Are you an intermediary of transport services or rental homes? Learn about the reports you need to sendNews, 9/10/2020
As an intermediary of services, you will have to complete and submit an information return every year because a new reporting requirement has been in effect since the start of 2020.
If you run a business where you arrange transportation (or taxi) services, or arrange for rental accommodation in a house, apartment or a larger real estate property or part of it, you must send information to the Tax Administration in January 2021 on your contracts and payments that have taken place during 2020.
The intermediaries who are in charge of the transfer of payments between the sellers and the customers must send the reports. If you are based in another country and have a representative in Finland, your representative must gather together the payment data and send the reports.
The new information-reporting requirement is the first step to keep abreast with today’s international trend relating to the platform economy: many third parties are now required to send enough facts to the national tax administrations of various countries so that fiscal revenues can be secured. The OECD has published a guide, equated with an international standard, on how member countries should enact national rules on the information-reporting requirements. In addition, the Commission of the European Union has released a draft for a new Directive on the subject last July.
Taxi and other transport services: the intermediary’s requirement to report information
In the transportation industry, if payments to the taxi drivers and other service providers are handled by an intermediary, the reporting requirement concerns the intermediary. The work of the intermediary can be organised in a variety of ways. To make it easier to see how the way the intermediary’s activities affect the reporting requirement, see the illustrations below:
- A customer contacts the taxi dispatch center to request a taxi ride. The center sends the request on to the driver (an independent contractor) who happens to be free and not too far away from the customer’s location. When the taxi ride is over, the customer sends a payment to the center, which will then pay it on to the driver, net of charges.
- In this example, the center is required to report information.
- However, if circumstances were changed so that the customer’s payment would go to the driver, not the center, the center would not be required to report information.
- A company owns a fleet of vans that are used for transporting the customers’ packages of goods. The entire transport service from the sender to the recipient at the destination is sold by this company to whoever orders the service.
The company carries out the transport runs. It either operates its own vans or orders its sub-contractors to pick up and transport the packages to their destinations.
- This means that the company only accepts packages from its direct customers who order the services directly. The company is no third party, so it is not required to report information.
- To order a load of gravel delivered to a construction site, a customer makes a telephone call to an intermediary that passes the order on to a truck driver (an independent contractor). When the delivery is completed, the customer sends their payment to the intermediary’s office. The intermediary deducts a service charge and pays the rest on to the truck contractor.
- In this example, the intermediary is required to report information.
- However, if circumstances were changed so that the customer’s payment would go to the truck contractor, not the intermediary, the intermediary would not be required to report information.
Rental intermediaries’ requirement to report information
If an intermediary assists landlords and tenants to enter into rental agreements with each other, the intermediary is required to report information to the Tax Administration if the intermediary handles the payments. See the illustrations below to find out how different circumstances affect the rental intermediary’s information-reporting requirement:
- An intermediary has created a website, on real estate owners’ behalf, where apartments and other residential property is presented to potential tenants. Then, a tenant comes forward and signs a rental contract with one of the owners.
The tenant starts paying rent via the intermediary’s website that contains a payment-transfer feature. After deducting a fee from the tenant’s payment, the intermediary pays the rent on to the landlord.
- In this example, the intermediary, being the party that handles the payments and operates the website, must gather data and report it on to the Tax Administration.
- An intermediary has a website where rental summer cottages are presented to potential tenants. The contact information of every cottage’s landlord is shown on the website. Whenever a tenant wishes to rent a summer cottage, the rental contract is signed directly with the landlord, and the tenant pays the rent directly to the landlord as well.
- In this case, the intermediary that operates the website is not required to report information. This is because the website is for advertising, not for the business activity of an intermediary of rental services.
Intermediaries are invited to participate in our Newsroom
Please come to our online Newsroom Event on 22 September 2020 to hear about the information-reporting requirement of third parties. We try to answer the question: who must report what? There will be a question-answer session.
- Do you provide taxi, transportation, or rental services for others? Join our Newsroom Event on 22 September to find out whether your company must send information to the tax authority (in Finnish)
- “The Finnish Tax Administration’s official decision on information-reporting requirements” – Verohallinnon tiedonantopäätös 20 § (the official decision is in Finnish and Swedish)
- Do you provide taxi, transportation, or rental services for others? If you are an intermediary, you must submit an information return – news article dated May 20, 2020