Benefit payment to a substitute recipient
The term 'substitute recipient' refers to a payment recipient to whom a benefit or part of a benefit is paid instead of the actual benefit recipient. The actual benefit recipient is the person to whom a decision on the benefit was given.
The substitute recipient must be reported to the Incomes Register if a benefit payment is made to a person other than the benefit recipient based on a right of recourse, for example.
A substitute recipient can only be reported in a benefits payment report.
Who can be a substitute recipient?
The substitute recipient could be, for example, the Social Insurance Institution of Finland (Kela), the Employment Fund, an earnings-related pension provider, a non-life insurance provider or an employer. The substitute recipient can also be the organisation that pays the benefit. Read more about the substitute recipient types.
In which cases must a substitute recipient be reported to the Incomes Register?
Information on a benefit being paid to a substitute recipient must be reported to the Incomes Register only in cases where the Incomes Register data user requires this piece of data.
A benefit or part of a benefit may be paid to a substitute recipient in the following cases, for example:
- The benefit is paid to another benefit payer based on right of recourse as a recourse payment.
- A share corresponding to the salary from a parental allowance granted by Kela is paid to the employer.
- A housing allowance granted by Kela is paid directly to the lessor.
- A benefit or pension is paid to a municipal social welfare body.
Reporting of the substitute recipient is not necessary if 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, because none of the data users requires this piece of data. In these cases, the payment can be reported to the Incomes Register following the standard procedure without including the substitute recipient’s details.
Distraint and withholding must be reported in the benefits payment report under separate income types, and these are not payments to a substitute recipient.
How to report a substitute recipient’s details in the Incomes Register
A benefit being paid to a substitute recipient must be reported under the Deductions data group on the benefits payment report. The Deductions data group must also be used when the benefits income is paid in full to a substitute recipient. The actual benefit recipient to whom the decision on the benefit was given must always be reported as the income earner.
The benefit payer must report under the Deductions data group the share paid to the substitute recipient and information about which substitute recipient the payment was made to.
At least the following must be reported under the Deductions data group:
- Income type of deduction
- Type of deduction
- Amount of deduction
- Earnings period of original benefit (start and end date)
- Period of calculation.
Reporting the substitute recipient’s details is recommended but not mandatory.
For more information on the data of deduction to be reported, please see the document Application instructions on the data contents of a benefits payment report (on the page Documentation).
The income earner has started parental leave at the beginning of June. The employer pays the income earner EUR 3,000 as the salary for June. Kela pays the parental allowance granted for June, EUR 2,000, in full to the employer.
Income type: Parental allowance
Amount: EUR 2,000
Earnings period:
- Start date: 1 June 20xx
- End date: 30 June 20xx
Deductions:
- Deduction income type code: Parental allowance
- Type of deduction: Other deduction from taxable income
- Amount of deduction: EUR 2,000
- Earnings period of original benefit:
- Start date: 1 June 20xx
- End date 30 June 20xx
- Substitute recipient details:
- Type of identifier:
- Identifier:
- Type of substitute recipient: Employer
- Period of calculation:
- Start date: 1 June 20xx
- End date: 30 June 20xx
Sometimes an error may occur in the assignment of a payment to a substitute recipient. For more information on how to correct errors, please see sections 5.4.4 and 5.4.5 of the instructions Benefits: Reporting data to the Incomes Register.
