The information-reporting requirement in the construction industry

Date of issue
11/1/2019
Validity
11/1/2019 - Until further notice

This is an unofficial translation. The official instruction is released in Finnish and Swedish, the national languages. In case of questions of interpretation, see the official versions.

This guidance is about the information-reporting requirement in the construction industry to the Tax Administration, in reference to the provisions of § 15 b — § 15 d of the act on assessment procedure (Verotusmenettelylaki 1558/1995). Reportable information, the way the requirement to submit report becomes effective, the available channels of report submittal and a number of related special situations are discussed.

After legal amendments, including the change to subsection 2 of section 15 d of the Act on assessment procedure, and reflecting the Tax Administration’s new instructions, the guidance was updated on 1 November 2019.

This guide replaces the previous version, record number A83/200/2017.

1 Introduction

The Act on assessment procedure contains detailed rules in § 15 b, § 15 c, and § 15 d controlling the construction sector’s obligation to provide information. The reportable information falls into the category of third-party information, collected and used for purposes of tax control as the activities of companies and employees in the construction industry are overseen. The information-reporting requirement’s purpose is related to the combat against the shadow economy. Not only the act on assessment procedure but also other Finnish legal acts contain rules against activities relating to the shadow economy. However, the present document only discusses the information content based on the tax rules set out in the act on assessment procedure, and we only refer to the other Finnish legal acts when it is necessary.

Information must be given on construction workers (§ 15 b of the act on assessment procedure), and on contracts (§ 15 c of the act).  In addition, the tax rules also require households to report information (§ 15 d of the act). Each information-reporting requirement is different, and the grounds that define the parties’ obligations may vary.

The Tax Administration has issued an official decision that outlines the construction sector’s requirement to provide information, record no VH/1950/00.01.00/2019 (available in Finnish and Swedish, link to Finnish). The text of the official document contains precise information on reportable details and also a regulation that relieves the reporting requirement if economic impact is unimportant, or if the significance for tax control is unimportant; in other words, the contract for construction services is of a low value or the number of workers is small.

This document’s objective is to address the question of how the information-reporting requirement is imposed on a person or a company in different circumstances. We also describe the content and the methods of submittal of the information. In addition, we describe the administrative procedure in situations where the party concerned by the information-reporting requirement has not submitted the information. Some examples are also discussed, presenting a few typical situations related to reporting.

Chapter 2 discusses the information-reporting requirement relating to construction jobs, i.e. the contracts. Chapter 3 discusses the information-reporting requirement relating to the workers. Chapter 4 is directed to households in the role of buyers of construction services (in-depth instructions available in Finnish and Swedish). Chapter 5 gives instructions on how contract details and employee details should be included in the reports.  After a report relating to the construction work has been submitted, errors may be detected in the already submitted information. Chapter 6 contains instructions for making corrections to all report types. Chapter 7 discusses the consequences of non-reporting, also covering all report types.  

2 The buyer’s requirement to submit contract details (contractor reports)

2.1 Overview

In accordance with the provisions of § 15 c of the act on assessment procedure (Verotusmenettelylaki 1558/1995), the buyer of construction services must send information on the companies that provide services if:

  • the company has rendered a construction service to the buyer (§ 31.3.1 of the VAT Act),
  • the company has built or dismantled scaffolds for the buyer to prepare for construction activity; or
  • the company has arranged for people to work for the buyer as leased employees, performing tasks related to the above purposes.

“Contract” means an agreement for the performance of construction services against payment. “Construction service” means construction, scaffolding services and employee leasing for purposes of construction; it is used as a general, collective term in the text below and it refers to the definition found in the VAT Act.

Under the law, the Tax Administration can decide to relieve the information-reporting requirement in situations where the information is of minor relevance from the perspective of tax control. Pursuant to § 2 of the Tax Administration’s official decision VH/1950/00.01.00/2019 (available in Finnish and Swedish, link to Finnish), the buyer must submit the information if the total value of the contract, excluding VAT, goes over the threshold of €15,000.

2.2 Who has the information-reporting requirement?

The buyer — often also called the constructor or the customer — has ordered the construction service. This means that the buyer must report the required information on any construction services it has bought. Other parties in the role of “buyer” may be the main contractor, a subcontractor or other contractor. Where a chain consisting of many sub-contracts if formed, each buyer, for its part, is required to submit reports on their subcontractors. The information-reporting requirement is understood in a broad sense, and imposed on all kinds of customers and buyers of construction services, not only companies that conduct business in the construction sector.

Typically the buyer of construction is a corporate entity, a company or other legal person such as a foundation or an association. It is also possible for a public organisation to be the buyer; the State of Finland, municipalities, federations of municipal authorities and parishes of churches may be in the buyer’s role. In addition, other parties that are regarded as specific taxpayers such as a benefit under joint administration (a road maintenance association), and others. In addition, the buyer may be a company operating in a foreign country, or its subsidiary or branch operating in Finland when it has ordered construction work to be carried out in Finland. In this case, the foreign organisation has the information-reporting requirement.

Individuals (natural persons) are treated as buyers when the construction project is associated with a business that the individual conducts (for example, he or she is a self-employed individual, and orders a construction service for having an office space built; or he or she has an agricultural farm where a new cattleshed is being built). In the above circumstances, the information-reporting requirement concerns individuals.

In a consolidated enterprise group, if the contract is signed with a unit that has a different legal identity and Business ID, information on the construction work must be submitted to the Tax Administration even if both contracting parties were members of the same enterprise group. Contractor reports must be submitted even if the company that renders the construction service is a similar company as the buyer, i.e. a subsidiary of the same group.

Buyers that have the information-reporting requirement can authorise another party to send the contract details to the Tax Administration on the buyer’s behalf. However, legal responsibility for fulfilling the information-reporting requirement remains with the buyer itself. For more information on the ways to submit the reports on construction, see 5.1 below.

2.3 What types of work must be reported on the contractor report?

2.3.1 What is meant by “contract” in the construction sector?

“Contract” means an agreement for the performance of construction services against payment. “Construction service” means construction, scaffolding services and employee leasing for purposes having to do with construction, building and scaffolding; it is used as a general, collective term in the text below and it refers to the definition found in the VAT Act.

The contractor report must be submitted even if only a small part of the contract represents construction services, and the seller’s supply to the buyer is generally considered a supply of goods.   The important element from the viewpoint of the information-reporting requirement is that the contract contains some construction services. However, an auxiliary performance in a construction contract, such as the building materials that the contract covers, must not be left out of the reporting.

2.3.2 Contractor reports must be submitted when the buyer has bought a construction service referred to in the VAT Act

If the nature of the construction work is a construction service referred to in the VAT Act, the buyer has the information-reporting requirement. Under § 31.3 of the VAT Act, such services are the building work and repair work on immovable property, as well as deliveries of goods that are installed in connection with the building or construction work.

Construction can be divided into building construction, civil engineering and specialist construction. The company that renders a construction service may perform a task in a building, or the work may have to do with the ground where the building is located or with a body of water located on the property.

Construction service, as defined in § 31.3 of the VAT Act, is also a key concept affecting the reverse-charge liability of VAT in the construction sector (§ 8 c of the VAT Act). However, it should be noted that even if the buyer is not liable to pay VAT under the reverse charge mechanism, the buyer must still comply with its information-reporting requirement if the work is a construction service under § 31.3 of the VAT Act. This means that the buyer must submit a contractor report.

Example 1: A housing company has commissioned a major repair contract in the block of flats, involving water, sewage, and electrical renovations. No VAT reverse charge mechanism within the meaning of § 8 c of the VAT Act applies on the contract. However, the contract is for a construction service, by definition of § 31.3 of the VAT Act. This means that the housing company has the information-reporting requirement.

For more information on the ‘construction service’ concept for VAT purposes, see the Tax Administration's in-depth guides on “Sales of construction services and own use” and “VAT reverse-charge mechanism in the construction sector” – Rakentamispalvelun myynti ja oma käyttö arvonlisäverotuksessa, and Rakennusalan käännetty arvonlisäverovelvollisuus (available in Finnish and Swedis, links to Finnish).

2.3.3 Other assignments and jobs for which the buyer must submit a contractor report

The information-reporting requirement also applies to the setting up and dismantling of scaffolding and the leasing of employees for construction services or for scaffolding, even if these are not construction services referred to in the VAT Act.

2.3.4 Various circumstances affecting the necessity to submit contractor reports

Planning and supervision work undertaken for a specific purpose

In general, the information-reporting requirement does not extend to contracts that only concern planning and supervision. The planning is not a construction service even in cases where the buyer has first signed a contract for building plans and designs, and then proceeds to arrange a competitive bidding for construction companies that prepare offers to sell the building job to the buyer. In these circumstances, although the selected bidder would be the company that made the original plans and designs, the planning would be treated as a separate contract i.e. outside of the information-reporting requirement.

However, if the contract itself contains a clause that planning and design are bought from the company providing the construction service, the information-reporting requirement extends to the planning and design.

Supply of goods and other services

The commercial activities relating to the building sector – selling products, goods and services that are connected to construction – do not fall into the category of construction services as referred to in the VAT Act. For example, the information-reporting requirement does not apply when a company of the construction sector only buys building materials from a supplier, or only buys services other than construction services from a subcontractor, including consultancy services and healthcare services and other services. 

The information-reporting requirement is brought about at the time when it is noted that a contract has been signed that contains at least some form of construction service. However, an auxiliary performance in a construction contract, such as the building materials that the contract covers, must not be left out of the reporting. Instead, information must be reported for both construction services and building materials.

Installing and repairing equipment for a particular activity

As of 2017, there is a harmonized European definition of ‘immovable property' for VAT purposes, valid in EU countries. The harmonisation has resulted in a change from the perspective of the Finnish VAT Act: some of the machinery and equipment present on the property are now treated as being part of the property itself.

However, the information-reporting requirement still does not apply to services relating to machinery and equipment used in a particular activity, in accordance with the provisions of § 15 c of the act on assessment procedure.

Examples of these services and work performances include maintenance of the machinery, equipment and instruments that are part of the process in production plants.

Example 2: The company that owns a food processing plant has commissioned a cooling system to be installed. Because the cooling system is “equipment for a particular activity”, its installation, repairs and maintenance are not a construction service – no reporting is necessary.

Example 3: The company that owns a building has commissioned an escalator. It is installed there and is free for everyone to use. The installation job is considered a construction service – the information-reporting requirement applies to it.

Maintenance of real property and the technical service jobs connected to it

Services and maintenance related to buildings, etc., including any technical work closely related to service/maintenance, are not construction services, so no reporting is necessary. In the same way, the reporting requirement does not apply to minor repairs that a typical contract on maintenance services normally covers. 

Regular maintenance work is usually a package of services that includes cleaning, maintenance of facilities, snow-ploughing, spreading of sand, attention to the heating system, ventilation and air conditioning and any minor repairs that are associated with the work.

The minor repairs that are part of regular maintenance mainly consist of preventive action, which may focus on troubleshooting and prevention of further problems. Work excluded from the reporting requirement includes chimney sweeping, checks and cleaning operations of electrical, plumbing, sewage and ventilation systems in a building or property and various checks, measurements and testing of cooling systems.

In addition to the contract on maintenance, the contracting parties may also have another agreement on repairs with separate billing for all repair work. Those repairs are treated as a construction service – the information-reporting requirement applies.

2.4 The threshold for information reporting

2.4.1 Reports on contract details are required when value exceeds €15,000

Under the law, the Tax Administration can decide to relieve the information-reporting requirement in situations where the information is of minor relevance from the perspective of tax control. Pursuant to § 2 of the Tax Administration’s official decision VH/1950/00.01.00/2019 (available in Finnish and Swedis, links to Finnish), the buyer must submit the information if the total value of the contract, excluding VAT, goes over the threshold of €15,000.

This threshold concerns the signed contract or contracts; it is not a threshold that would concern every specific building site. The contracts may be verbal agreements or written agreements. If contract value, including work and any building materials, and excluding VAT, goes over the threshold of €15,000, the buyer must submit the report even if the contractor were to perform its work on many building sites that are separate from one another and in these circumstances, the work on some of the sites were worth less than €15,000.  If contract value is at maximum €15,000 ex VAT, the information need not be reported. However, even in this case, there is nothing to prevent the buyer from providing the information on a voluntary basis.

Example 4: The contract between “X” and “Y” has set out that “Y” takes on a renovation job worth €30,000, broken down between the 3 buildings that “X” owns: Renovation of the 'A' building – €10,000 and the 'B' building – €8,000 and finally, the 'C' building – €12,000. The buyer’s information-reporting requirement goes into effect because the contract is for more than €15,000 although the site-specific jobs stay below that threshold.

If the 15,000-euro threshold is not reached until work has been going on for some time, the month when it becomes obvious that the threshold is reached marks the beginning of the information-reporting requirement. However, there would be no need for retroactive reports or corrections.  

Example 5: The “S” renovation company receives an order from a housing company. The work to be done is the renovation of the roof, and “S” has given an estimate amounting to €10,000. Work begins in April. The billing for April is €5,000. When work progresses, it is established that more work is needed, now bringing the value of the contract to €25,000. The billing for June is €3,000. In these circumstances, the housing company must submit a report to inform the Tax Administration of the €3,000 that “S” has billed for June. This is because the housing company has now become aware that the contract’s total value will exceed the threshold. However, there is no need to submit a report for April.

2.4.2 A single contract or a combination of many contracts?

From the perspective of the information-reporting requirement, the basic approach is to treat every contract as a separate entity, i.e. every contract is independent in relation to other contracts. Nevertheless, we must treat a serial sequence of contracts (=after the end date of a contract, new contracts are signed immediately or almost immediately in order to continue the work) as one whole.

However, if contracts are signed one after another but there is a business reason for it – or some other acceptable reason – the contracts are treated as being independent of one another. An example of a business reason would be a situation where the contractor wins two tender processes in a row, so the contractor gets to sign 2 contracts with the buyer.

Example 6: There is an agreement to perform a repair job on the roof, to install snow barriers on the eaves, between a housing company and “K”, a roof-repair company. The job is part of the housing company’s yearly plan for normal maintenance and miscellaneous repairs.  Job value is €6,000. However, when the company is installing the barriers, the roof begins to leak. The housing company asks “K” also to repair the leak. The estimate for this job is €10,000. Because the roof repairs to prevent leaking have no connection with the original order related to snow barriers, the second contract is treated as being independent of the first. Under the circumstances, the housing company has no information-reporting requirement for neither one of the 2 contracts. 

If no business reason or other acceptable reason can justify the existence of 2 contracts instead of 1, any set of two contracts one-after-another is treated as a single contract for purposes of the information-reporting requirement. Accordingly, if the buyer and the contractor that already works on an ongoing building contract make an additional agreement – clearly connected to the ongoing job – the information-reporting requirement will apply on the two contracts, because they make up one whole.

Example 7: There is an agreement to perform a repair job on the roof, to install snow barriers on the eaves, between a housing company and “K”, a roof-repair company. The job is part of the housing company’s yearly plan for normal maintenance and miscellaneous repairs.  Job value is €6,000. After the snow barriers are installed, the housing company – being satisfied with the services that “K” renders – also orders a roof-repair job from “K”. This order involves no competitive tendering, and the roof repair is part of the housing company’s yearly plan for maintenance and repair. The estimate for this job is €10,000. Both of the 2 repair orders fall under the category of annual maintenance and repair, and the jobs are performed one after the other. Accordingly, there is no acceptable reason to treat the contracts as being independent of one another. Instead, they make up one whole, and the information-reporting requirement will concern the housing company because the value exceeds the threshold of €15,000. 

Example 8: The customer has agreed with a contractor to repair a 200-square-metre floor that has suffered from a water leak. As it turns out, the damp part is larger than expected, so the surface increases from 200 to 500 square metres. The conclusion is that there has only been one occurrence of a water leak and the contracts related to fixing it make up one whole. If the threshold of €15,000 is exceeded, the customer will have the information-reporting requirement.

Example 9: The “X” company has received an order for steel reinforcement installations at a building site. Agreed job value is €8,000. Soon afterwards, the same customer signs another contract with “X” for concrete casting work, €6,000, the building site being the same. Then the next stage of the project is reached and “X” gets another order – this time for floor preparation, job value €3,000. The conclusion is that the 3 contracts are closely related i.e. one whole. If the threshold of €15,000 is exceeded, the customer will have the information-reporting requirement.

However, if a “framework”-type contract is made, it is not treated as a single whole from the perspective of the information-reporting requirement. As defined in this guide, “framework” refers to means the type of blanket agreement with a certain set of terms and conditions that the parties commit to following later when they sign other mutual agreements in the future. However, every order must be treated as an independent contract even though it may be based on a “framework agreement” between the parties involved. Accordingly, for the information-reporting requirement to be in effect, every single order itself must go over the 15,000-euro threshold. However, if contracts are signed one after another, we must evaluate them the same way as all other contracts are evaluated. This means that there must be a business reason for signing more than one contracts one after another – or some other acceptable reason – otherwise, the contracts cannot be treated as being separate.

Example 10: Having had a negotiation but not having written up a text for a written contract, “O” the buyer and the “U” the contractor – an owner-operator of an excavator – agree that until further notice, “O” will always give “U” the right of first refusal whenever any future building sites get started. “O” and “U” also agreed on the principles for calculating the prices to be invoiced for the future excavator jobs. They also agreed on a discount that goes into effect if “O” buys services from “U” for more than €100,000 a year. The conclusion is that we must treat every order from “O” to “U” relating to a new building site as an independent, separate contract.

Example 11: A framework agreement for one year was signed between “T”, a real estate holding company and the “Y” company, which agreed on a certain amount of money to be invoiced by the hour. The assignment given to “Y” is to handle the maintenance and repair, based on specific orders to be issued as needs arise, of all the service stations belonging to “T” and located in Kaskinen and Kristiinankaupunki.  An estimate has been made for some €30,000 as the value of the annual repair and maintenance orders. If no order alone in the course of the year were to exceed the 15,000-euro threshold, the buyer would not have to report information to the Tax Administration although the value might be over €15,000 a year for all orders combined.

2.5 The required information

2.5.1 General notes about the required information                   

The information to be reported concerns the buyer, i.e. the party having the information-reporting requirement, the site, the contractors operating at the site, and their contracts. The following information must be provided:

  • the name, address, etc. of the party having the information-reporting requirement
  • details on the site, or details on the contract
  • the contractor’s information and the contractor’s contact person’s information
  • the euro amount of contract value, by each reporting month
  • how long the contract will last
  • category or type of the contract
  • whether or not the VAT reverse charge mechanism applies

Each buyer must submit its reports on contracts directly to the Tax Administration. Information must also be provided on leasing agent companies, i.e. about the employers that send leased workers to work for you. You also have to indicate the payments made to them.

Buyers must submit data on the building contractors if the contractors have:

  • Sent invoices to the buyer for an advance payment even if no work according to the contract has yet been done;
  • Started their work during the reporting month even if no invoices were yet made out at all; or
  • Been active in such a way during the reporting month that certain euro amounts must be reported (for more information, see 2.5.7)

Part of the data entries on the contractor reports are made on a voluntary basis. These include the information concerning the buyer on reports other than those relating to real-property development activities. In “conditional” sections of data entry, filling in the field or the result of a calculation determine whether some other data element becomes required.

2.5.2 Your contact details

If you, the party that has the information-reporting requirement, have logged in to an e-service to submit the reports, the Tax Administration will utilise the contact information saved in the electronic files. However, you have the option to specify a different postal address if you prefer to receive any correspondence about the submittals to some other postal address than the one that the Tax Administration has on file.

In addition, every submittal must contain a specific data entry to indicate your contact person’s name and telephone number.

If you have authorised an agent or representative to submit the reports required in the construction sector on your behalf, your representative must still submit the reports in your name, i.e. fill in your information as appropriate (your name and Business ID), not the representative’s information.

2.5.3 Submitting reports for each construction site or for each contract

If you opt for compiling reports by site, then you can give the details on many contractors on one report, as they work on the same site. This kind of report must contain the valid address information for the site concerned. If you have a new building site where no street address exists, your report must contain a free-text description to indicate the site’s location.

After that, all your subsequent reports must indicate the site location in the same format. This means that if you started submitting reports based on a free-text indication instead of a street address – as no address existed – you must continue to submit reports that contain the same free-text indication. As an alternative to the above, you can submit a replacement report to make corrections to the site’s address. The replacement would in this case contain the site’s actual street address, and then you could continue giving the street address on all your further reports.

To identify the sites, if there is a site number we recommend that you indicate the site number. This may be a code number that your construction company uses in its accounting records. They can facilitate further correspondence if the Tax Administration were to find it necessary to send a letter to request more information about your operation. Site numbers are recommended also because if there are several sites for which the street address is the same, we identify each one of them by site number.

It may be that you have agreed with a contractor that several jobs at various sites get done; in this case, you can submit a report specifically for every contract. If you opt for contract-specific reporting, it means that you must compile reports that cover all the building sites that the agreement with your contractor refers to. The data related to different sites does not need to be entered for every site one by one. However, you must describe all site locations in free text on the contract report.

Example 12: Signed in 2015, the contract between “X” and “Y” sets out that “Y” takes on a renovation job worth €30,000, broken down between the 3 buildings that “X” owns: Renovation of the 'A' building – €10,000 and the 'B' building – €8,000 and finally, the 'C' building – €12,000. The “X” company has opted for site-specific reporting, maintaining the same report style up to the date of the contract’s termination.

In 2016, the “X” and “Y” companies sign a new 50,000-euro contract. “Y” gets to renovate 5 new units in various buildings owned by “X”. This contract is in force until end of 2017. This time, “X” opts for contract-specific reporting, in other words, submits a single contractor report.

The reporting rules do not require that the buyer submit all its contractor reports in the contract-specific format, or all of them in the site-specific format.  Instead, the buyer has the choice to implement the reporting style best suited for its business needs. However, the buyer is not allowed to alternate between the two styles when submitting reports that concern one contract.

Example 13: The “A” company has signed a contract with “B”. The latter will complete a number of assignments and jobs on “A’s” five different building sites. All the other building contractors that “A” has signed contracts with are only active on one of “A’s” sites. For this reason, “A” will submit a contract-specific contractor report to inform the Tax Administration of its contract with “B”, while submitting site-specific reports on all the other contractors. This also means that no information on “B” is included in the contractor reports that are submitted in the site-specific format.

Regardless of whether the buyer submits report for every site or for every contract, the rules on the threshold for information reporting still depend on the values of each contract that has been signed (for more information, see section 2.4 above).

2.5.4 Information about the contractor          

Buyers must submit data on the building contractors if the contractors have:

  • Sent invoices to the buyer for an advance payment even if no work according to the contract has yet been done;
  • Started their work during the reporting month even if no invoices were yet made out at all; or
  • Been active in such a way during the reporting month that certain euro amounts must be reported (for more information, see 2.5.7)

To give the contractor's name and Finnish personal or Business ID code is the way to identify them and to submit data on them. If the contractor has no Finnish Business ID, give their foreign ID code and indicate its type. Also provide the contractor's country of tax residence and address. 

You must give either the Finnish or the foreign ID, not both.

Last name, first name, and telephone of the contractor company’s person to contact are required, regardless of the type of ID code provided on your report.

2.5.5 How long the contract will last

Duration of contract is a data element to be provided specifically for every contractor company, in order to indicate the time period when the different contractors have worked for you. Enter the date when the particular contractor began working at the building site as the start date.

Correspondingly, enter the date that you estimate the contractor’s work to be finished as the end date. The first occasion when you must report the true end date to the Tax Administration is during the reporting month when the work on the contract has ended, or at the point of time when you otherwise become aware of the completion date. No action on your part is necessary in order to make corrections afterwards to your earlier reports where an estimated end date had appeared.  

2.5.6 Category of services covered by the contract

Contractor reports must indicate whether the contract is for:

  • Contracting or maintenance work in the construction sector;
  • Employee leasing; or
  • Real-property development

Contracting in the construction sector involve a contract where the seller party undertakes – against the contract’s price – to construct a building, a built structure or other constructions such as a road, pipeline etc., for the other party (buyer, constructor, customer). Maintenance includes various repairs, such as those undertaken to keep the building in a good condition or to maintain a road, etc.

Employee leasing is an arrangement where the leasing company, against payment, provides its employees to perform work for another company, the service recipient. The leasing company pays the wages earned by the leased employees. When work under a leasing contract is being done, the service recipient company directs and supervises the work. You must not report leasing of employees as the contract type if the actual category of the services is subcontracting. Correspondingly, you must not report the contract type under “contracting” if the contractor is actually a leasing company sending workers to your building site. For more information, see the Tax Administration’s following in-depth guides:  “Tax treatment of wages and trade income” – Palkka ja työkorvaus verotuksessa (available in Finnish and Swedish), and  Leased employees from other countries and taxation in Finland (available in English).

Property developers’ operation involves the setting up of a housing company or a property holding company. After the developer has done that, it signs a contract with the newly established housing/holding company, where the developer’s construction company receives an order to build a building on the land. For more information on development of real estate properties, see section 2.7 below.

2.5.7 Contract period and contract value

Contractor reports can be compiled on an accrual basis, on the basis of invoicing, and on a cash basis. Contractor reports must only indicate amounts of money as related to the reporting month. VAT must be excluded. However, the value of an auxiliary performance must not be left out of the reporting if it concerns goods such as supply of building materials, etc. The buyer company’s accounting method determines the periodisation rules for contractor reports, indicating the way the amounts of money must be divided across reporting months. If you are a buyer that has a Finnish VAT registration, the reporting month of your contractor report must be the month for which you submit a VAT return relating to the contract that you have bought. In the case of received advances, you are required to submit a contractor report in accordance with the date when you receive them, regardless of how you treat the received advances in your accounting books.

Example 14: The building contractor “A” (the seller of construction services) and the buyer “B” (the buyer of construction services) agreed that the work will be undertaken and completed in July 2020. In accordance with the contract, “B” pays an advance amount to “A” in June 2020. As a result, “B” must submit a report on construction work for the 6/2020 reporting month, informing the Tax Administration of the received advance.

The value in euros of a contract is a data element that must be provided only once, on the report submitted for the month when you treat it as booked, in accordance with your accounting practices. This means that no inclusion is allowed of the above amount in your subsequent reports.  In other words, no cumulative accrual of the contract value is allowed.

Example 15: The contractor “A” (a seller of construction services) sends an invoice to “B” for €5,000 in July 2020. As a result, “B” the buyer submits a contractor report for July, indicating the purchase of services from “A”, and the value is €5,000. In August “A” sends an invoice to “B” for €12,000. Accordingly, “B” submits a contractor report for August, indicating the purchase of services from “A”, and the value is €12,000.

2.5.8 How to apply the VAT reverse charge mechanism

In general, the seller for purposes of VAT taxation is the party that must pay the VAT. VAT reverse charge is a mechanism that involves VAT payments by the buyer (instead of the seller). The reverse charge mechanism is applied in the construction industry in circumstances indicated in § 8 c of the VAT Act. The mechanism applies if the buyer is a company that usually sells construction services or usually rents out workforce as leased employees, and if the company performs these activities on an ongoing basis, not merely as an exception from its primary operation in other sectors; and if the construction service is sold in Finland or if the employees are leased in order to work in Finland on a building site. Additionally, as provided by § 9 of the VAT Act, the mechanism applies in situations where the buyer has made a purchase from a foreign company that has no VAT registration in Finland.

When you compile a contractor report, you must indicate – making reference to the invoice you have received from the seller – whether the VAT reverse charge mechanism has been applied. Invoices must in this case contain the words “VAT reverse charge”, and another evidence of VAT reverse charge is that the seller has not added any value-added tax to the invoice’s final sum. When you are in the role of the buyer, your contractor reports must indicate that reverse charge was applied if the words VAT reverse charge appear on the seller’s invoice. On the other hand, your contractor reports must also indicate that no VAT reverse charge mechanism applies if the sum of the invoice has value-added tax included in it.

In situations where the buyer is not a company of the construction sector, i.e. not a seller of construction services – the buyer may be a housing company or a flower shop – the contractor report from that buyer must contain an indication that the reverse charge mechanism does not apply. Invoices indicate that reverse charge does not apply by having value-added tax included in the sum. An exception to the above rule is the situation where the contractor is a foreign company with no Finnish VAT registration. In that case, the buyer must pay the VAT on the purchased contract.

Example 16: The housing company “C” turns to the building contractor “E”, a foreign company, and signs a contract for repairs of a water damage. “E” is not treated as having a permanent establishment in Finland and has no employer registration. Under the circumstances, “C” is liable to pay VAT because “C” is the buyer. As a result, “C” submits a contractor report indicating that VAT reverse charge is applied. This also means that unless “C” already is registered for VAT already, it must submit an application for VAT registration.

For more information on the VAT reverse charge in the construction industry, see the Tax Administration's guide “on VAT reverse charge” – Rakennusalan käännetty arvonlisäverovelvollisuus (available in Finnish and Swedish, link to Finnish).

2.6 Deadline date for contractor reports

2.6.1 Deadlines for reporting

Reports must be submitted to the Tax Administration by the fifth day of the second month following the reporting month; for example, the information that concerns January must be submitted by 5 March. If the deadline falls on Saturday, Sunday or other holiday, the due date is extended to next business day.

Submittals of reports are accepted as of the beginning of every reporting month.  However, you are not allowed to give details on the contracts in advance: in other words, you can submit the January report as soon as January has begun, but you are not allowed to submit it in December.

Example 17: The time to submit the report for 06/2020 is between 1 June – 5 August 2020.

2.6.2 Deadline for the first contractor report

The information-reporting requirement regarding contracts starts when the site is launched or – if any advance payment is made for the contractor’s contract – at the advance’s date of payment. After the first report has been submitted, you must submit reports for the all the months for which any reportable transactions with amounts of money take place.  

Construction work is treated as having started when actual work on the site begins: when breaking the ground, when clearing the land, etc. The point in time when the information-reporting requirement on contracts begins must be determined for every contractor company one by one.

If the buyer pays the company an advance at a stage when no work has yet been started at all, the buyer must submit a contractor report for the month when the payment was made. 

If the amount of money involved in a building contract had been lower than the threshold for information reporting, and if the threshold were exceeded when the work is ongoing, there would be no need for retroactive reports or corrections. When it becomes obvious that the threshold will be exceeded, it is necessary to submit the first contractor report. This report must indicate the actual start date of the work on the site, and the amount of money related to the reporting month. However, it does not have to contain information about the amounts relating to the previous months of work. 

2.6.3 Submitting contractor reports when construction is ongoing

You must submit contractor reports for the months for which any reportable transactions with amounts of money have taken place. Contractor reports must only indicate amounts of money as related to the reporting month. You do not have to submit a contractor report only because work and activities have gone on, i.e. there have been no transactions with money during the month.

2.6.4 The final contractor report's deadline date

The contract is treated as completed when the construction or building is handed over to the buyer and the buyer received it. However, the information-reporting requirement regarding a contract does not cease to be in effect until such time as the contractor no longer sends invoices to the buyer. Accordingly, the time when the final contractor report should be submitted is for the month treated as the last reporting month for which there were transactions in money with the contractor. The way to identify that month is determined in accordance with the buyer’s bookkeeping and accounting method.

Example 18: The buyer signed a contract worth €30,000 with a renovation company for having repairs done starting 2 January 2020 and to be finished 15 February 2020. The renovation company does not prepare an invoice until May.

The buyer submits the first contractor report for January, the month when work started. The data entry for “amount invoiced” is €0.00 and the data entry for “contract period” is 2.1.–15.2.2020. No reporting for February, March and April is required. For May, the data entry for “amount invoiced” will be €30,000 and the data entry for “contract period” 2.1.–15.2.2020.

If the final payment for a contract is made only when an agreed warranty has ended, the buyer must submit the final contractor report at that time. However, work may have ceased on the site much earlier.  The true date when work ceases on the site must be indicated on the contractor report that you compile for the month when that date has become known (i.e. when you become aware of the date when work ceases). If the original contract in its entirety is already invoiced, and later, the contractor performs more work because of the contract’s warranty and guarantee clauses, the buyer does not have to submit a contractor report to the Tax Administration to give details on that work. Nevertheless, any additional work that you buy during the warranty period that is not a part of the original contract is considered a separate agreement. From this, it follows that if the 15,000-euro threshold is exceeded, you must submit a contractor report. 

2.7 The real-property development business and the requirement to report information on contracts

Companies in the construction sector are called “property developers” if they conduct business by first buying a free, undeveloped lot, and then establishing a housing company or a real estate holding company. The next step in the development operation is to write up a contract where the construction company sells a building to the new housing/real estate company.   The housing/real estate company, now being the buyer, obtains a loan, which is the (primary) way to finance the building. The construction company starts selling the apartments in the future building, i.e. selling the shares that entitle future shareholders to have the apartments.

In general, the party being the buyer, in this case the housing company, is the party that has the information-reporting requirement with respect to the contract bought from the construction company.  The housing company can submit its own contractor reports as described above in 2.1 – 2.6.

Alternatively, having the role of the developer, the construction company can submit the reports.  In this case, the category of the contract should be specified as “property development”. In that case, it would be necessary to indicate the start and end dates of the contract, and the identifying information of the buyer – which means the newly established housing company’s name and Business ID. Contractor reports must be submitted site by site for the month when work was started and for the month when site activities have ended.

The developer submits contractor reports regarding its subcontracts in accordance with the general guidelines for contractor reports.

If the newly established housing company were to buy services from other construction companies than the property developer company, the housing company would have the information-reporting requirement for those contracts in the usual way.

3 Project supervisor's duty to send information on persons working on a shared site (employee reports)

3.1 Overview of employee reports

In accordance with the provisions of § 15 b of the act on assessment procedure, companies operating at a shared construction site must give details on their workers to the project supervisor. Then, the project supervisor must pass the information on to the Tax Administration, submitting a report on a monthly basis regarding the workers i.e. the following persons:

  • workers (employees)
  • self-employed operators (those who work independently, i.e. operate a trade or business)
  • employers
  • companies and others in the role of service recipients, if leased workers are working on the building site

The reporting does not have to cover the persons delivering goods to the building site on a temporary basis.

Under the law, the Tax Administration can decide to relieve the information-reporting requirement in situations where the information is of minor relevance from the perspective of tax control. In accordance with § 1 of the Tax Administration’s official decision VH/1950/00.01.00/2019 (available in Finnish and Swedish, link to Finnish), the information must be submitted if the total value, per site, of the contract, excluding VAT, goes over the threshold of €15,000.

3.2 Who has the information-reporting requirement?

The project supervisor

The project supervisor of the shared site has the information-reporting requirement and must submit employee reports. Project supervisors submit reports on the workers on their own payroll and on the workers of the other contractors. They also have to give details on any self-employed workers and leased workers.

The definition of “project supervisor” is found in § 2.4 of the Government Decree on the Safety of Construction Work (205/2009). “Project supervisor” means the main contractor appointed by the buyer (=customer); or an employer having the main authority, or where there is no such employer, the buyer. Ultimately, it means that the reporting requirement applies to the constructors (=buyers, customers) themselves, unless they have appointed someone else as the supervisor.

Example 19: A housing company has commissioned a major plumbing renovation job, involving the entire residential building. Because the housing company did not designate any party in the text of the contract as the site’s project supervisor, the housing company itself, because it is the buyer, is the party having the information-reporting requirement and it must submit the employee reports. 

Example 20: A housing company signs 2 contracts simultaneously, one for sewer piping repairs, the other for elevator repairs. Part of the work must be done in one space, i.e. a shared location. Because the housing company has designated the sewer-pipe company as the project supervisor for the shared site, this company also gets the information-reporting requirement regarding the workers of the other company that handles the elevator repairs. 

It is not possible for a consortium for fulfilling an assignment in the construction business to be the project supervisor on a shared site. To account for the requirement set out in the Government Decree on safety in construction work, the buyer must designate one of the consortium’s participants as the project supervisor. As a result, this participant becomes the company having the information-reporting requirement: it must submit the employee reports.

Companies operating on the site

Companies operating on a shared site must give the information referred to in § 15 b of the act on assessment procedure to the site’s project supervisor. What is meant by “companies working or operating on a site” includes the companies that the workers have an employment contract with, and in the case of leased workers, the companies that are in the role of service recipients i.e. the leased workers’ perform work for the service-recipient companies. Self-employed workers must submit similar information on themselves for the project supervisor.

The information must be provided before work is begun. If there are any changes, the self-employed must also inform the project supervisor of the changes without delay.

3.3 Employee reports concerning a shared site

3.3.1 What kind of building site is “shared”?

In the provisions of § 2.1 of the Government Decree on safety of construction work, a shared site means a workplace where work referred to in the Decree's scope of application is carried out (=construction) and where more than one employer, or more than one self-employed worker, operate simultaneously or successively.

The above provisions do not restrict shared sites’ existence; not in terms of how long the site can operate nor in terms of the volume of work carried out.  There is no threshold that would have to be exceeded in order for the site to become a shared site. The information-reporting requirement regarding workers extends to all sites treated as being “shared”. This means sites where there is more than just one company performing work, either at the same time or in succession. The site is a shared site even if when the site is started, only one employer is active there, and the other employer companies join in later. Even a relatively minor renovation site may thus become a shared site if, for example, in addition to surface treatment work that a painting company is handling, electrical installations are carried out by electrical contractors.

The legal basis of the “shared site” concept is controlled by the provisions of the Occupational Safety and Health Act. This act has been in force longer than the legal acts governing the information-reporting requirements in the construction industry. The public authority in charge of occupational safety (the relevant unit at the local Regional Administrative Agency) has jurisdiction in matters of interpretation regarding shared sites, occupational safety, how a shared site is formed, in matters of instruction and guidance. The authority in charge of occupational safety has issued an instruction booklet including examples, “Construction work and shared construction sites” — Rakennustyö ja yhteinen rakennustyömaa (www.työsuojelu.fi) (available in Finnish).

Characterisation of the activity on a shared construction site

In order for a site to be considered shared, at least two employers or independent workers must be conducting construction workWhat “building and construction” means is defined in § 1 of the Government Decree on the Safety of Construction Work:

  • The work can be done not only on the surface but under the ground or in the water;
  • It can be directed toward a building or other structure;
  • Its objective may be to construct a new building, to renovate or to perform maintenance on an existing building, to complete an installation related to them, or to demolish a structure or an entire building;
  • It can be earthwork or hydraulic engineering, and
  • It can also be the preparation and planning of a construction project.

All activities associated with construction are within the decree's scope of application. Accordingly, the definition set out in the Government Decree covers more variants of construction that the definition related to the information-reporting requirement and submittals of contractor reports.

A guideline issued by the occupational-safety authority excludes maintenance related to keeping a process running from the scope of application of the Government Decree. As a result, the maintenance of machinery and instruments at industrial production plants and replacement of machinery parts fall outside of the definition of construction work. In the same way, the setting up of scaffolding, temporary platforms for workers including gangways for the purpose of maintenance for keeping a process running is not construction work if no direct building and construction is related to it. This means that maintenance related to keeping a process running is not an activity where there could be a “shared construction site”.

However, if a construction site has been paused, and workers arrive there to keep the site maintained so it can be re-started in the future can be treated as such an activity, depending on whether the project is large enough and the workers’ activities are extensive enough. The type of work that requires an interruption or downtime of a production plant can involve repairs, maintenance and installation, which have no connection to keeping the process running. For a more extensive discussion of the concept of a “paused site” from the perspective of whether it can still be “shared”, see the occupational-safety authority’s memorandum.

Physical limits of the construction site

Sites can be delimited in order to only allow access to the people who work there. This way, a fence, ribbon, gates, and locked doors can prevent others from entering the site as the workers always have to pass through the points of entry to come to the rooms or areas where work is done.  Only the fenced or otherwise isolated area would then be the shared construction site.

However, in some circumstances, it is not possible to put up a fence or other physical limits. For example, the site’s location may be the lobby of a shopping centre. In this case, the customers can walk through the entire site although construction work is ongoing. However, even the spaces of the above type can be treated as being shared construction sites if there is more than just one company doing the work, either at the same time or in succession.

3.3.2 Start of the reporting requirement

After the first worker or the first company has begun work at the site, the information-reporting requirement goes into effect. If you have not been aware that the site will become “shared” when the construction work began, and some time later – when work is ongoing – the non-shared site becomes shared, the point in time when the reporting requirement begins is the time when it became obvious that the site will be a shared site.

Example 21: City employees are renovating a municipal building. It has been known since the beginning that a private electrical contractor must be commissioned to work there, too. As a result, this is a shared site, and the project supervisor is the city’s unit in charge. This unit must submit information to the Tax Administration on the workers who work at the site as soon as the renovation work has started, regardless of any delays that may be associated with the start date of the private electrical contractor.

Example 22: City employees are renovating a municipal building. No earlier plans and designs have indicated that a private electrical contractor must also come to the site. In this case, the site becomes a shared site when the city’s unit in charge becomes aware of the electrical contractor coming to the site. The city’s unit, being the project supervisor, must submit information to the Tax Administration on the workers at the site.

3.3.3 Who are the workers included in the report that the project supervisor submits?

The supervisor’s reporting requirement applies to everyone who works at a shared site, even if the individual in question is not engaged in construction work. For example, you must give the details of office workers, cleaners, security guards, group foremen, designers, project managers and coordinators dealing with work safety on the site. If it is difficult to isolate the construction work area, only the details of the people who actually participate in the construction work are required.

When you prepare the employee report, you must include all the workers who have worked on the shared site during the reporting month. Even if an individual worker had worked there for one day only, his or her details must be on the employee report. However, you must not include any workers who have not begun working during the reporting month or who have already finished their work there or who were absent from the site for other reasons. For example, you are not allowed to include an individual worker’s details in your employee report to the Tax Administration only because his or her access permit is still valid.

List of workers

In connection with the enactment of the information reporting requirement in the construction sector, rules were introduced that define a duty for project supervisors to keep a list of those who work at a shared construction site; see the provisions of § 52 b of the Occupational Safety and Health Act (738/2002). The occupational safety authority oversees project supervisors’ compliance with this duty. You must give details on your employee reports of the persons who must wear a name tag with a photo and whose names must be included in the list described above. Nevertheless, the information provided in the list does not have the same contents as the employee reports to be submitted to the Tax Administration.

3.3.4 Who can be left out of the project supervisor’s employee reports?

You have to give the employee details to the Tax Administration for the people who work on the site. If it is difficult to determine whether the person must be included in the employee report, the Tax Administration interprets the relevant rules the same way as the authority in charge of occupational safety interprets the rules governing the list of workers on the site. That authority’s interpretation principles are outlined in the “Construction work and shared construction sites” — Rakennustyö ja yhteinen rakennustyömaa booklet (available in Finnish).

In general, the employee report must contain details on the people who, in accordance with the occupational-safety authority’s interpretation, are treated as working on the site. Correspondingly, you do not have to submit the details for persons who are not treated as working there.

People who deliver goods to the site                 

In accordance with § 15 b, subsection 1 of the act on assessment procedure, no employee reports must be submitted for the persons who deliver goods to the site on a temporary basis. However, drivers are treated as being present at the site and working there if they participate in the construction work doing something elsewhere than on the back of their truck or in the truck’s immediate vicinity. This way, a driver who brings prefab building blocks to the site is treated as working there if he unloads them at a location where they are not going to be kept in storage, or if he participates in the prefab installation work. Similarly, if a driver of a concrete mixer distributes the unhardened mixture from the chute in his vehicle, he is treated as working on the site.

Guests and representatives of public authorities

The guide of the occupational-safety authority excludes officers who work for a public authority and site guests from the information-reporting requirement, as they do not work at the site under a contract that the buyer or any of the building contractors would have made. For purposes of this rule, “site guests” refer to guests like a group of schoolchildren who have come to visit the site, and for example, to the Managing Director of the project supervisor company who has arrived in order to familiarize himself with the ongoing project.  However, if an individual’s presence on a shared site has to do with any of the subcontracts, contracts, etc. necessary for the construction site – this constitutes working there, and as a result, the employee reports must include these individuals.

Persons active in the area having no physical limits, performing non-construction work

If no physical separation can be effected between the construction area and the area where other activities are ongoing, which may happen at factories, schools, shopping centres and hospitals, only the workers who actually participate in the building or construction work should be on the employee reports. This means that although they may be present, you must include no production workers of the factory, no school personnel or employees of the shopping centre or hospital on the reports. However, the authority in charge of work safety has noted that a photo ID card is still required of the production workers of the factory, school personnel or employees of the shopping centre or hospital as they are present on the site.

3.3.5 Obligation of employers to pass on information about their workers to the project supervisor

The project supervisor must receive data regarding the workers working on the site that are not on the payroll of the project supervisor itself. Either their employers must send them on, or in the case of self-employed workers, the workers themselves must pass them on to the project supervisor who will, in turn, include the data in the employee reports and submit them to the Tax Administration. All the companies present at a shared site must give their employee details to the project supervisor, covering the people on their payroll and also any leased workers they might have. Self-employed workers are also required to do so for their own part. The above obligations must be fulfilled in the same way by domestic and foreign companies and self-employed workers.

Those in the role of employers must give the details to the project supervisor before work is begun. If any changes affecting the data were to occur when work is ongoing, the supervisor must be informed of them without delay so as to make sure that corrected, up-to-date information about the workers get sent to the Tax Administration. If it is the project supervisor’s policy to collect data directly from the workers, those in the role of employers are required to verify that every worker provide the details to the supervisor and to their employer in the same way.

Construction workers who are customers of an invoicing-service firm

A further variant is a worker who has engaged the services of an invoicing service firm that prepares invoices for the work that he/she has done on the building site. These invoices go to the company that has given the assignment to the worker. In this case, the individual worker has received the order to do the work from the contractor. However, no employment contract is made between the worker and the contractor company.

Typically, the worker and the invoicing firm agree to prepare a formal contract of employment. The invoicing firm then pays the amounts received from the contractor company on to the worker as the worker’s wages. In these situations, the invoicing service firm is the party that must fulfil the regular tax obligations of an employer. Besides that, for purposes of the information-reporting requirement in the construction sector, the invoicing service is treated as being the worker’s employer.

The invoicing service’s duty to submit employee reports is comparable to a leasing company’s duty to submit the same for its leased workers (for more information, see 7.3). The invoicing service firm is responsible for ensuring that the worker’s identifying information is correct. On the other hand, the construction company where the workers work is better informed on the facts and circumstances that relate to the work itself.  For this reason, the construction company bears responsibility for giving details about the workers to the project supervisor.

Alternatively, the worker and the invoicing service can sign an invoicing agreement, which means that the invoicing firm pays on the amounts to the worker as trade income (not as wage income). If a person working at your site has no employment contract with the invoicing service, and he or she receives their income in the form of trade income, not wages, he or she is treated as being self-employed. As a result, the party liable to give the details on their work to the shared site’s project supervisor is the worker himself or herself.

3.4 The threshold for information reporting

Under the law, the Tax Administration can decide to relieve the information-reporting requirement in situations where the information is of minor relevance from the perspective of tax control. In accordance with the Tax Administration’s official decision VH/1950/00.01.00/2019 (available in Finnish and Swedish, link to Finnish), the buyer must submit the information if the total value per site of the contract, excluding VAT, goes over the threshold of €15,000.

The sum total must not include the buyer’s own expenses, such as any payroll costs of the buyer's own employees although they might be closely related to the construction project – only the construction services purchased from an external provider can be included.

Example 23: Municipal employees who normally work on maintenance are present at a renovation site, working there for an entire month. Their wages for this period are €16,000. To have some additional special work done on the renovation site, the municipality also signs an agreement with an outside provider of building repair services, the value of this agreement being €8,000. In these circumstances, no reports have to be submitted, because the amount does not go over the threshold for information reporting.

However, if the agreement’s value with the outside provider went over the 15,000-euro threshold, the requirement to submit employee reports would not only concern the outside provider's workers but also the maintenance workers of the municipality itself.

If the value exceeds €15000, the project supervisor or constructor must advise the other employers operating on the site in order to allow them to meet their own requirement of providing information to the project supervisor.

If the value of the main contract exceeds €15000, the main contractor must notify the other companies operating at the site of the threshold being exceeded. If the main contract stays below €15,000 but the entire construction project’s value is higher than €15,000, the buyer must notify both the main contractor and all the other companies that run an operation on the site.

Example 24: The buyer-constructor “A” has a building site with a main contract and three smaller contracts on the side. The main contract’s value stands at €10,000 while the 3 other buyers on the site have purchased smaller contracts for €2,000 each. Under the circumstances, the value of the entire construction project is higher than €15,000 but the main contract’s value is less than €15,000. Accordingly, the buyer-constructor must notify the main contractor and the other companies of the threshold being exceeded.

If it is already known when the parties are signing the contract that the threshold will be exceeded, the text of the contract itself can contain this information so as to make it known. Correspondingly, if the threshold is not exceeded until work has been going on for some time, the information-reporting requirement begins the month when the companies on the site become aware that it will be exceeded.

3.5 What information is required on employee reports?

3.5.1 General notes about the required information

The information concerns the buyer, i.e. the party having the information-reporting requirement, the site, the employers operating at the site, and the workers on their payroll. Contents of a building site’s employee report:

  • the name, address, etc. of the party having the information-reporting requirement
  • details that concern the site
  • the employer’s information and the employer’s contact person’s information
  • if leased workers do the work, information on the service recipient company
  • the worker's identifying information
  • the type of the worker’s employment contract

Before starting to work, each company operating on a shared site is required to give details on its workers to the site's project supervisor, who has the duty to collect this information and send it on to the Tax Administration. If no project supervisor has been appointed for the site, the information-reporting requirement applies to the constructor i.e. the buyer.

You must submit employee reports that provide information on the employers and workers that have worked on the shared site during the reporting month. If some of the workers have not worked at all on the site during the reporting month, do not include their information in that month’s employee report.

The employee report form contains information to be added on a voluntary basis. This includes the count of days worked per every worker, and the count of hours worked. In “conditional” sections of data entry, filling in the field or the result of a calculation determine whether some other data element becomes required.

3.5.2 Your contact details as the party having the information-reporting requirement

If you have logged in to an e-service to submit the reports, the Tax Administration will utilise the contact information saved in the electronic files. However, you have the option to specify a different postal address if you prefer to receive any correspondence about the submittals to some other postal address than the one that the Tax Administration has on file.

In addition, every submittal must contain a specific data entry to indicate your contact person’s name and telephone number.

If you have authorised an agent or representative to submit the reports required in the construction sector on your behalf, your representative must still submit the reports in your name, i.e. fill in your information as appropriate (your name and Business ID), not the representative’s information.

3.5.3 Information about the site                

You must give at least one of the following site details: the site’s street address or a free-text description of where the site is located. The preferred way to indicate location is to give the street address. You can describe the location in free text if no street address is in existence yet, or if the site is in a place where it can have more than one street addresses. For both the above variants, you must additionally enter the postal code and post office.  If the site location spans across more than one zone of postal codes, you should enter the postal code that matches the place where the site’s main entrance is located when work begins.

After that, all your subsequent reports must indicate the site location in the same format. This means that if you started submitting reports based on a free-text indication instead of a street address – as no address existed – you must continue to submit reports that contain the same free-text indication. As an alternative to the above, you can submit a replacement report to make corrections to the site’s address. The replacement would in this case contain the site’s actual street address, and then you could continue giving the street address on all your further reports.

To identify the sites, if there is a site number we recommend that you indicate the site number. This may be a code number that your construction company uses in its accounting records. They can facilitate further correspondence if the Tax Administration were to find it necessary to send a letter to request more information about your operation. Site numbers are recommended also because if there are several sites for which the street address is the same, we identify each one of them by site number.

3.5.4 Details on the employer or a self-employed worker

To give the employer's name and Finnish personal or Business ID code is the way to identify them and to submit data on them. If the employer has no Finnish Business ID, give their foreign ID code and indicate its type. Also provide the employer's country of tax residence and address. 

You must either give the Finnish or foreign ID, but not both for an employer company that you have a contract with.

You must enter the last name and first name and phone number of the employer’s person to contact, regardless of what company ID code has been entered.

3.5.5 Details on the service-recipient company where leased workers are working

The “service recipient” is the party using the services – or the work – of the leased workers whose actual employer is the employee-leasing company with which the leasing agreement has been made. The leasing company (agent) pays the wages earned by the leased employees. When work under a leasing contract is being done, the service recipient company directs and supervises the work. Data entry of information about the service recipient is required whenever any leased workers are included in the report you are submitting.

Accordingly, you must enter the service recipient's name and Finnish personal or Business ID code. If the service recipient has no Finnish Business ID or no Finnish personal identity code, give their foreign ID code and indicate its type. Also indicate the service recipient's country of tax residence.

You must not report leasing of employees as the contract type if the true nature of the service you receive from the other company is contracting.

3.5.6 The worker's identifying information

Your report must identify the workers either by individual tax number, date of birth, first name and last name – or by Finnish personal identity codes.

It may be that a worker has an artificial personal identity code. In this case, the first 6 digits of the code do not indicate date of birth in the usual way. For this reason, you have to give their individual tax number, date of birth, first name and last name.

3.5.7 The category of the worker’s employment contract

The employee report must show the category of the worker’s employment contract:

  • wage-earning employee
  • self-employed, etc.
  • leased employee
  • someone who works but does not get paid

If a person working at a building site is a shareholder of the limited-liability company having a contract, select “wage-earning employee”. For a self-employed individual and that person’s wife or husband, select “self-employed, etc.”. In the same way, for the general partners in partnerships (limited partnerships and general partnerships), select “self-employed, etc.”.

A further variant is a worker who has engaged the services of an invoicing service firm that prepares invoices for the work that he/she has done on the building site. These invoices go to the company that has given the assignment to the worker. Typically, the worker and the invoicing firm sign a formal employment contract. The invoicing firm then pays on the amounts to the worker as wages. If a person working at your site fits the above description, select “wage-earning employee” and fill in the invoicing service company’s name as the employer.

Alternatively, the worker and the invoicing service can sign an invoicing agreement, which means that the invoicing firm pays on the amounts to the worker as trade income (not as wage income). If a person working at your site has no employment contract with the invoicing service, and the person receives his or her income in the form of trade income, not wages, he or she is treated as self-employed. As a result, you must select “self-employed, etc.”.

If a person working at your site is a leased employee, select “leased employee”. They are people who have signed their employment contract with a foreign or Finnish business enterprise – the leasing company – that has arranged a lease with another business, so that the employees (having given their consent to this) actually perform their work in the service of the latter. For “employer”, fill in the name of the company that pays wages to the person. In addition, you must provide the details on the service recipient (for more information, see 3.5.5.).

If students, interns, trainees are working at your site, you must include then in the employee report in the same way as everyone else who has an employment contract, provided that the organisation that directs the students’, interns’ or trainees’ work has made out employment contracts with them.

However, if no employment contract exists and the student, etc. receives no wages/compensation, fill in the educational institution as their employer, and select "someone who works but does not get paid". Correspondingly, make the same selection for any other people who are present at the shared site without getting paid, e.g. members of an association doing voluntary work: “someone who works but does not get paid”.

If the building manager of a housing company is present, fill in the management company’s name as the employer if he or she has an employment contract; then select “wage-earning employee”.

However, if the building manager performs services directly for the housing company, and there is no building management company, fill in the housing company’s name as the employer. The proper selection for the type of employment depends on whether the housing company pays wages to the manager and on whether an employer/employee relationship exists between the housing company and the manager.  If the housing company pays wages to the manager, give the housing company’s name and select “wage-earning employee”. If no employment contract exists but the manager performs services for the housing company receiving no compensation in cash, fill in the housing company’s name as the employer, and select “someone who works but does not get paid”. The “someone who works but does not get paid” selection must also be made in the case of Board members of the housing company, who may be present on the site in the role of a buyer’s authorised representative.

3.6 By what date must we submit employee reports?

3.6.1  Deadlines for reporting

Reports must be submitted to the Tax Administration by the fifth day of the second month following the reporting month; for example, the information that concerns January must be submitted by 5 March. If the deadline falls on Saturday, Sunday or other holiday, the due date is extended to next business day.

Submittals of reports are accepted as of the beginning of every reporting month.  However, you are not allowed to give details on the contracts in advance: in other words, you can submit the January report as soon as January has begun, but you are not allowed to submit it in December.

Example 25: The time to submit the report for 06/2020 is between 1 June – 5 August 2020.

3.6.2 What is the deadline for the first employee report?

The information-reporting requirement is dependent on whether or not more than one employers are active on the building site; in other words, whether a “shared site” has come about. The event that triggers the information-reporting requirement is the time when the first one of the employers begins its activity on the building site. If you have not been aware that the site will become “shared” when the construction work began, and some time later – when work is ongoing – the non-shared site becomes shared, the point in time when the information-reporting requirement begins is the time when it became obvious that the site will be a shared site.

3.6.3 Submitting employee reports when construction work is in progress

You must submit employee reports that provide information on the employers and workers that have worked on the shared site during the reporting month. If some of the workers have not worked at all on the site during the reporting month, do not include their information in that month’s employee report.

3.6.4 What is the deadline for the final employee report for the site?

You must continue submitting employee reports for as long as the shared site is operating. The authority in charge of occupational safety can give you guidance regarding any open questions related to the final stage of a construction project.

The opinion of the authority has been that a shared site is not necessarily closed down although the project supervisor has already left the site because delivery of the building to its buyer has been effected. This makes for a situation where the information-reporting requirement regarding workers is reassigned to the buyer or to a new project supervisor that the buyer designates.

4 Households in the role of buyers of construction services

4.1 Households may be required to submit information

If private individuals enter into a contract with a construction company for having a house, building or other structures, under an issued building permit, built for them, the information-reporting requirement is in force as provided in § 15 d of the act on assessment procedure. 

For further information and guidance, see Tax.fi Report on construction work – households  or original Finnish or Swedish versions of this detailed guide.

5 How to submit the information

5.1 The available reporting channels

Information on both contracts and workers can be submitted to the Tax Administration online through Ilmoitin.fi, with a fillable web form, or via MyTax. Households can e-file their construction reports via MyTax.

Reports generated by various corporate software applications can be submitted through Ilmoitin.fi. Alternatively, Ilmoitin.fi also accepts the standard report files compiled according to the Tax Administration’s “data specifications” as attachment files. For more information on format requirements and content, see the relevant Data file specifications. Another source of further information and guidance is the Instructions for submittal on the Ilmoitin.fi website.

Users of MyTax can complete and send a fillable web form. MyTax guides you to enter the data in the right formats. You can use the information submitted on a previous report as the basis for a new report.

You must be signed in when you start using the e-services. Read more about authentications and login on Tax.fi.

If preferred, the reports can also be submitted on paper. You can print out the construction-report forms on tax.fi.

If you submit a replacement or if you delete a previous report, etc. to make corrections, we strongly recommend using the same reporting channel as you had used when sending the original reports.

5.2 The basic report

The basic report is the report type for submitting the reportable information for the first time. The monthly basic report gets an identifier and a timestamp automatically. This identifier is different for every submittal, regardless of whether the report contains one building site’s information or information for multiple sites and contracts.  If it turns out later that there were errors in the submitted report’s contents, so you need to make some corrections, you must refer to the identifier when you send a replacement or a deletion.

The Ilmoitin.fi website creates unique identifiers for the basic reports that are sent via Ilmoitin.fi. You are required to refer to that identifier in case you are making corrections (or deletions) later via Ilmoitin.fi. Your submittals via Ilmoitin.fi are also saved in MyTax, so you can see them there. However, there are delays in the transfer of information between these two channels (the saved reports need to be transferred from one channel to the other).

If you submit reports in MyTax or on paper, the Tax Administration’s IT system creates the unique identifiers for them. Please note that the MyTax and paper submittals are not transferred to Ilmoitin.fi at all.  For this reason, you cannot use the identifiers of MyTax and paper-submitted reports as a reference when you send a replacement, make corrections, delete something in Ilmoitin.fi.

You can file several basic reports during one month, and relating to one reportable month. Each one of them get their unique identifiers although the company that submits them remains the same.

The reporting month’s report is submitted for the first time as the “basic” report even if the submittal is late i.e. many days past deadline.

5.3 Replacement report

If the company having the information-reporting requirement notices an error, or if the Tax Administration has pointed out an error, the company must submit a replacement report. When you replace a previously submitted report with a replacement, all the correct information of the original report must be repeated on it.

The identifier of the relevant “basic” report must appear on the replacement report. You cannot submit the replacement unless you add the original report’s identifier to it. The replacement report must refer to the relevant basic report’s month.

Example 25: In July, a company having the requirement to submit reports on construction workers had mistakenly left out one person from the employee report for July. To remedy this error, the company must submit a replacement report for July, referring to the original employee report’s identifier. The replacement must contain the details concerning the worker that had been left out of the original report and all the correct information of the original report, as well.

5.4 Deletion report

You can delete a submitted report. This may be useful if there had been errors in the report’s entire information content. To do so, use a deletion report. The relevant basic report’s identifier must appear on the deletion report.

Example 26: Let us assume that you mistakenly re-submitted the information for January as information for February. In this case, you want to delete an entire report. In these circumstances, you can delete the report where you refer to February as the reporting month but the report contains January information. To delete it, send a deletion report. The identifier of the basic report must appear on the deletion report. When you deleted the submittal that contained errors, you can proceed to submit a new basic report for February.  

6 Making corrections

6.1 To remedy an error because the Tax Administration has prompted you

If you receive a message from the Tax Administration asking you to make corrections, you must take care of this before the deadline stated. In such a case, you submit a replacement for the original contractor report or employee report for the relevant reporting month. The identifier of the month’s basic report must appear on the replacements.

6.2 To remedy an error on your initiative

You are required to take action independently to make corrections on any report if you detect any inaccuracies on your previous reports on construction work, contract, companies and employees. If you have the information-reporting requirement and you notice that any details are missing from an earlier submittal, you must give these details: you can either send a replacement in order to add them to a report you have submitted previously, or submit an entirely new basic report for the reporting month concerned, which must contain all the details that were missing. If you notice that an entire report is missing, you are required to take action to submit a basic report for the reporting month concerned.

However, you can put some of the errors right when you submit the next month’s contractor/employee report. An example of that kind of errors is a wrong address or phone number of one of the companies included in your reporting.

Example 27: In March, a company submitted a contractor report. It was detected that the name and phone number of the contact person were wrong. The company becomes aware of this mistake when its reports for May are being prepared. In this case, it is enough if the company just indicates the name and phone number as they should be on the basic report for May.

You can make corrections this way for 48 months from the reporting month’s usual deadline date for reporting. All reports on construction work for which the reporting month is January 2020 or later have the 48-month period for making corrections. Basic reports missing from the reporting month can also be submitted, and reports can be deleted, during 48 months starting from the usual deadline date of the monthly report.

Example 28: You submitted your May 2020 report on 5 July 2020. As it turns out, there is a mistake in the reported information. You can make corrections to any errors up to 5 July 2024.

7 Description of the control process if information is not provided

7.1 Penalty charges for neglect

If a filer fails to report, under § 22 a, Act on Assessment Procedure, a maximum charge of €15,000 may be imposed due to neglect.

When the Tax Administration determines the exact amount, it considers the extent of the information that should have been reported. Amounts are rounded to full hundreds. This means that the minimum charge is €100.

Parties liable to report information may be imposed a penalty charge of up to €2,000, if

  • the report or other information or document that the party has submitted contains a small error or omission,
  • submittal is past deadline without a good reason,
  • the party has sent information with methods other than those the Tax Administration has approved.

Parties liable to report information may be imposed a penalty charge of up to €5,000, if

  • the report, information or document contains material errors or omissions, or
  • the party submits it only when prompted to do so.

Parties liable to report information may be imposed a penalty charge of up to €15,000, if

  • the party has deliberately or due to gross neglect submitted a report with material errors, or
  • the party submitted no report at all.

Individuals in the role of the buyer or customer in the construction project may have to pay a penalty charge in the following circumstances:

  • The project has to do with the individual's business operation, and he or she has not complied with the reporting requirement, or
  • The project is for the individual's private or family use, and he or she has not complied with the reporting requirement.

7.2 Extent of the project supervisor's responsibility for the information

Project supervisors on building sites carry responsibility for sending the workers’ information to the Tax Administration. Accordingly, it is treated as an obvious neglect on the project supervisor’s part if the report is submitted but it refers to fewer construction workers than the true headcount of on-site workers during the reporting month. 

However, penalty charges are not imposed on the project supervisor if the information is incomplete due to an error of an employer on the site or due to a self-employed individual’s error, and if the project supervisor was probably not aware of the errors.

The Tax Administration can refrain from imposing the charge on the project supervisor if one or more of the employer companies present on the building site fail to pass information about workers on to the project supervisor, or if a self-employed construction worker fails to give his or her information to the project supervisor.  When submitting their employee reports, project supervisors must inform the Tax Administration of the enterprises active on the site that have failed to give their workers’ information or part of it. In the same way, if one of the employers or the self-employed passes on information that the project supervisor finds inaccurate, based on obvious reasons, the project supervisors must inform the Tax Administration of the employer enterprise or enterprises concerned. Otherwise, responsibility for the inaccuracy lies on the project supervisor.

7.3 Extent of the contractor company's and the leasing agent's responsibilities for submitting information              

§ 15 b of the act on assessment procedure requires that all companies present at a shared site must give their worker information to the project supervisor. However, in the case of employee leasing, the act on assessment procedure contains no provisions that would determine which one of the two companies must give the employee details to the project supervisor – it may be either the leasing company (the employer of the leased workers = agent) or the service recipient company (the contractor present on the site).   

The leasing company is an agency that arranges for workers to begin working for the contractor, so the leasing company does not necessarily know about the sites and the work itself. This means that it is the service recipient that has the better potential to gather the necessary details on the leased workers and pass the information on to the project supervisor. However, the leasing company is the one legally responsible for the correctness of the leased workers' personal details. As for facts about the work they do, the service recipient, being the on-site contractor, is the party better informed.

For these reasons, the contractor companies present on shared sites must not only give details on their ordinary employees but also on their leased workers. If such a contractor neglects its obligation to submit them, a penalty charge may be imposed. For this reason, it is important that contractor companies that sign contracts with employee-leasing agents make sure that they can receive all the information they need for fulfilling the reporting requirement. 

7.4 Removal of a business enterprise from the Prepayment Register

Anyone entered in the Prepayment register may be removed from it if they do not fulfil the information-reporting requirement. Before the Tax Administration does so, we send you a letter prompting you to state your opinion, giving you an opportunity to remedy errors or make the necessary corrections.

The primary course of action is to impose a penalty charge for neglect; in other words, no removal of a business enterprise from the Prepayment register is carried out without justified reasons.

8 Data storage

Pursuant to § 15 b.4 of the act on assessment procedure, information covered by the reporting requirement must be stored for 6 years from the calendar year when the site was completed. The site is treated as completed when the work has been received and handed over to the customer.

No minimum storage time for contractor information is stated in § 15 c of the act on assessment procedure. However, under § 10 of the Accounting Act, those who must maintain accounting must keep their accounting books and records in storage. The period for storing books, receipts, vouchers, correspondence, printouts from computerised accounting systems, etc. is 6 years as a minimum, counting from the end of the calendar year when the company’s accounting year ended.

You can keep your accounting records on file in an electronic format. The reports you submit in MyTax stay there for one year, available for viewing. The reports in Ilmoitin.fi stay archived in Ilmoitin.fi for 48 months.