to be allocated correctly. When submitting a new report, the benefit payer always receives an Incomes Register report reference that can be used to allocate the correction to the correct report. The benefit payer can also use their own internal report reference for corrections, if they do not want to, or are unable to, use the report reference generated by the Incomes Register. The benefit payer’s report reference must be specified when a new report is submitted via the technical interface or the upload service. 

Benefits payments made on 1 January 2021 or later, and any corrections to them, are reported to the Incomes Register. If payments made prior to 2021 are corrected in 2021 or later, the corrections should not be reported to the Incomes Register. Corrections to payments made prior to 1 January 2021 should be submitted directly to each data user. However, payments recovered on 1 January 2021 or later are reported to the Incomes Register, even if the original income has been paid prior to 2021.

Data submitted to the Incomes Register is stored in the Incomes Information System for ten years from the beginning of the year following the year in which the data was registered. The data submitted to the Incomes Register can be maintained and corrected as long as it is retained in the Incomes Register.

5.2 Replacement or cancellation of submitted benefits payment reports

As a rule, data in the Incomes Register is corrected by way of a replacement report. However, there are situations where the replacement method cannot be used; instead, the previously submitted report must be cancelled and then a new report with corrected data submitted. These situations are listed in the ‘Cancellation of data’ section of this guide. The cancellation of data refers to deleting information from the Incomes Register.

When a benefits payment report is cancelled, the previously submitted report is deleted. The deletion is allocated to the correct report based on the Incomes Register’s report reference or the payer’s report reference. When an entire record is cancelled, the record reference of the record in question is used.

5.3 Correcting an error in a report

The need to correct a report may arise from a payment error or a reporting error. Payment errors are situations where the report as such is correct, but the amount of income paid was too high or too low. Reporting errors refer for example to situations where the income was paid correctly but reported incorrectly to the Incomes Register due to mistyping, for example. The income may also have been reported using a wrong income type. When it comes to reporting errors, as a rule, the original data must be corrected using a replacement method.

The correction can be allocated to the correct report either using the Incomes Register’s report reference or the benefits payer’s own report reference. Both references can also be submitted in the report. The recommendation is that the benefit payer specifies a version number on the replacement report to enable the correction to be allocated to the correct report.

The Incomes Register assigns version number 1 to the new report. The first replacement report is allocated to a previous report by providing this version number (1) on the replacement report. The first replacement report, in turn, is stored in the Incomes Register as version number 2. If a version number is not used when submitting a replacement report, the Incomes Register will always perform the action on the latest version of the report. The use of the version number is described in more detail in the ‘Technical interface – Submitting data to the Incomes Register’ document.

5.4 Correcting payment errors

5.4.1 Too little has been paid in benefits

If an insufficient amount of benefit has been paid to the income earner but the amount matches the information on the benefits payment report, the original report will not be corrected. The original report remains valid, and a new report is submitted on the missing payment for the date on which the missing part is paid.

5.4.2 Too much has been paid in benefits

If an income earner has been erroneously paid too much, the benefit payer submits a replacement report. The overpayment is regarded as unjust enrichment, and the new report replaces the original report. Unjust enrichment is explained in greater detail in the ‘Reporting an unjust enrichment’ section of this guide.

5.4.3 Benefit has been paid to the wrong account

If an income earner’s benefit is paid to a third party and the income earner has provided an incorrect bank account number for the payment of the benefit, the benefit payer is not obliged to correct the mistake. Because it is a question of income to which the income earner is entitled, the payment details should be displayed in the Incomes Register as the income earner’s income. If it is a case of the benefit payer’s own mistake or if the benefit payer is otherwise obliged to correct the mistake, the information should be corrected according to the ‘Correcting data by cancelling a previously submitted report’ section of this guide.

5.4.4 Insufficient amount of benefit has been paid to a substitute recipient

Unjust enrichment should not be reported to the Incomes Register, if the error occurred in the forwarding of the payment to a substitute recipient instead of the income earner’s decision. A payment may be incorrectly forwarded so that the payment made to the substitute recipient is too low and, as a result, the income earner receives an overpayment. A so-called overpayment like this is not considered unjust enrichment. The payer may make a separate decision on the payment incorrectly forwarded to the substitute recipient. This will not, however, affect the reporting procedure described in these instructions.

What is of the essence here is that the amount granted to the income earner as well as the amount paid were both correct. The amount of benefit paid to the substitute recipient was too low as a result of a payment distribution error that occurred during the payment stage. When incorrect payment distribution information like this is corrected, the amount of the income earner’s taxable income may not be changed compared to the original reports.

5.4.5 Too much benefit has been paid to a substitute recipient

A payment forwarded to a substitute recipient may be incorrect also in the sense that the substitute recipient receives an overpayment. The unjust enrichment received by the substitute recipient is not reported to the Incomes Register. However, the payment of the missing income paid later to the income earner must be reported to the Incomes Register. When reporting the payment to the Incomes Register, the payer must specify the ‘Payment reallocation – Yes’ entry. This indicates to the data users that the payment concerns a payment of missing income and not a payment based on a decision to grant a new benefit. The additional data must only be specified for the income type of the benefit reported, not for the ‘Withholding tax’ income type.

In addition to the entry concerning a payment of missing income, the original report must be corrected so that the amount of deduction is correctly distributed in the replacement report. The payer must specify either ‘Payment reallocation from taxable income’ or ‘Payment reallocation from net income’ as the overpayment deduction type, depending on the case. Money transfers between the substitute recipient and the payer do not need to be reported to the Incomes Register. This means that when a substitute recipient refunds an overpayment, the payer should not report it to the Incomes Register. When correcting Incomes Register data, the amount of the income earner’s taxable income may not be changed due to the corrections compared to the amount originally reported.

The payer may make a separate decision on the payment incorrectly forwarded to the substitute recipient. This will not, however, affect the reporting procedure described in these instructions.

5.4.6 Payments returned to the payer by the enforcement authority

The National Enforcement Authority of Finland usually returns any overpayments it receives directly to the income earner. When the benefit payer makes a payment to the enforcement authority in accordance with a payment ban, the payer cannot know how the payment is distributed in the end. Therefore, in such situations, the payer does not need to correct the original report submitted to the Incomes Register.

However, if the National Enforcement Authority of Finland for some reason returns a payment to the payer, the payer must in certain exceptional situations report this to the Incomes Register. A report must be submitted, for example, if the returned payment affects the incomer earner’s taxation. If the National Enforcement Authority of Finland returns a payment to the payer and the payer then forwards the returned payment to the income earner, the payer is not required to report the forwarded payment to the Incomes Register. However, if the payer does not forward the payment returned by the National Enforcement Authority of Finland to the income earner, the payer is required to report the returned payment to the Incomes Register. The kind of situation occurs when a payment originally paid to an income earner changes to an unjust enrichment (for example, when the income earner dies and the overpayment is returned to the payer).

5.5 Cancellation of data

If need be, the record or report may be cancelled, that is, removed from the Incomes Register. Cancellation is not made with the same benefits payment report record type as is used when new and replacement benefits payment reports are submitted. Cancellation has been separated into a dedicated schema.

For example, if the type of the record uploaded to the Incomes Register is ‘Cancellation of benefits payment reports’, the following information must be provided in addition to the technical record data:

• Record owner’s (payer’s) identification details
• The ‘Payer's report reference’ or ‘Incomes Register report reference’ of the cancelled report

The report's version number may also be provided. The version number constitutes voluntarily submitted complementary additional data.

The cancellation record types can be used to cancel, for instance, an individual benefits payment report (record type 107) or the entire record comprising the benefits payment reports (111). Cancellation has been separated into its own schema structure. When a report is cancelled, the previously submitted report is deleted. The deletion is allocated to the correct report based on the Incomes Register’s report reference or the payer’s report reference. When an entire record is cancelled, the record reference of the record in question is used.

A benefits payment report must always be cancelled when you correct data on which data distribution is based. The following information is used as a basis for distribution (data group in brackets):

• Date of payment or other reporting date (Record data)
• Identifier (Payer’s identifiers)
• Identifier (Income earner's identifiers)
• Identifier (Substitute recipient identifiers)
• Date of birth (Basic income earner details)
• Start date/End date (Original earnings period)

Usually, a benefits payment report must also be cancelled when the earnings period changes (i.e. the entry ‘Start date/End date (Earnings period)’), except in cases where part of the benefit changes to an unjust enrichment and, as a result, the earnings period also changes.

The report will also be cancelled in case of so-called refunded money, which is explained in greater detail in the ‘Refunded money’ section of this guide.

The data must be corrected by cancelling the previous report also in cases where one of the following entries is specified for the income type:

• Recovery
• Unprompted refund
• Late payment increase

If one of these entries has already been specified in the original report, the data can be corrected by submitting a replacement report.

5.6 Correcting data by cancelling a previously submitted report

This subsection gives examples of situations where data must be corrected by cancellation. The cancellation method must be used so that data users who have received an incorrect report from the Incomes Register learn when the report is changed.

5.6.1 Correction of a payment date

An incorrect payment date or other reporting date must always be corrected by cancelling the previously submitted report. If other payments made to the same income earner have been reported on the same report, all data on the cancelled report must be resubmitted on one or several new reports and corrected where necessary. This must be done even when some of the reported payments have actually been paid on the reported payment date.

An incorrect payment date is not always caused by inadvertence or oversight. The benefit payer may make a payment and submit a report to the Incomes Register correctly, and yet the payment may be returned from the bank, in which case it will not reach the income earner. In this case, the report should be cancelled. The benefit payer will submit a new report including the new information once the income has been successfully paid.

5.6.2 Correcting the earnings period

An incorrect earnings period must be corrected by cancelling the previously submitted report when correcting an earnings period specified in the ‘Deductions’ or ‘Additional repayment details’ data group. Usually an incorrect earnings period must also be corrected by cancelling the previously submitted report when correcting an earnings period specified in the ‘Earnings period’ data group. If several payments made to the same income earner have been reported on the report, all data on the report must be resubmitted and corrected where necessary.

In certain exceptional cases, however, an earnings period specified for an income type must be corrected by submitting a replacement report. A replacement report must be submitted when part of the benefit changes to an unjust enrichment and, as a result, the earnings period also changes, or in situations where the payer corrects the earnings period and specifies the entry ‘Income type changed, new income type code’.

Unlike the earnings payment report, the Incomes Register's benefits payment report does not include period data on the entire record. The only data indicating the time of benefit payment that applies to the entire record is 'Date of payment or other reporting date'. At report level, the precise earnings period of the type of income paid must be submitted.

5.6.3 Correcting the benefit payer’s identifiers

If the benefit payer’s identifiers contain an error, all of the reports included in the record must be resubmitted because, in all probability, the incorrect benefit payer identifier is found in all of them. One record must never contain data on payments made by several different benefit payers, such as the payment data of two different customer companies. In the cancellation of an entire record, the item to be cancelled is specified using the payer’s record reference or the Incomes Register’s record reference rather than report references.

5.6.4 Correction of income earner’s identifier or substitute recipient identifiers

The data must primarily be reported to the Incomes Register using a Finnish personal identity code. If the income earner does not have a Finnish customer identifier, the information should be reported using a foreign identifier. In such a case, name, date of birth, sex and address details must also be provided. If the income earner has both a Finnish and a foreign identifier, it is recommended that both identifiers be reported. If the income earner is a non-resident taxpayer, the Tax Identification Number (TIN) of the country of residence must be reported if known. If the income earner does not have a Finnish or a foreign identifier, the ‘Income earner does not have a customer ID’ entry must be specified.

If a foreign income earner later receives a Finnish personal identity code, the data must be reported to the Incomes Register using the Finnish personal identity code starting from the next report. The previous reports do not need to be corrected. Correspondingly, if the sex of an income earner changes and as a result of this they receive a new personal identity code, the new code must be reported to the Incomes Register in the next report submitted after the change. The previous reports submitted to the Incomes Register do not need to be corrected.

An incorrect income earner's identifier or substitute recipient identifier must always be corrected by cancelling the previously submitted report. An income earner may have several identifiers that can be reported. If even one of the submitted identifiers is incorrect, the report must be cancelled and all data on the report must be resubmitted and corrected where necessary.

5.6.5 Refunded money

Paid income may be refunded by the bank, for instance, because it never reached the income earner. This may occur, for example, if the income has been paid to the wrong recipient, the income earner’s account has been terminated, the income has been calculated in the wrong currency or the income earner has not withdrawn the payment from the bank. If the paid income is refunded, the benefit payer should correct the data so that it corresponds with the realised payment.

In some cases, the bank may deduct transaction fees before returning the payment to the benefit payer. It is not practical to report the bank charges using the ‘Deductions’ data group data. If the benefit payer writes off the fees charged by the bank as its own losses, the reports can be submitted in accordance with Example 40. If the share of the fees charged by the bank is deemed to be the income earner’s taxable income, the reports to the Incomes Register should be corrected in accordance with Example 42.

5.7 Returning of withholding to an income earner

If the benefit payer has withheld too much tax from the benefit paid to the income earner, it can return the excess amount to the income earner. The returning of the withholding is reported to the Incomes Register on a new report where the amount of withholding is negative.

The excess amount withheld must be refunded during the same calendar year. This is because the negative amount of withholding is taken into account in the taxation for the year of the payment date. Therefore, extraneous withholding carried out during the previous year can no longer be returned to the income earner in the next January. If the payer does not return the extraneous withholding during the same year, the extraneous withholding is accredited to the income earner in taxation.

If a mistake is made in returning the withholding, the data must be corrected in the Incomes Register.

If the returned withholding is distrained, this must be reported to the Incomes Register.

If the returned withholding or part of it is paid to a substitute recipient, the deduction data must be reported to the Incomes Register.

In certain situations, the benefit paid involves a deduction allocated to a benefit that was not originally reported to the Incomes Register.  For example, social assistance is not reported to the Incomes Register but, if withholding must be returned regarding the benefit paid or part of it is paid to compensate for social assistance, data about the deduction must be reported to the Incomes Register.

5.8 Corrections related to employee contributions

A certain part of the total of the employee’s earnings-related pension insurance contribution, the employee’s unemployment insurance contribution and the daily allowance contribution of health insurance is deducted from the daily allowance under the Workers’ Compensation Act. Employee contributions can also be deducted in a similar manner from patient injury insurance, motor liability insurance and liability insurance payments, and from the rehabilitation allowance under the Workers’ Compensation Act. When the employee contributions are deducted from the work income on which a benefit is based before the amount of the benefit is confirmed, the deduction is not reported to the Incomes Register.

Even though most of the benefits data users need the post-deduction amount of employee contributions, some of the benefits data users require the amount before the deduction of the employee contributions. The deduction is reported by using the ‘Deductions’ data group where the amount of deduction is reported using a specific deduction type. When using the deduction of employee contributions, report the gross amount prior to the deduction as the amount of the income type.

This section presents situations where the report of the original benefit included the deduction of employee contributions, and the report is corrected later. Corrections involve special situations that are covered in the examples presented in this section.

6 Reporting unjust enrichment and recovery

6.1 Reporting an unjust enrichment

In some situations, the income earner is not entitled to a payment made to them and reported to the Incomes Register. A case of unjust enrichment occurs when, for example, a benefit has been granted or paid groundlessly, for example to the wrong person or in an incorrect amount. Unjust enrichment may also occur when the circumstances of the benefit change at a later date.

Once the unjust enrichment is detected, the data must be corrected in the Incomes Register without undue delay and in any case no later than within one month of the time when the decision regarding the unjust enrichment is made. When an overpayment is in dispute, the decision on unjust enrichment means the final decision on the adjustment or removal of the benefit. There are two different ways of reporting unjust enrichment, depending on whether the income was already reported to the Incomes Register as other income before the error was detected, or whether the payment error was detected before the report was submitted. If the error is detected before the report is submitted, use the separate ‘Unjust enrichment’ income type. This income type is used only when a groundless payment is detected before the first report is submitted and the income has not been previously reported to the Incomes Register as other income.

If it is not just a case of using the wrong account number, but the payment made to an incorrect income earner has been entered into the payment system including the withholding, the withheld amount must also be reported on the incorrect recipient's benefits payment report in the amount collected. However, the payment is often just entered in the name of the actual income earner and paid to them. In such a case, the withholding is reported only on the actual income earner's benefits payment report. Ungrounded payments to legal persons or unidentified parties are not reported on the benefits payment report.

If the ungrounded payment has already been reported to the Incomes Register as other income, the data must be corrected by using the income type specified in the report and the separate ‘Unjust enrichment – Yes’ entry provided in connection with it.

If the income type changes retroactively in addition to the income changing to an unjust enrichment, the payer must specify in the same replacement report the ‘Unjust enrichment’ entry and the ‘Income type changed, new income type code’ entry. This data cannot be submitted in separate reports because an unjust enrichment and an income type change must always be submitted using a replacement report and only one report version can be valid at a time.

6.2 Income types for which the ‘Unjust enrichment’ entry cannot be specified

It is not appropriate to use the ‘Unjust enrichment’ entry in the case of items deducted from income. Such items include, for example, withholding and distraint. Payments recovered are reported once the payment has been recovered. Tax withheld and tax at source collected are reported as the amounts in which they were recovered. If the payer adjusts the amounts, the amounts adjusted are reported once they have been adjusted.

In the case of benefits, the ‘Unjust enrichment – Yes’ entry cannot be submitted in connection with the following income types:

• Withholding tax (1266)
• Tax at source (1267)
• Tax at source deduction (1268)
• Distraint (1269)

6.3 General information about the recovery of benefits

When the income earner pays back an unjust enrichment or another groundless payment made, this must be reported to the Incomes Register. The procedure is the same if the recovery is conducted so that the payment is offset against a later benefit payment. The recovered amount is not corrected on the original benefits payment report; the recovered amount is reported on a new report and allocated to the payment date on which the income was recovered. The procedure is the same when the payment is returned to the benefit payer, for example, if the employer or spouse pays back the benefit on behalf of the income earner.

There is more information on recovery or offsetting reporting in the ‘Benefits – Recovery and recourse’ instructions.

A recovery report is created by submitting the ‘Recovery – Yes’ entry linked to the income type and the related additional data for the payment date on which the income earner pays the overpayment back or the overpayment is offset against a later benefit payment.

Reporting the original payment date is not mandatory. However, in some cases it is needed so that the Tax Administration can correctly allocate the income earner’s taxation. The payment date is necessary when, for example, recovered withholding needs to be allocated to the tax year during which it was withheld from a payment. If the income is recovered from the income earner in net, the tax withholding applicable to the amount is reported in the ‘Withholding from the repayment’ section. If the income is recovered from the income earner as a gross amount, the amount of the tax withholding does not need to be reported. The previous withholdings are accredited to the income earner in taxation.  Recovery and recourse are discussed in more detail in the ‘Benefits: recovery and recourse’ instructions.

The ‘Tax at source from the repayment’ data is submitted, if the income is recovered from the income earner in net and the tax at source is deducted from other taxes at source transferred to the Tax Administration. If the income is recovered from the income earner in gross, the benefit payer should not report the previous tax at source exacted from the recovered payment. These instructions do not cover all the specific requirements regarding the reporting of recoveries. Reporting tax at source and reporting in international situations are described in more detail in the ‘Benefits: recovery and recourse in international situations’ instructions.

The original earnings period can be specified in the ‘Additional repayment details’ data group with a precision of a calendar year. Reporting the original payment date related to the original earnings period is not mandatory. If the original payment date is not specified, the Tax Administration will allocate the payer’s obligations according to the end date of the original earnings period in the adjustment of self-assessed taxes transferred to it. The payer may thus lose interest benefit by fulfilling only its minimum reporting obligation and not reporting the original payment date.

The payer must report the details of the recovery to the Incomes Register when the income earner returns the overpayment to the payer. The data must be submitted no later than on the fifth day after receiving notification of the payment of the recovered amount, the benefit payer and the payment or compensation to which the payment is linked and the recovery has been allocated in the benefit payer’s own system. Of this allocation data, the actual repayment date is reported as the repayment date in the ‘Additional repayment details’ data group.

6.4 Waiving the recovery

Legal sources on the recovery of benefits typically include a provision on the possibility of the benefit granter to waive the recovery either partially or in full in certain situations. When the granter considers waiving the recovery, they take into account, for example, considerations of equity and the income earner's sincere intentions. In addition to the waiving of recovery, there are situations where a decision is made to continue the payment of a benefit of a continuous nature even though the benefit has been found to be groundless. 

If income has been groundlessly paid to an income earner, a report on unjust enrichment must be submitted to the Incomes Register regardless of how the recovery will be carried out or, for example, whether it will be waived in full or in part. In some cases, therefore, more unjust enrichment may be registered as income for an income earner than has been or ever will be recovered from them. If the paying of income continues without a decision granting the benefit, the income is reported to the Incomes Register using the Unjust enrichment income type.

6.5 Benefit recipient’s unprompted repayment of benefit

An income earner may repay a received benefit unprompted even if the benefit does to comprise unjust enrichment for the income earner. The repaid benefit will not comprise unjust enrichment for the income earner later. In this case, the benefit payer does not report an ungrounded benefit.

The refunded amount is reported to the Incomes Register using a new report on the basis of the ‘Unprompted refund – Yes’ data and by allocating it to the payment date on which the income was refunded. The ‘Additional repayment details’ data group enables the Tax Administration to correctly allocate the income earner’s taxation.

If an income that was refunded unprompted is later deemed to be unjust enrichment in the benefit payer’s process, the benefit payer must correct the original report by submitting a replacement report in which the ‘Unjust enrichment – Yes’ entry is linked to the paid income type and the ‘Unprompted refund – Yes’ entry is changed to ‘Recovery – Yes’. In this case, unjust enrichment refers both to a decision made by the process itself regarding unjust enrichment (e.g. a decision to reallocate, change, correct, cancel or remove) and unjust enrichment due to a payment error resulting in an overpayment to the income earner.

Unprompted repayment of benefit is subject to the same regulations and measures as in recovery. However, unprompted refund can never be an unjust enrichment.

6.6 Reporting the reallocation of a payment that does not affect taxation

The ‘No effect on taxation – Yes’ data will affect the income earner’s taxation. The payer should report this data in two cases:

• To prevent the same income from being taxed twice: when paying an income that has already previously been reported as taxable income
• To prevent an ungrounded deduction: when reporting a repaid income that was not originally subject to tax.

The same income may be reported twice as taxable income if an overpayment has been made to a substitute recipient. However, such occurrences are rare. The income is entirely taxable if the substitute recipient’s deduction is reported using any of the following deduction types: ‘Collection of maintenance debt’, ‘Demand for payment (not a recourse situation)’, ‘MATA and MYEL collection’, ‘Other deduction from net income’, ‘Recourse on tax-exempt income’, ‘Recovery of guaranteed student loan debt’ or ‘YEL collection’. All of these deductions are deductions effected after withholding. When an income earner is paid an overpayment already paid to a substitute recipient, the payment of the missing income must be reported to the Incomes Register. This duty to report will result in the same income being reported twice. When reporting the payment, the ‘No effect on taxation – Yes’ entry should be added in order to prevent the same income from being taxed twice. There is more information on reporting as well as examples in the ‘Too much benefit paid to a substitute recipient’ section of this guide.

An ungrounded deduction received by the income earner in taxation may occur in rare situations where the benefits payment report is used to report the repayment of the income earner’s income, said income has not been originally taxed and it is not a case of a tax-exempt income type. As a result of recovery or unprompted refund, the benefit payer is refunded for a payment that, when it was paid, had the ‘Recourse on taxable income’, ‘Other deduction from taxable income’ or ‘Deduction of employee contributions’ deduction type. If the ‘Additional repayment details’ data group is used to report refunded income, the data user cannot know whether the refunded income had previously been taxed or not. This is why the payer should use the ‘No effect on taxation – Yes’ entry, so as to make the Tax Administration ignore the recovered amount in the income earner’s taxation.

The subject has also been discussed in the ‘Benefits – Recovery and recourse’ instructions.   

7 Reporting data in international situations

7.1 Obligation to inform in international situations

A Finnish benefit payer must report to the Incomes Register all the benefits and pension income paid regardless of whether the income earner is living in Finland or abroad.

Income data must be reported to the Incomes Register in international situations whenever the benefit payer has an obligation to inform a user of the Incomes Register data. Foreign payers of benefits and pensions do not have an equally extensive obligation to inform as foreign employers. The third parties’ obligation to inform laid down in the act on assessment procedure applies to foreign benefit payers only if the benefit payer has a permanent establishment in Finland for the purposes of income tax. They are then considered comparable to a benefit payer in Finland with respect to the tax-related obligation to inform.

The benefit payer can report payments made to non-resident taxpayers and resident taxpayers in the same record. Persons whose residence and home are abroad and who do not reside in Finland for more than six months consecutively are deemed non-resident taxpayers. For further information on the income earner’s tax liability, see the instructions on tax residency and non-residency. A report must be submitted of payments made to a person who is a non-resident taxpayer, regardless of whether tax at source must have been collected or tax withheld from the payment, or whether the income earner is insured in Finland. Such a report must also be submitted on compensation paid to a non-resident taxpayer for an accident that has occurred abroad.

7.2 Income earner details in international situations

In international situations, benefits and pension income are reported using the same income types regardless of whether the income earner is a resident or non-resident taxpayer.

The details of an income earner living abroad must also be reported to the Incomes Register primarily using a Finnish personal identity code entered into the Population Information System. In addition, a foreign tax identification number or personal identity code must be provided. If the income earner does not have a Finnish personal identity code, the data is reported using the income earner’s foreign personal identity code. If the payer does not know the income earner’s Finnish or foreign personal identity code, the income earner’s name, date of birth, sex and address must be provided. The income earner’s address in Finland and in the country of residence can both be reported to the Incomes Register.

If an artificial identifier has been given to the income earner, the artificial identifier is reported using the identifier type Other identifier Every time data is submitted with a non-Finnish personal identity code, the following data must be submitted: name, date of birth, sex, and address. The foreign identifier is also reported, if the payer knows it.

If the income earner is a non-resident taxpayer, the ‘Non-resident taxpayer – Yes’ must also be specified in the income earner details. Furthermore, in the case of non-resident taxpayers, the country code of the country of residence, the Tax Identification Number (TIN) of the country of residence or the foreign personal identity code, and the address in the country of residence must always be reported. International treaties oblige the Tax Administration to forward information on income earned by foreign nationals in Finland to foreign tax authorities.

If withholding has been carried out from income subject to tax at source (such as sickness allowance) received by a non-resident taxpayer instead of collecting tax at source, the ‘Income subject to withholding – Yes’ entry must be submitted. The payer may carry out withholding from income subject to tax at source only if the income earner presents a non-resident taxpayer's tax card that was calculated for the year in question, and is valid on the payment date.

However, the ‘Income subject to withholding – Yes’ entry is not needed for the income types paid to non-resident taxpayers that are progressively taxed (such as pension income).

7.3 Reporting of income subject to tax at source

When reporting income subject to tax at source, in addition to a foreign identifier, the payer must also submit the income earner’s name, date of birth, sex, address and country code of the country of residence.

7.4 Non-resident taxpayer’s benefit subject to withholding

The 'Income subject to withholding' data item can be submitted only when the income earner is a non-resident taxpayer and has, in accordance with the act on assessment procedure, applied for (progressive) taxation of income that would otherwise be subject to tax at source (such as unemployment allowance). This requires that the income earner has provided the payer with a tax card of a non-resident taxpayer. However, the ‘Income subject to withholding – Yes’ entry is not needed for the income types paid to non-resident taxpayers that are progressively taxed (such as pension income).

7.5 Tax at source changes to a resident taxpayer’s withholding

The income earner’s circumstances may change so that the original benefits payment report must be corrected by submitting a replacement report. This may happen, for example, when an income earner living abroad moves to Finland and changes from a non-resident taxpayer to a resident taxpayer. Tax at source may have been collected from the income before the payer is informed of the income earner having become a resident taxpayer.

The excess amount withheld must be refunded during the same calendar year. This is because the negative withholding amount is recorded for the payment year indicated in the record data. For example, a negative withholding supposed to be allocated to the previous December’s excessive withholding cannot be reported in January; instead, the excessive withholding will be credited to the income earner in taxation.

7.6 Health insurance contributions in international situations

Persons insured in Finland under the Health Insurance Act participate in funding the benefits under the social security legislation by paying the health insurance health care contribution and the health insurance daily allowance contribution, collected in connection with taxes. Together, the health care contribution and the daily allowance contribution form the health insurance contribution of the insured person.

Pension recipients who live abroad and for the compensation of whose medical expenses Finland is responsible under the EU's social security regulation (No. 1408/71) or 'basic Regulation' (No. 883/2004) pay the health care contribution to Finland even after they are no longer insured in Finland under the Health Insurance Act.

The benefit payer is obliged to withhold tax from all income items subject to withholding. If the person is insured in Finland, the withholding includes the person’s health insurance contribution.

The reporter of pension and benefits income does not need to include an itemisation on their Incomes Register benefits payment reports to indicate what part of the withholding is health insurance contribution. The correct contribution amount has been taken into consideration in the income earner's withholding rate.

7.7 Only the health care contribution is collected from the income earner’s pension

When the pension of a resident taxpayer is paid to another country, the reporting is the same as for domestic situations. An exception to this rule include situations where only the health care contribution is collected from the resident taxpayer’s pension according to the tax card.

In some international situations, a tax treaty may prevent Finland from taxing the income. However, tax treaties do not apply to the health insurance contribution. Health care contribution must thus be paid from pension income if Finland is responsible for compensating the pension recipient's medical expenses. If the income earner is a resident taxpayer, the benefit payer uses the ‘Taxability of benefit’ entry to specify, as per the tax card’s instructions, that only the health care contribution is collected from the income. 

7.8 Pension income of a non-resident taxpayer

When a non-resident taxpayer is paid pension, the grounds for pension paid to a non-resident taxpayer must be reported in the additional details for the income type. The information must be reported in the additional details for both the pension and the withholding. If the grounds for different portions of an earnings-related pension paid to a non-resident taxpayer are different (e.g. in the case of the ‘VILMA pension’), the withholding on the different portions must be reported to the Incomes Register using different income type itemisations. The same grounds for pension must be given to the ‘Withholding tax’ income type as to the income type that the withholding concerns. The Tax Administration needs this data for the purposes of international information exchange.

In the ‘Grounds for pension paid to a non-resident taxpayer’ data group, the payer must submit the employment relationship or contract based on which the pension is paid. The grounds for pension paid include the following:

• ‘Earnings-related pension paid by a public sector organisation not earned from business activities’ – This is submitted when the pension was earned in the service of a public-sector organisation. The data is not submitted if the pension has been earned from public-sector business activities.
• ‘Earnings-related pension from public body, earned from business activities’ – This is submitted when the pension was earned from public-sector business activities.
• ‘Non-earnings-related pension paid by the Social Insurance Institution of Finland or the State Treasury’ – This is submitted when Kela or the State Treasury pays non-earnings-related pension based on social security legislation.
• ‘Other payment based on social security legislation’ – This is submitted when the pension was earned in the private sector, or when the pension is paid on the basis of an accident and occupational disease insurance, unemployment insurance or health insurance.
• ‘Other payment not based on social security legislation’ – This is submitted when the pension is paid on the basis of a voluntary pension insurance purchased independently or taken out by the employer, or on the basis of a motor liability insurance or some other risk insurance, for example.

According to the law, pension paid to a non-resident is always progressively taxed. Therefore, the income earner does not need to separately register for progressive taxation. In addition, it is not necessary to specify the ‘Income subject to withholding – Yes’ entry in the benefits payment report.

7.9 A resident pensioner becomes a non-resident taxpayer

If an income earner retroactively changes from a resident taxpayer to a non-resident taxpayer, or vice versa, the benefit payer must correct the previously submitted reports to match the new tax card.