Negligence penalty for a third-party filer regarding obligations laid down in § 14 f and 17 a–f of the act on the assessment procedure

This is an unofficial translation into English. The official guidance is available in Finnish and Swedish, the national languages: VH/2701/00.01.00/2023.

1 Scope of application

The third-party filer's general and special obligations to provide information are laid down in chapter 3 of the act on the assessment procedure (Laki verotusmenettelystä 1558/1995). A negligence penalty laid down in § 22 a of the act on the assessment procedure can be imposed on a party neglecting these obligations.

This guidance concerns the grounds for imposing a negligence penalty under § 22 a of the act on the assessment procedure as regards the following obligations to provide information:

• Reporting obligations regarding international financial account information in accordance with § 17 a–d of the act on the assessment procedure (FATCA and DAC2/CRS). These obligations to provide information concern financial institutions.
• Reporting obligations regarding reportable cross-border tax arrangements in accordance with § 14 f and 17 e of the act on the assessment procedure (DAC6). These concern the service provider's or taxpayer's obligation to provide information on tax arrangements that may include certain features of tax avoidance or tax evasion. These reportable arrangements are governed by the act on reportable arrangement in the field of taxation (Laki raportoitavista järjestelyistä verotuksen alalla 1559/2019).
• The platform operators' obligation to provide information on relevant activities in accordance with § 17 f of the act on the assessment procedure (DAC7). This concerns the obligation of digital platform economy operators to provide information on relevant activities enabled by them. The platform operators' reporting obligation applies in situations where the seller is liable to pay tax to Finland or another EU Member State or the immovable property rented out is located in one of those countries.The reporting of information, the deadline and method of reporting, and the due diligence, reporting and other obligations are laid down in the act on the digital platform operators’ obligation to report information in the field of taxation (Laki digitaalisen alustatalouden toimijoiden tiedonantovelvollisuudesta verotuksen alalla 1267/2022).

In addition, the following Tax Administration decisions contain provisions on deadlines and reporting methods regarding the above obligations:

• Tax Administration decision on the requirement to report information on financial accounts (A35/200/2016)
• Tax Administration decision to exchange information in accordance with the FATCA agreement (A38/200/2015)
• Tax Administration decision on the obligation to report and provide information on reportable arrangements (VH/2566/00.01.00/2020).

This guidance is applied to negligence penalties imposed for FATCA and DAC2/CRS reports submitted for the first time in 2024, and for DAC7 reports.

The guidance is applied to the DAC6 reports for which the reporting threshold of the arrangement has been exceeded during the period of validity of the guidance.

2 Overall regulation regarding the negligence penalty

The amount of negligence penalty under § 22 a of the act on the assessment procedure depends on how serious the neglect is. The penalty is determined as hundreds of euros, so the minimum penalty is €100. The party with obligation to provide information must always be heard before a negligence penalty may be imposed.

The negligence penalty imposed on the party with obligation to provide information may not be more than €2,000 if

1. there is a minor omission or error in the return or in other information or document submitted to fulfil the obligation to provide information or another obligation under chapter 3 of the act on the assessment procedure, or in the procedure followed, and the party required to provide information has not corrected the matter although a request to do so has demonstrably been sent;
2. the party with obligation to provide information has submitted a report, information or document late without a valid reason; or
3. the party with obligation to provide information has submitted the information by using a method other than decreed by law or specified by the Tax Administration.

If there are substantial omissions or errors in a return, other information or a document submitted by the party to fulfil the obligation to provide information or another obligation under chapter 3 of the act on the assessment procedure, or in the procedure followed, or if the party has not corrected the matter until after a request to do so had demonstrably been sent, a negligence penalty of no more than €5,000 can be imposed.

If the party with obligation to provide information has intentionally or through gross negligence submitted a substantially incorrect return, other information or document to meet the obligation or has failed to submit a return at all, or if the party has intentionally or through gross negligence substantially neglected another obligation under chapter 3 of the act on the assessment procedure partly or in full, a negligence penalty of no more than €15,000 can be imposed.

When imposing the negligence penalty, the Tax Administration takes into account the amount of information that the party is obliged to report. No negligence penalty is imposed on a natural person or death estate unless the neglect relates to an obligation to provide information about business activities or agricultural or forestry operations. The negligence penalty is not deductible as expense in taxation.

Interest for late payment is collected on an imposed and overdue negligence penalty in accordance with § 5 a of the act on surtax and penalty interest (Laki veronlisäyksestä ja viivekorosta 1556/1995). The interest for late payment accrues from the day following the due date stated in the decision up until the date of payment. The interest for late payment on an overdue negligence penalty is not deductible in income taxation.

A negligence penalty can be imposed both for neglecting the obligation to provide information and for neglecting other obligations under chapter 3 of the act on the assessment procedure, such as due diligence obligations.  The negligence penalty is specific to a return and to a data flow.

3 Filing deadline

The returns discussed in this guidance must arrive at the Tax Administration by the filing deadline. If the due date for filing falls on a Saturday, Sunday or other holiday, the return must arrive at the Tax Administration on the next business day at the latest.

• Where FATCA and DAC2/CRS information is concerned, a return for the calendar year must be filed by the end of next January.
• Where DAC7 information is concerned, platform operators reporting to Finland must file the calendar year's information by the end of next January.
• As regards reportable arrangements, both the service provider with obligation to provide information (§ 17 e of the act on the assessment procedure) and the relevant taxpayer liable to report information (§ 14 f of the act on the assessment procedure) must submit a return on the reportable arrangement to the Tax Administration within 30 days of the date when any of the following reporting thresholds is exceeded (§ 5 and § 9 of the act on reportable arrangements in the field of taxation):
  • the reportable arrangement has been made available for implementation,
  • the reportable arrangement is ready for implementation, or
  • the first step of the reportable arrangement has been implemented.

4 Method of reporting

The annual return on FATCA and DAC2/CRS information and the reporting platform operator's annual information return according to DAC7 must be submitted electronically in the Ilmoitin.fi service.

The DAC6 return can be filed in the Ilmoitin.fi service or in the Tax Administration's e-service. Natural persons and death estates can also file the return on paper (Form 6910e).

5 Extended time for filing based on an application

5.1 Extended time for filing regarding FATCA and DAC2/CRS obligations

An extension of time can be requested for filing a return regarding FATCA and DAC2/CRS obligations. 

If the taxpayer wants to request an extension, they must submit an application to the Tax Administration before the end of office hours on the original due date of the annual information return at the latest. If the application arrives after that, it is considered to have arrived late and will not be processed. Only for a special reason can an extension be granted for an application that has arrived after the filing deadline.

An extension of time for filing an annual information return can be requested orally or in writing. The free-form application must contain the following information:

• date
• name of party with reporting obligation
• Business ID
• annual information return for which extension is requested
• up until when extension is requested
• grounds on which extension is requested, and
• contact information of the party with reporting obligation or of their representative

5.2 No extension is granted for filing a return regarding DAC6 or DAC7 obligations 

As regards DAC6 obligations, both the service provider with obligation to provide information and the taxpayer with reporting obligation are required by law to submit a return within a 30 days. The act on reportable arrangements in the field of taxation (1559/2019) does not contain provisions on granting an extension for filing.

As regards DAC7 obligations, a platform operator reporting to Finland must report the information laid down in the act on the digital platform economy operators' obligation to report information in the field of taxation (1267/2022) to the Tax Administration annually by the end of January following the reporting period. The act does not contain provisions on granting an extension for filing.

6 Negligence penalty amount

A negligence penalty is imposed separately on each annual information return that is missing, substantially incorrect or filed late, and for failure to reply to the Tax Administration’s request for additional information in an acceptable way. When a negligence penalty is determined, it is possible to take into account the total number of the filer’s cases of neglect and missing recipient itemisations, the number of times the filer has been requested to submit the missing annual information return, the economic value of the reportable information, and the actual filing date of the returns. A negligence penalty can also be imposed if the return is not submitted in the method specified by the Tax Administration. Further, a negligence penalty can be imposed separately for neglecting other obligations relating to the obligation to provide information, such as due diligence obligations. When determining the amount of negligence penalty, the Tax Administration will consider the amount of information to be reported, for example. The above types of neglect are not sanctioned by other legislation. The nature of obligations is such that criminal sanctions and other punitive administrative sanctions are not applicable to the cases of neglect.

6.1 The amount of negligence penalty regarding liabilities relating to financial account information, and to money laundering and prevention of terrorism  

A negligence penalty imposed for neglecting the obligations to provide information and the due diligence procedures under § 17 a–d of the act on the assessment procedure (FATCA and DAC2/CRS) is determined in accordance with the table below, unless there are special reasons for reducing or increasing the amount.

Information not assessed or filed due to negligence; accounts and information assessed or filed incorrectly	Information has arrived late, or  has been submitted by using a wrong method, or  the party with obligation to provide information has been requested to file an annual information return, or no acceptable reply has been received to an information request.		The annual return information has not been available for international exchange of information, or due diligence procedures have been neglected.
Number of accounts	Late / requested once	Requested twice
1–20	€100	€200	€800
21–50	€200	€400	€1,200
51–100	€300	€500	€1,600
101–200	€400	€600	€2,000
201–700	€500	€700	€3,000
more than 700	€1,500	€2,000	€5,000
Nil return	€100	€200	€400

For a justified reason, it is possible to reduce the negligence penalty or not impose it at all. A justified reason is, for example, if the neglect is minor in view of the circumstances or if it is of low economic value.

One reason for increasing the amount of negligence penalty is that the economic value of unreported accounts and/or payments is high. When due diligence procedures are neglected, a reason for increasing the negligence penalty is, for example, if the neglect concerns new accounts or accounts of high value. In CRS/DAC2, a 'new account' refers to an account that has been opened on 1 January 2016 or later, and in FATCA, an account opened on 1 July 2014 or later.

If a party with obligation to provide information has intentionally or through gross negligence submitted a return, other information or document that is substantially incorrect or has not submitted a return at all, or if they have intentionally or through gross negligence neglected some other obligation under chapter 3 of the act on the assessment procedure either partly or in full, the amount of negligence penalty is always at least twice the amount indicated in the table in this chapter but no more than €15,000.

6.2 The amount of negligence penalty regarding digital platform economy operators' obligation to provide information (DAC7)

A negligence penalty can be imposed for neglecting the obligation to provide information and other obligations, such as due diligence procedures, laid down in § 17 f of the act on the assessment procedure (DAC7) and in the act on the digital platform operators’ obligation to report information in the field of taxation.

The negligence penalty is determined in accordance with the table below in situations where there is no special reason to reduce or increase the penalty. The amount of negligence penalty is determined based on the euro value of considerations reported in the annual information return or the number of relevant activities, whichever is the greater.

Information not reported or reported incorrectly due to neglect		Information has arrived late, or information has been submitted by using a wrong method.		The party with obligation to provide information has been requested to submit annual return information but the information has not been available for international exchange of information, or there is an error in the information submitted by the party with obligation to provide information, and the error has not been corrected by the deadline
Number of relevant activities	Reportable considerations in euros
1–200	less than €10,000	€100		€800
201–500	€10,000–50,000	€200		€1,200
501–2,000	€50,000.01–€100,000	€300		€1,600
2 001–5,000	€100,000.01–€500,000	€500		€2,000
5,001–10,000	€500,000.01–€1,000,000	€1,000		€3,000
more than 10,000	more than €1,000,000	€2,000 €		€5,000
Nil return		€100		€400

For a justified reason, it is possible to reduce the negligence penalty or not impose it at all. A justified reason is, for example, if the neglect is minor in view of the circumstances.

If a party with obligation to provide information has intentionally or through gross negligence submitted a return, other information or document that is substantially incorrect or has not submitted a return at all, or if they have intentionally or through gross negligence neglected some other obligation under chapter 3 of the act on the assessment procedure either partly or in full, the amount of negligence penalty is always at least twice the amount indicated in the above table but no more than €15,000.

A negligence penalty for neglecting other obligations, such as due diligence procedures, is always imposed based on a case-specific overall evaluation. 

When the amount of negligence penalty is being determined and, in general, when the penalty is being imposed, it is possible to take into account, especially during the first reporting year, that this obligation to provide information is new. In case of problems or unclarities relating to reporting, do not hesitate to contact the Tax Administration.

6.3 The amount of negligence penalty regarding obligations relating to reportable arrangements (DAC6)

A negligence penalty for neglecting obligations regarding reportable arrangements (DAC6) is always imposed based on a case-specific overall evaluation.

7 Adjustment and appeal

The parties with obligation to provide information and the Tax Recipients' Legal Services Unit can appeal against a decision made by the Tax Administration on the negligence penalty by submitting a written claim for adjustment to the Assessment Adjustment Board.

The claim for adjustment must be submitted within 60 days of the date when a notice of the Tax Administration’s decision was received. For the Tax Recipients’ Legal Services Unit, the appeal period is 60 days from the date of decision.