The Finnish Incomes Register – unique in its scope

9/21/2020

The Incomes Register, an electronic database for income data, was deployed in Finland in 2019. Data on paid income is reported to the register within five days of payment. At the moment, the register covers earnings payment data, and as of 2021 pensions and benefits payment data will also be included in the register.

- Some other countries have similar centralised registers that contain real-time income data but the Finnish Incomes Register is one of a kind in terms of its scope and the availability of up-to-date information. The data stored in the register can be utilised by different organisations simultaneously, and citizens or employers do not need to report their data to each organisation separately. The manual workload is reduced as the process of reporting data to the Incomes Register is highly automated, says Terhi Holmström, Director of Incomes Register Unit.

The Incomes Register speeds up and automates the data flow of earnings and benefits payment data from companies to the authorities and other data users. Thanks to real-time data, authorities, for example, have been able to automate their own processes and give up various manual steps in the recording of data. Therefore, the Incomes Register, in its part, helps create and support an effective way of carrying out official duties in Finland.

Data moves automatically and in real time

Data is submitted electronically to the Incomes Register (99% of reports). The majority of reported data is transmitted directly from payroll systems, even before the actual payment date, to the Incomes Register via a technical interface. Therefore, various authorities and organisations can access the data whenever they need it.

- The Incomes Register is a major step forward in utilising technical interfaces between the systems of companies and the authorities. Via the interfaces, data moves quickly, automatically and in a controlled manner from one system to another, says Holmström.

In Finland, Incomes Register data is utilised widely throughout society. We can all see the benefits of the register in various forms of communication with public authorities as Incomes Register data is used, for example, in taxation, granting benefits and pensions, claims handling, labour protection, statistics, and the determination of customer fees.

Employers report the wages they pay to the Incomes Register. Starting from next year, benefits payment data will also be reported. Up to 69% of earnings payment reports are submitted before the actual payment date. Using digital public services is something many people in Finland are already familiar with.

- With the deployment of the Incomes Register, Finnish employers have taken a great digital leap and automated their reporting processes. Developing a real-time digital society has been a common goal. The Incomes Register with its interfaces has introduced new possibilities for this development, and there are many possible ways to continue the development in the future, says Holmström.

The Incomes Register helps combat the shadow economy

The Incomes Register makes it possible to combat the shadow economy and undeclared work more efficiently than ever before. Occupational safety and health authorities, for example, can utilise Incomes Register data when they monitor the fulfilment of the minimum conditions of an employment relationship and the use of foreign labour. With the help of real-time income data, any possible violations can be detected quicker. It is also possible to prevent violations, as the same data is available to all data users.

- It will be interesting to see how the Incomes Register's role in combating the shadow economy will develop in the coming years, says Holmström.

Income earners can also check in the Incomes Register's e-service whether their employers have carried out their reporting obligations. This was not possible before the Incomes Register; instead, potential omissions were often discovered only after a long time.

The wage income, pension income and taxable benefits income reported to the Incomes Register cover about 90% of all taxable income of the income earners in Finland. This is because certain types of income are excluded from the reporting obligation. These include, for example, the majority of capital income, reimbursements of travel and accommodation expenses paid by the employer against a receipt, and the work income of a self-employed person insured under the farmers' pensions act or the self-employed persons' pensions act.

Despite the exclusions, the Incomes Register provides a comprehensive overview on the income of most people: in about two out of three cases, the income reported to the Incomes Register is an exact match to the income earner's total income. In addition to income data, information related to employment relationships and absences is also collected in the Incomes Register.

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The Incomes Register participates in the #EU4FairWork campaign. The campaign is raising awareness of the benefits of declared work among employers and employees as well as informing decision-makers about the importance of preventing undeclared work. Authorities together with organisations are on board with this EU-wide campaign. Follow the campaign on social media #EU4FairWork.