Entrepreneur: When you pay wages, report the data to the Incomes Register from 1 January 2019 onwards
Wages, salary and earned income paid after 1 January 2019 will be reported to the Incomes Register. All employers (large and small companies and, for example, household employers) will report data to the Incomes Register in real time. The payer, such as the employer, will be obligated to report the earnings payment data.
Data reported to the Incomes Register includes wages, bonuses, fringe benefits, non-wage compensations for work and other earnings. Tax-free and taxable reimbursements of expenses must also be reported. Daily allowances, meal allowances and kilometre allowances paid will be reported to the Incomes Register.
Company owner's wages
With regard to the reporting of the earnings payment data of the company's owners, i.e., from the perspective of an entrepreneur, it is significant whether or not an owner of the company can draw wages from the company. An owner of a limited liability company can draw wages from the company but, for example, a self-employed person cannot draw wages from his or her business; such withdrawals are withdrawals for private use. Wages paid to an owner of a limited liability company will be reported to the Incomes Register The withdrawals for the private use of a self-employed person will be handled in the accounting of the person's business and reported on the tax return. Withdrawals for private use by a self-employed person will not be reported to the Incomes Register. However, if the business has employers, the wages paid by the business to the employees will be reported to the Incomes Register.
All wages will be reported to the Incomes Register, regardless of the type of insurance. Wage income paid to YEL and MYEL insured entrepreneurs will be reported to the Incomes Register.
However, the following will not be reported to the Incomes Register, for example
- reimbursements of travel and accommodation expenses paid by the employer against a document, such as a ticket or a hotel invoice;
- expense items that are the employer's responsibility;
- if an employee buys coffee and doughnuts for a work site and the expenses are reimbursed to the payer according to the receipts, or if an employee fills up the company car on his or her own expense and this is paid back as a reimbursement of costs during the payment of wages;
- compensation paid to the employer;
- confirmed annual wage income used as the basis for social insurance contributions, determined for an insured entrepreneur under the Self-Employed Persons' Pensions Act or the Farmers' Pensions Act; and
- business income;
- an exception to this: remunerations, for which tax must be withheld, paid to a worker not registered in the Prepayment Register must be reported to the Incomes Register (using the Non-wage compensation for work income type). The report must be submitted regardless of whether the recipient of the non-wage compensation for work is a natural person, a limited liability company, a general partnership or a limited partnership.
The data must be reported within five days of the payment date
Data will be submitted to the Incomes Register on two reports. An earnings payment report will be submitted separately for each employee and each payment date. The employer's separate report will be submitted company-specifically, once per month.
The earnings payment report must be submitted within five calendar days of the payment date. This means the payday, or the day on which the payment is available to the income earner. A company that is a casual employer must also submit data within five calendar days of the payment date.
The employer's separate report must be submitted on the fifth day of the calendar month following the payment month. The separate report will be used to report the total amount of the employer's health insurance contributions paid and any deductions made thereof, and the "No wages payable" data of an employer in the employer register. Casual employers will only be obliged to submit the employer’s separate report to the Incomes Register for the months in which they pay wages.
Wage advances must also be reported on the fifth day of the payment date of the advance
Tax must be withheld from the advance and social insurance contributions must be paid on the payment date of the advance. Once the tax has been withheld and the social insurance contributions paid, the advance will be deducted from the employee's gross wages on the actual wage payment date. The employer will pay the withheld tax and the social insurance contributions to the parties responsible for collecting these payments in accordance with separate schedules. An advance reported to the Incomes Register may not be reported to the Incomes Register again on the actual wage payment date.
The accountant may not have received information on the advance until during the following month, for example. Nowadays reporting will be done in real time. In accordance with the Act on the Incomes Information System, data on payments made must be reported no later than on the fifth calendar day after the payment date.
According to law, tax must always be withheld when the payment – even if it is an advance – is paid to the income earner.
Example: An advance is paid directly from the account on 8 February 2019. It is not registered in the payroll software until the advance is collected, for example on 28 February 2019. When does this need to be reported? If the reports are generated directly from the payroll software, the report would be submitted on 28 February 2019 when the payroll department registered it. Is this right?
The advance paid must be reported to the Incomes Register on the fifth calendar day after the payment or, in the example case, no later than on 13 February 2019. An advance reported to the Incomes Register must not be reported again on the actual wage payment date (on 28 February 2019 in the example case).
Fringe benefits will also be reported in real time
In accordance with the usage principle, fringe benefits will be counted as income for the month during which the benefit was available to the income earner.
If an income earner is paid both monetary wages and fringe benefits, all data must be reported under the payment date plus five days principle. If, however, the income earner is not paid monetary payments, or monetary wages, but only – say – fringe benefits, the data must be reported to the Incomes Register monthly no later than on the fifth day of the calendar month following the month during which the income earner received the benefit.
If the telephone benefit is processed in payroll accounting on an advance basis in January for the entire year, this benefit can also be reported to the Incomes Register once a year. It is possible to take this action when the payable income is not subject to earnings-related pension, unemployment, or accident and occupational disease insurance contributions, such as with YEL-insured shareholders. Another condition is that the person is not paid any other income or has not been issued any other benefit.
Reporting the reimbursements of travel expenses to the Incomes Register
Tax-exempt and taxable reimbursements of expenses must also be reported to the Incomes Register. With regard to tax-exempt reimbursements of expenses, kilometre allowances, daily allowances and meal allowances must be reported. Reimbursements of travel expenses must be reported under the payment date plus five days principle, even if no monetary wages are paid.
As an example, should an employee deliver travel invoices from several months at once to the employer, and the tax-exempt travel expenses be paid as a single payment on one payment date, the employer must report the reimbursements of expenses paid to the Incomes Register within five calendar days of this payment date. The reimbursements of expenses paid (and other income) must be reported on the report for the pay period and payment date in relation to which the expenses were reimbursed to the income earner or the other income was paid.
The pay period and earnings period mean different things. An earnings period can be longer than the pay period. The earnings period is income type specific data and indicates the period over which the income was accrued.
The data must be submitted to the Incomes Register without monetary minimum thresholds or age limits
The data must be submitted to the Incomes Register without monetary minimum thresholds. Incomes Register data users, such as the Tax Administration, earnings-related pension providers and occupational accident insurance companies, have different monetary thresholds related to issues such as the obligation to provide insurance or withhold taxes. It should be noted, however, that such data is reported to the Incomes Register without monetary minimum thresholds. If you pay wages, you must report the data to the Incomes Register.
Wages paid to minors must also be reported to the Incomes Register. Even if a minor does not need to be provided with social insurance, the income received by the minor is taxable, and the data must be reported to the Incomes Register in all circumstances, without monetary minimum thresholds.
Submit the data to the Incomes Register as comprehensively as possible – this will reduce the amount of work needed later
Some of the data to be reported to the Incomes Register are mandatory on every report and some are mandatory if the income in question is paid. Some of the data are voluntarily submitted complementary data that data users need in order to fully utilise the data they receive from the Incomes Register.
The Mandatory data to be reported to the Incomes Register matches the data submitted to the Tax Administration, earnings-related pension providers, occupational accident insurance providers and the Employment Fund on annual notifications before the year 2019 without a separate request.
Complementary data is needed for benefit decisions, the determination of customer fees and claims handling, for example. When an employer also submits complementary data directly in connection with a wage payment, there is a reduction in retroactive investigative work.
Data can be submitted on a paper form only in special circumstances
Online transactions are a basic requirement of the Incomes Register, and data may be submitted on a paper form only in special circumstances. Situations where the electronic submission of data cannot reasonably be required can be considered special circumstances. This is the case when, for example, a natural person, an estate, a casual employer or a foreigner is unable to submit the data electronically. Neither can data be reported to the Incomes Register by phone; the data must be reported in a fixed format.
The recommended and easiest way is to report the data to the Incomes Register directly from the payroll system over a so-called technical interface. Indeed, we recommend consulting the supplier of your payroll system on whether an Incomes Register update will be released for your payroll system, and on how the data will be delivered to the Incomes Register.
If your company is not yet in the digital era and does not use e-services, now would be a good time to begin doing so. This will require learning new practices and bring about changes, but in the long term this will make the employer's everyday life easier.
You can familiarise yourself with electronic payroll management and reporting via the free Palkka.fi service, a statutory official service particularly intended for small entrepreneurs and households. The Palkka.fi service allows you to perform payroll calculations for companies and, from 1 January 2019 onwards, report data directly to the Incomes Register, thereby eliminating the need for a separate report to the Incomes Register.
Data can also be reported to the Incomes Register via the Incomes Register's e-service, either by uploading the data as a file or manually entering the data into an online form. You can perform Incomes Register e-service identification using strong Suomi.fi identification means such as online banking codes, a mobile certificate or a certificate card.
You cannot report data to the Incomes Register via the Ilmoitin.fi or Lomake.fi services.
Authorisation is required for using the e-service
The recommended method is to report the data to the Incomes Register directly from the payroll system over a so-called technical interface. If a company uses the Incomes Register's e-service for reporting data, the company's authorised signatory, Managing Director, Substitute for the Managing Director or a private trader can authorise an accounting firm, for example, to report the data on their behalf to the Incomes Register.
Such an authorisation can be granted via the Suomi.fi authorisation service or the Katso service, depending on the form of company in question. Read more about authorisation.
Reporting of wages will transfer to the Incomes Register – the other reporting channels will be discontinued
The last annual notifications for wages will be submitted for 2018 separately to the Tax Administration, earnings-related pension providers, the Employment Fund (the Unemployment Insurance Fund) and occupational accident insurance providers. Data on payments made after 1 January 2019 will be submitted in real time to a single, centralised register. This will apply to all wage payers, with no transition periods.
Payments made before 1 January 2019 will be reported and corrected separately for each authority. It should be noted, however, that in 2019, employers must report to the Incomes Register and separately to the authority in question for the year 2018 and the preceding years.