Benefits: recovery and recourse

Validity
5/29/2020 - Until further notice

The instructions were updated on 29 May 2020:

  • The instruction texts were reviewed and clarified.
  • The years were changed to match the deployment of benefits.
  • Added Section 1.2, section 51(5) of act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016).
  • Added a clarification to the instructions, stating that in reports for both unjust enrichment and recovery, zero (0) is reported as the number of benefit units. This data must not be removed from a replacement report.
  • Corrected a rounding error in Example 2, and corrected numbers in Examples 3, 10 and 14.
  • In Example 4, corrected "Unprompted refund – Yes" to "Recovery – Yes".
  • In Example 5, corrected the Original earnings period data item.
  • The Earnings period of original benefit data item belonging to the Additional repayment details data group was corrected to the Original earnings period data item.
  • Examples 6, 7, 8 and 9 were divided into separate sections.
  • Added Section 5, Partial payment, to the instructions.

1 Foreword

Both pension and benefits income are reported on a benefits payment report submitted to the Incomes Register. In these instructions, the term "benefit" refers to both pensions and benefits unless otherwise specified.

In certain situations, pensions and benefits can be recovered from the benefit recipient, for whom the term income earner is mostly used in these instructions. The income earner may have incorrectly received an overpayment, the benefit could have been paid on incorrect grounds, or the income earner has retroactively received another benefit for the same period for which they have already received some other pension or benefit. When the income earner pays back unjust enrichment or another groundless payment made, this must be reported to the Incomes Register.

The recovered amount is not corrected on the original benefits payment report; the recovered amount is reported on a new report and allocated to the payment date on which the income was returned to the payer. Recovery is reported by specifying the "Recovery – Yes" entry linked to the income type and providing the related additional details. The date on which the income earner pays back the overpayment or the overpayment is offset from a later benefit is entered as the payment date. The set-off of income is reported using additional repayment details, and it must not be confused with recourse or other deductions.

The original payment date is voluntarily reported data. However, it is necessary in certain situations so that the Finnish Tax Administration can correctly allocate the income earner's taxation. The payment date is necessary when, for example, recovered withholding needs to be allocated to the tax year during which it was withheld from a payment.

The following mandatory data is submitted on the recovered payment:

  • Income type
  • Recovery – Yes
  • Amount
  • Repayment date
  • The start date and end date of the original earnings period.

The recovery must be reported to the Incomes Register no later than on the fifth day after the day on which the payer received information on the repayment of the recovered amount, its payer, and the payment or remuneration that the repayment relates to. This data is required in the allocation of the recovery. The actual repayment date is reported in the Additional repayment details data group.

In addition to recovery, these instructions also depict recourse situations. Recourse means situations where an income earner is retroactively granted a benefit for the same period of time for which the income earner has previously been granted another benefit. The payer of the previous benefit may gain a right of recourse to the retroactive benefit granted later. In other words, the income earner has been granted two overlapping benefits for the same period, and the recourse covers the overpayment of the other benefit to the payer of the previous benefit so that the payer does not need to recover the overpayment from the income earner. In recourse situations, the payer of the benefit paid later does not make the payment to the income earner but to the payer of the earlier benefit, either in full or in part.

Situations where the provision of section 112 a of the act on income tax (tuloverolaki 1535/1992), "Adjustment of certain recovered benefit income", applies to the reporting have been compiled in these instructions. Because the act on income tax provision in question is only applied to pensions, study grants and other statutory benefits, the term "non-statutory benefit" used in these instructions refers to those benefits to which section 112 a of the act on income tax is not applied. Neither is section 112 a of the act on income tax applied to payments taxed as capital income.

The instructions provide examples of situations in which benefits are paid, unjust enrichment is reported, a benefit is recovered, or the recovery is abandoned. The instructions also give examples of possible problems related to the change of the year and withholding from the recovered amount. The Finnish Tax Administration must be able to allocate the recovered withholding to the tax year in which it was withheld from a payment (examples 2, 3 and 11).

These instructions do not discuss a situation where the parties that have granted overlapping benefits share the costs between themselves in the background, with the income earner having no knowledge of the money transfers. This is not a case of actual recourse. These instructions also do not treat recourse payments between insurance companies. These include, for example, recourse payments made between accident and occupational disease insurers and motor insurers, and between pension providers and parties liable to pay damages under the rail transport liability act (raideliikennevastuulaki 113/1999). The instructions Benefits: Reporting data to the Incomes Register treat the situations not reported to the Incomes Register in more detail (in particular, see Section 8.2., Right of recourse situations excluded from reporting to the Incomes Register).

The instructions discuss only the recovery and recourse of the benefits income of income earners. Benefits repaid voluntarily are discussed in more detail in the instructions Benefits: Reporting data to the Incomes Register.

The instructions use examples to describe the most common Incomes Register reporting situations. The examples do not take all data to be submitted into consideration, only data that is relevant to resolving the matter in question.

1.1 Section 112 a of the act on income tax

Section 112 a lays down provisions on the adjustment of recovered benefits income. These instructions take into account the amendment to section 112 a, subsection 1, of the act on income tax (tuloverolaki 1535/1992), which will be applied for the first time in the taxation for the 2020 tax year.

Under the previous subsection 1, the repayment could be taken into consideration in the taxation for the original payment year if the year of repayment was the next year after the original payment year and the payer had time to take the recovery into consideration, either in the original annual information return submitted in January or a replacement annual information return submitted later. In such a case, no recovery deduction was established in the taxation for the payment year. If the repayment was made so late that the payment could not be taken into consideration in the annual information return submitted by the benefit payer, the repaid amount was deducted as a recovery deduction in the repayment year.

Under the amended subsection 1, the repaid amount is deducted as an adjustment of the taxation for the repayment year (as a recovery deduction) if the repayment was made so late that the payment cannot be taken into account in the income earner's taxation in the year of the original payment. However, the repayment can be taken into account in the income earner's taxation for the payment year if the repayment is made by the deadline confirmed in the Finnish Tax Administration's decision on the repayment deadline for recovered benefits income in the income earner's taxation. In these instructions, the Finnish Tax Administration's decision in question is referred to as the benefit recipient's deadline decision.

Subsections 1 and 2 of section 112 a of the act on income tax particularly concern the recovery of a benefit from an income earner. Subsection 3 of the section lays down provisions on the set-off between different payers.

Section 112 a of the act on income tax only applies to pensions, study grants and other statutory benefits. The provision does not apply to non-statutory benefits. Non-statutory benefits include payments based on insurance terms and payments made by a municipality, based on a decision made by the municipality. If these types of non-statutory payments are recovered from an income earner, the recovery is taken into account by adjusting the taxation for the original payment year within the adjustment periods. For more details on situations between different payers, see Section 4 Recourse situations.

1.2 Section 51(5) of the act on assessment procedure for self-assessed taxes

The act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016) lays down provisions on the adjustment of the payer's obligations. These instructions take into account the new subsection 5 of section 51 of the act that came into effect on 1 January 2020.

According to subsection 5 of section 51 of the act, the taxation of the payer's tax period is not adjusted if the payment recipient repays income received in a previous year to the payer so late that that the withholding or tax at source collected from the income has been taken into consideration in the payment recipient's taxation. In practice, the Finnish Tax Administration's decision on the deadline for the repayment of recovered income issued under subsection 5 of the section determines the date until which the payer can carry out net recovery of the payment. The decision will be applied for the first time to withholding and tax at source collected from payments repaid on or after the date the act came into force. In these instructions, the Finnish Tax Administration's decision in question is referred to as the payer's deadline decision.

1.3 The income earner refunds a benefit voluntarily

An income earner can refund a benefit voluntarily even though the benefit is not unjust enrichment for the income earner and does not become unjust enrichment later. In such a situation, the benefit payer does not submit a report for unjust enrichment. The Incomes Register's situations involving unjust enrichment must not be confused with situations involving unprompted refunds.

The refunded amount is reported to the Incomes Register by specifying "Unprompted refund – Yes". The date on which the income was refunded to the payer is reported as the payment date. The payer also reports the Additional repayment details data group, allowing the Finnish Tax Administration to correctly tax the income earner. The principles of reporting gross and net recovery are also applied to unprompted refunds.

For more details on reporting, see the instructions Benefits: Reporting data to the Incomes Register.

2 The income earner repays a payment

Section 112 a, paragraph 1 of the act on income tax lays down provisions on a procedure in which the income earner repays a payment to the benefits payer. The time of payment determines whether the recovery can be taken into consideration in taxation as net recovery. The payer can always choose to recover the payment made as a gross amount. Net recovery is discussed in Section 2.2.1 of these instructions and gross recovery in Section 2.2.2.

The recovery is reported by specifying the "Recovery – Yes" data item added to the income type and providing the related additional details. The recovery data must be submitted no later than on the fifth day after the date on which the benefit payer was informed of the payment of the recovered amount, the payer and the payment or remuneration the payment is related to, and the recovery has been allocated in the benefit payer's own system.

If the income is recovered as net recovery, the benefit payer reports the withholding to which the amount recovered from the income earner is subject, using the ”Withholding from the repayment" data item. If the income is recovered from the income earner as a gross amount, the benefit payer does not report the tax previously withheld from the recovered amount. In this case, the income earner is given credit for the withholding from the recovered amount in the taxation for the payment year.

The income can be recovered from the income earner as a net amount, if the income is paid back in the same year or at the beginning of the next year before the previous year's taxation has been completed. The Finnish Tax Administration will determine in the benefit recipient's deadline decision by what calendar date of the year following the payment year of the original payment the repayment must be made in order for it to be possible for the payment to be taken into account in the taxation for the payment year of the income earner's original payment. The Finnish Tax Administration also specifies the date by which the payment must be repaid so that the payer's tax for the tax period can be adjusted in the payer's deadline decision. If the payment is repaid after the deadline confirmed in the Finnish Tax Administration's decision, the payer must use gross recovery.

The original earnings period must be reported at a precision of a calendar year. The original earnings period means the earnings period during which the income to be recovered was originally paid. The benefit payer may report a more precise earnings period (for more detail, see Example 1). When the Finnish Tax Administration receives the data on the withholding from a repayment, it adjusts the withholding obligation for the month of the original payment date reported by the benefit payer. If the benefit payer has not reported the original payment date, the Finnish Tax Administration allocates the payment to the tax period of the end date of the original earnings period. In such a situation, the benefit payer may lose credit interest calculated based on the amount of returned withholding.

Examples 2, 3 and 11 of these instructions depict problematic situations related to the change of the year and the withholding collected from the recovered amount. It must be possible to allocate the recovered withholding to the same tax year in which it was withheld from the payment.

Payments received through enforcement proceedings are considered comparable to payments made by the benefit payer from its own funds.

2.1 The payer recovers a payment made before the year 2021

Payments recovered in 2021 or later are reported to the Incomes Register, even if the original income had been paid prior to 2021. Although the information of the recovery is reported to the Incomes Register, the report submitted for the original benefit cannot be corrected in the Incomes Register if the benefit was paid prior to 2021. Such corrections must be made in accordance with the instructions of each data user.

2.2 The payer recovers a payment during the original payment year

2.2.1 Net recovery

If the income earner (or some other party on their behalf, such as a spouse) pays back an overpayment in the payment year of the original payment, the income earner can return the net amount of the payment, i.e. the amount from which withholding has been deducted. In net recovery situations, the benefit payer must report to the Incomes Register both the recovered payment as a gross amount and the amount of the tax withheld from it. The withholding from the recovered amount is not credited to the income earner in the taxation for the payment year; instead, it is taken into consideration in the payer's withholding obligations based on the additional repayment details.

Example 1: A basic unemployment allowance of EUR 648 per month was paid to an unemployed jobseeker from 1 January to 31 March 2021. 20% tax was withheld from the basic unemployment allowance (EUR 129.60 per month). The benefit payer has reported the payment monthly according to the payment date. The Benefit unit data group is mandatory when unemployment benefits are reported in order that the days qualifying for unemployment benefits can be determined.

The example of a report (Table 1) features the report submitted for the basic unemployment allowance for January, and corresponding reports have been submitted for February and March:

Example 1, table 1
Record data Values
Payment date or other reporting date 05.02.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY00020120
Income earner details  
General income type details  
Income type code Basic unemployment allowance
Amount 648.00
Earnings period  
Start date 01.01.2021
End date 31.01.2021
Benefit unit  
Unit Day
Number of units 21
General income type details  
Income type code Withholding tax
Amount 129.60
Earnings period  
Start date 05.02.2021
End date 05.02.2021

In April, the benefit payer notices that the basic unemployment benefit has been mistakenly paid for January and February, so the payer recovers the payments from the income earner. The benefit payer submits replacement reports for January and February, reporting the unjust enrichment paid. The Benefit unit is mandatory information when reporting unemployment benefit income types. In the case of unjust enrichment, zero (0) days is reported as the benefit unit on the replacement report. The data must not be removed from the replacement report, as it is required by the data users. 

The example of a report (Table 2) features the replacement report submitted for the basic unemployment allowance indicating the unjust enrichment. A corresponding report has been submitted for February, with 3 March 2021 specified as the payment date.

Example 1, table 2
Record data Values
Payment date or other reporting date 05.02.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 20YY00020120
Report version number n
Income earner details  
General income type details  
Income type code Basic unemployment allowance
Amount 648.00
Unjust enrichment Yes
Earnings period  
Start date 01.01.2021
End date 31.01.2021
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Withholding tax
Amount 129.60

The income earner pays the recovered amounts on 5 July 2021. The benefit payer then allocates the repayments in its payment system on 9 July 2021. As the entire original earnings period occurs in the same calendar year, the recovery (net recovery) can be reported using a single earnings period. The Finnish Tax Administration adjusts the withholding obligation (EUR 259.20) for the tax period of the end date of the original earnings period, i.e. March.

The example of a report (Table 3 a) features the new report on recovery submitted in July:

Example 1, table 3 a
Record data Values
Payment date or other reporting date 09.07.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY00090720
Income earner details  
General income type details  
Income type code Basic unemployment allowance
Amount 1296.00
Recovery Yes
Additional repayment details  
Repayment date 05.07.2021
Withholding from the repayment 259.20
Original earnings period  
Start date 01.02.2021
End date 31.03.2021
Benefit unit  
Unit Day
Number of units 0

If the benefit payer wants the withholding obligations to be correctly allocated to the original tax periods, the report on recovery must be submitted in an itemised manner. The benefit payer must report the Withholding from the repayment data item separately for each earnings period, or by also using the Payment date or other reporting date data item. In this way, the benefit payer will receive any credit interest possibly resulting from the adjustment of the withholding obligations. In a recovery report, the Benefit unit is reported as zero (0) days.

The example of a report (Table 3 b) features the same new report submitted of the recovery in July, with the recovery amounts reported in a more itemised manner:

Example 1, table 3b
Record data Values
Payment date or other reporting date 09.07.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY00090720
Income earner details  
General income type details  
Income type code Basic unemployment allowance
Amount 648.00
Recovery Yes
Additional repayment details  
Repayment date 05.07.2021
Withholding from the repayment 129.60
Original earnings period  
Payment date or other reporting date 05.02.2021
Start date 01.02.2021
End date 28.02.2021
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Basic unemployment allowance
Amount 648.00
Recovery Yes
Additional repayment details  
Repayment date 05.07.2021
Withholding from the repayment 129.60
Original earnings period  
Payment date or other reporting date 05.03.2021
Start date 01.03.2021
End date 31.03.2021
Benefit unit  
Unit Day
Number of units 0

Example 2: The income earner has been paid benefit A as follows:

  • payment date 27 December 2021, earnings period 17–23 December 2021, total amount of benefit paid EUR 323.21
  • payment date 3 January 2022, earnings period 24–30 December 2021, total amount of benefit paid EUR 242.00
  • payment date 10 January 2022, earnings period 31 December 2021–6 January 2022, total amount of benefit paid EUR 314.52.

20% tax has been withheld from the payments.

The benefits payer has submitted reports on the payments to the Incomes Register. The example of a report (Table 1) features the report on the 27 December 2021 payment. Corresponding reports have been submitted in January.

Example 2, table 1/3
Record data Values
Payment date or other reporting date 27.12.2021
Report details  
Service data  
Type of action New report
Payer's report reference yyyxxxzzz1
Income earner details  
General income type details  
Income type code (Benefit A)
Amount 323.21
Earnings period  
Start date 17.12.2021
End date 23.12.2021
General income type details  
Income type code Withholding tax
Amount 64.64

In March 2022, the benefit payer was informed of the income earner not being entitled to the benefit. The benefit payer submits replacement reports and reports the payments as unjust enrichment.

The example of a report (Table 2) features the replacement report submitted for the 27 December 2021 payment, indicating the unjust enrichment:

Example 2, table 2/3
Record data Values
Payment date or other reporting date 27.12.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference yyyxxxzzz1
Report version number n
Income earner details  
General income type details  
Income type code (Benefit A)
Amount 323.21
Unjust enrichment Yes
Earnings period  
Start date 17.12.2021
End date 23.12.2021
General income type details  
Income type code Withholding tax
Amount 64.64

The benefit payer recovers the benefit for the period 17 December 2021–6 January 2022, totalling EUR 879.73 (EUR 323.21 + EUR 242 + EUR 314.52). The benefits payer uses net recovery and recovers EUR 703.79 from the income earner on an invoice. The share of withholding, EUR 175.94, is taken into consideration in the payer's withholding obligations for the tax period.

The income earner pays back the benefit on 11 April 2022, and the payment is entered into the benefit payer's systems on 15 April 2022.

Because the original payments were made during two different calendar years, the data on the recovered benefits must be reported to the Incomes Register itemised in accordance with the payment year. This means that the payments made in 2021 are reported for the earnings period ending in 2021 and the payments made in 2022 are reported for the earnings period ending in 2022. When the data is reported in this way, the Finnish Tax Administration is able to allocate the amount of recovered withholding to the correct tax years.

The example of a report (Table 3) features a report submitted on net recovery with the amounts itemised for earnings period according to the payment years:

Example 2, table 3/3
Record data Values
Payment date or other reporting date 15.04.2022
Report details  
Service data  
Type of action New report
Payer's report reference yyyxxxzzz2
Income earner details  
General income type details  
Income type code (Benefit A)
Amount 323.21
Recovery Yes
Additional repayment details  
Repayment date 11.04.2022
Withholding from the repayment 64.64
Original earnings period  
Start date 01.12.2021
End date 31.12.2021
General income type details  
Income type code (Benefit A)
Amount 556.52
Recovery Yes
Additional repayment details  
Repayment date 11.04.2022
Withholding from the repayment 111.30
Original earnings period  
Start date 01.01.2022
End date 31.01.2022

Alternatively, the benefit payer can submit a report as in Table 3 b of Example 1, or also report the original Payment date or other reporting date in the Additional repayment details data group.

Example 3: The income earner has been paid the basic component of the earnings-related allowance as follows:

  • payment date 5 December 2021, earnings period 29 October–25 November 2021, benefit paid for 20 days, totalling EUR 876 (20 × 43.80)
  • payment date 3 January 2022, earnings period 26 November–23 December 2021, benefit paid for 19 days, totalling EUR 832.20 (19 × 43.80)
  • payment date 4 February 2022, earnings period 24 December 2021–11 January 2022, benefit aid for 10 days, totalling EUR 438 (10 × 43.80).

20% tax has been withheld from the payments.

The Benefit unit data group must always be used when reporting unemployment benefits. The data is needed in the determination of the unemployment benefits payment days. Unemployment funds and the Social Insurance Institution of Finland (Kela) must report, to the Tax Administration, the number of days in the tax year for which the income earner has been paid unemployment benefits referred to in section 93(4) of the act on income tax (Decision of the Tax Administration on a general obligation to provide information). Unemployment benefits include the unemployment allowance and the labour market subsidy.

The income types for which it is mandatory to specify the Benefit unit data group and on the basis of which the number of qualifying days is determined are listed in the Incomes Register's document Benefits – Income types – Codes. In the case of these unemployment benefits, the benefit unit is one day. The number of units is thus the number of days in the earnings period for the income type in question.

If the benefit payer pays the above-mentioned unemployment benefits and the earnings period for the income covers more than one year, the benefit payer must report the income data separately for each year.

The benefit payer has submitted reports on the payments to the Incomes Register. The example of a report (Table 1) features the report submitted for the payment made in February, where the continuous earnings period 24 December 2021–11 January 2022 has been divided into two periods, because the numbers of qualifying days in different tax years must be reported separately:

Example 3, table 1/3
Record data Values
Payment date or other reporting date 04.02.2022
Report details  
Service data  
Type of action New report
Payer's report reference 21VV0004022021
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 175.20
Earnings period  
Start date 24.12.2021
End date 31.12.2021
Benefit unit  
Unit Day
Number of units 4
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 262.80
Earnings period  
Start date 01.01.2022
End date 11.01.2022
Benefit unit  
Unit Day
Number of units 6
General income type details  
Income type code Withholding tax
Amount 87.60

On 18 February 2022, the benefit payer was informed of the income earner not being entitled to daily unemployment benefits. The benefit payer submits replacement reports for the original payment date 4 February 2022 and reports the daily unemployment benefit as unjust enrichment. The Benefit unit must be reported in connection with the basic component of the earnings-related allowance. Because this is unjust enrichment, zero (0) is reported as the number of benefit units.

The example of a report (Table 2) features the replacement report for the February report, indicating the unjust enrichment:

Example 3, table 2/3
Record data Values
Payment date or other reporting date 04.02.2022
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference

iuatyilrgbqikw3579275eo0ösuhd

21VV0004022021

Report version number n
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 175.20
Unjust enrichment Yes
Earnings period  
Start date 24.12.2021
End date 31.12.2021
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 262.80
Unjust enrichment Yes
Earnings period  
Start date 01.01.2022
End date 11.01.2022
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Withholding tax
Amount 87.60

The benefit payer recovers the benefit for the period 29 October 2021–11 January 2022 totalling EUR 2,146.20 (EUR 876 + EUR 832.20 + EUR 438). The benefits payer uses net recovery and recovers EUR 1,716.96 from the income earner on an invoice. The share of withholding, EUR 429.24, is taken into consideration in the payer's withholding obligations for the tax period.

The income earner makes the payment on 28 April 2021, and the payment is entered into the benefit payer's systems on 3 May 2022.

When benefits are recovered as a net amount, it is important to report the data to the Incomes Register in such a manner that the tax withholding data is allocated to the correct tax years. At a minimum, the data must be reported at a calendar-year precision. However, if the benefit payer wants the withholding obligations to be correctly allocated to the original tax periods, the data must be itemised in more detail.

The example of a report (Table 3) features the recovery report for May. The payer has reported the recovery data at a payment month precision, allowing the withholding data to be allocated to the correct tax periods. The benefit unit is mandatory data in connection with the basic component of the earnings-related allowance. Zero (0) is reported as the number of benefit units on the recovery report.

Example 3, table 3/3
Record data Values
Payment date or other reporting date 03.05.2022
Report details  
Service data  
Type of action New report
Payer's report reference 20YY00090720
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 876.00
Recovery Yes
Additional repayment details  
Repayment date 28.04.2022
Withholding from the repayment 175.20
Original earnings period  
Payment date or other reporting date 05.12.2021
Start date 01.12.2021
End date 31.12.2021
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 832.20
Recovery Yes
Additional repayment details  
Repayment date 28.04.2022
Withholding from the repayment 166.44
Original earnings period  
Payment date or other reporting date 03.01.2022
Start date 01.01.2022
End date 31.01.2022
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 438.00
Recovery Yes
Additional repayment details  
Repayment date 28.04.2022
Withholding from the repayment 87.60
Original earnings period  
Payment date or other reporting date 04.02.2022
Start date 01.02.2022
End date 28.02.2022
Benefit unit  
Unit Day
Number of units 0

2.2.2 Gross recovery

The benefit payer may choose to recover the payment made as a gross amount. In such a case, the income earner pays back the benefit and the tax withheld from it to the benefit payer. The income earner will be given credit in taxation for the tax withheld by the benefit payer at the time of payment.

The data is reported to the Incomes Register as in Section 2.2.1., but the Withholding from the repayment data is not reported for gross recovery. In gross recovery, the earnings period can be reported at a tax year precision.

2.3 The payer recovers a payment after the original payment year

If the income earner pays back the payment in the beginning of the year following the payment year by the deadline confirmed in the Finnish Tax Administration's decision, the same procedure is used as for a recovery taking place during the payment year.

If the income earner pays back the payment in the year following the original payment year after the deadline confirmed in the Finnish Tax Administration's decision (or in years after that), the amount repaid is deducted in the taxation for the repayment year as a recovery deduction. The recovered benefit was taxed as the income earner's income in the previous taxation, and the income earner was given credit for the withholding. The benefit payer cannot recover the payment as a net amount; instead, the payer must collect the payment from the income earner as a gross amount.

As the recovery is allocated to a payment made in a previous year, it is sufficient that the payer reports the original earnings period to the Incomes Register at a calendar-year precision. The original payment date or other reporting date does not need to be provided.

Example 4: The income earner has received a housing allowance of EUR 400 for the period 1 August–15 September 2021. At the same time, he has received an adjusted daily allowance. In May of the next year, it is discovered that excessive housing allowance has been paid, to the amount of EUR 128. The income earner is now employed, so no more daily allowance is paid. The overpayment has been recovered with an invoice. However, the income earner has not paid the invoice sent to them, and the invoice is now being recovered through enforcement. The employer has collected the enforcement fee from the employee's wages and paid it to the enforcement authorities. Enforcement has paid the amount to the benefit payer 2 December 2022. Although the payment was recovered by way of enforcement, the report on recovery is submitted in the same way as if the income earner had paid the payment back to the benefit payer himself. The benefit payer has reported the housing allowance to the Incomes Register, and also submitted an unjust enrichment report after noticing the overpayment.

The new report submitted for the recovery:

Example 4, table 1/1
Record data Values
Payment date or other reporting date 02.12.2022
Report details  
Service data  
Type of action New report
Payer's report reference 21CF12345667
Income earner details  
General income type details  
Income type code Housing allowance
Amount 128.00
Recovery Yes
Additional repayment details  
Repayment date 02.12.2022
Original earnings period  
Start date 01.08.2021
End date 15.09.2021

2.4 The payer recovers a payment due to abuse

A benefit may also have to be recovered because the income earner has given incorrect information to the benefit granter, withheld information or, for example, failed to report a change in their circumstances. The recovery can take place based on a recovery decision made by the benefit payer or a court decision.

Recovery in the event of abuse is reported to the Incomes Register in the same way as any other recovery. The reporting is affected by when the payment is repaid and whether the income earner repays it personally or the repayment is set off from some later benefit.

If the income is unjust enrichment to the income earner, it must always be reported to the Incomes Register as unjust enrichment, even if not recovered. If the income is not recovered but the income earner is sentenced to pay damages to the benefit granter, the payment is not reported to the Incomes Register. Damages or fines are not income types to be reported to the Incomes Register, and receivables collected from the income earner through a judgement are not a refund of the income earner's income: this is income received by the payer.

2.5 Unjust enrichment paid to a substitute recipient

A substitute recipient refers to the payment recipient in a situation where the benefit is paid to some other party than the income earner themselves. The substitute recipient's details are reported in recourse situations, for example, or when the income earner’s income is paid fully or partially to another party. On a benefits payment report, the substitute recipient can be, for example, the employer or, in some cases, the payer personally.

The substitute recipient's share deducted from the income earner's income is reported using the entries in the Deductions data group, of which there can be several for each income type. If such income is recovered, the payer must report "No effect on taxation – Yes" in the recovery details in certain situations. This additional data is used when, due to the recovery, the payer recovers a payment for which the deduction type was "Recourse on taxable income", "Other deduction from taxable income" or "Deduction of employee contributions" at the time of payment. Based on this data, the Finnish Tax Administration knows not to take the recovered amount into account in the income earner's taxation.

Example 5: The income earner has received a benefit retroactively for the period 1 February–30 April 2021 (EUR 1,000 per month). The benefit for three months was paid as a lump sum on 5 May 2021. Of this amount of EUR 3,000, EUR 2,400 (EUR 800 per month) was paid to the employer. The deduction type is "Other deduction from taxable income", so EUR 600 remains as the income earner's taxable income. It is later found out that the benefit paid in April was groundless, so the payer submits a report of the unjust enrichment. The payer reports the recovery data to the Incomes Register when the benefit is repaid to the payer. The actual income earner is entered as the income earner on the recovery reports regardless of who repays the money: the income earner themselves, or the substitute recipient (employer).

The example of a report (Table 1) features the report for May, in which EUR 2,400 has been paid to the substitute recipient. According to the tax card, 20% tax has been withheld from the income earner. The actual income type paid (Benefit B) is used as the income type of the deduction, because the income type (wages) paid by the substitute recipient to the income earner is not available on a benefits payment report.

Example 5, table 1/4
Record data Values
Payment date or other reporting date 05.05.2021
Report details  
Service data  
Type of action New report
Income earner details  
General income type details  
Income type code (Benefit B)
Amount 3000.00
Earnings period  
Start date 01.02.2021
End date 30.04.2021
Deductions  
Deduction income type code (Benefit B)
Type of deduction Other deduction from taxable income
Amount of deduction 2400.00
Earnings period of original benefit  
Start date 01.02.2021
End date 30.04.2021
Substitute recipient details  
Type of identifier Business ID
Identifier 1234123-4
Type of substitute recipient Employer
Period of calculation  
Start date 01.02.2021
End date 30.04.2021
General income type details  
Income type code Withholding tax
Amount (20% of EUR 600) 120.00

The example of a report (Table 2) features the replacement report in which the EUR 1,000 benefit for April is reported as unjust enrichment. EUR 800 of this has been paid to the employer.

Example 5, table 2/4
Record data Values
Payment date or other reporting date 05.05.2021
Report details  
Service data  
Type of action Replacement report
Report version number n
Income earner details  
General income type details  
Income type code (Benefit B)
Amount 2000.00
Earnings period  
Start date 01.02.2021
End date 31.03.2021
Deductions  
Deduction income type code (Benefit B)
Type of deduction Other deduction from taxable income
Amount of deduction 1600.00
Earnings period of original benefit  
Start date 01.02.2021
End date 31.03.2021
Substitute recipient details  
Type of identifier Business ID
Identifier 1234123-4
Type of substitute recipient Employer
Period of calculation  
Start date 01.02.2021
End date 31.03.2021
General income type details  
Income type code (Benefit B)
Amount 1000.00
Unjust enrichment Yes
Earnings period  
Start date 01.04.2021
End date 30.04.2021
Deductions  
Deduction income type code (Benefit B)
Type of deduction Other deduction from taxable income
Amount of deduction 800.00
Earnings period of original benefit  
Start date 01.04.2021
End date 30.04.2021
Substitute recipient details  
Type of identifier Business ID
Identifier 1234123-4
Type of substitute recipient Employer
Period of calculation  
Start date 01.04.2021
End date 30.04.2021
General income type details  
Income type code Withholding tax
Amount (20% of EUR 600) 120.00

When the income earner or the employer pays back an unjust enrichment, the benefit payer must report the recovery data to the Incomes Register. If the share paid to the substitute recipient has not been taxable income of the income earner, the Additional repayment details data group of the recovery report cannot be used for reporting the withholding or tax at source collected from the repayment.

The example of a report (Tables 3 and 4) feature the recoveries of an unjust enrichment (Benefit B) for June. Net recovery is used for the EUR 200 repaid by the income earner on 23 June 2021, whilst gross recovery is used for the EUR 800 repaid by the employer on 18 June 2021:

Example 5, table 3/4
Record data Values
Payment date or other reporting date 25.06.2021
Report details  
Service data  
Type of action New report
Income earner details  
General income type details  
Income type code (Benefit B)
Amount 200.00
Recovery Yes
Additional repayment details  
Repayment date 23.06.2021
Withholding from the repayment 40.00
Original earnings period  
Start date 01.05.2021
End date 31.05.2021

The "No effect on taxation – Yes" data item must be specified for the amount paid to the employer and deducted before taxes. Because the income in question was not subject to tax, the recovery of the income must also be reported so that it has no effect on taxation. If the data item is not specified on the recovery report, the income earner will receive a deduction in their taxation to which they are not entitled.

Example 5, table 4/4
Record data Values
Payment date or other reporting date 20.06.2021
Report details  
Service data  
Type of action New report
Income earner details  
General income type details  
Income type code (Benefit B)
Amount 800.00
No effect on taxation Yes
Recovery Yes
Additional repayment details  
Repayment date 18.06.2021
Original earnings period  
Start date 01.05.2021
End date 31.05.2021

Neither "Withholding from the repayment" or "Tax at source from the repayment" can be reported in this report.

2.6 Recovery of non-statutory benefits

The recovery of non-statutory benefits is reported to the Incomes Register in the same way as the recovery of any other benefits. Section 112 a of the act on income tax is not applied to the recovery of non-statutory benefits. If such a benefit is recovered during the original payment year or during the next year before the deadline confirmed in the payer's deadline decision, the recovery can be carried out and reported as net recovery, as instructed in Section 2.2. The Finnish Tax Administration will take the recovered amount into account in the income earner's taxation in the original payment year.

The recovery deduction defined in section 112 a of the act on income tax will not be applied to the recovery of non-statutory benefits. If a payment is recovered after the original payment year, and after the deadline confirmed in the Finnish Tax Administration's decision, the payment must be recovered as a gross amount. Based on the recovery report submitted to the Incomes Register, the Finnish Tax Administration will adjust the taxation for the original payment year within the adjustment periods. The income earner themselves can also submit a claim for adjustment.

The recovery data is submitted as instructed in Section 2.3. 

3 Offset

Offsetting refers to a situation in which the same benefit payer recovers a benefit that it previously paid without grounds from a benefit paid later. The offset payment and the payment from which it is set off can be the same or different benefits. Pension, for example, can be offset from a pension or some other payment, such as sickness allowance. The benefit to be paid later for the same period is thus not paid instead of the previous benefit.

Section 112 a, subsection 2 of the act on income tax, lays down provisions for a situation in which the offset target is a payment made in an earlier year. The procedure is then as decreed in subsection 1. However, subsection 2 does not lay down provisions for a situation in which the recovery concerns a payment made in the same year. However, the preliminary work for the act on income tax (HE 57/2004) states that in a situation where the benefit payer is recovering a benefit from the same or another benefit in the same year in which it has also paid another benefit, the recovery can be carried out in the same way as in section 112 a, subsection 1 of the act on income tax.

Internal recourse refers to a situation in which the same benefit payer recovers a benefit it paid previously from a benefit it pays later. The difference between internal recourse and offsetting is that in internal recourse, the benefit to be paid later for the same period is paid instead of the previous benefit. The above-mentioned preparatory work for the act on income tax makes it possible that in a situation where the same benefit payer pays another benefit to the income earner for the same period as the benefit paid first, the benefit payer can use the procedure laid down in section 112 a, subsection 3 of the act on income tax. The internal recourse can take place either in the same year or in some later year. Internal recourse is reported in the same way as recourse between different payers, see Section 4. Recourse is always reported using the Deductions data group.

Only the recovery of a taxable benefit is taken into consideration in taxation. If the income earner is paid a tax-exempt benefit (such as a housing allowance), its recovery will not affect their taxation, because the original payment was also not taxed. The same also applies to a situation in which the original tax-exempt benefit is recovered by offsetting it from a taxable benefit paid later. In such a situation, the benefit paid later is taxable in full. However, reporting in these situations does not differ from the reporting of the offsetting of a taxable benefit.

3.1 Offsetting and the original payment in the same year

If the payer of the earlier and later benefit is the same, and offsetting is carried out during the year in which the earlier payment was made, the benefit payer can deduct the gross amount of the payment (the amount from which tax has not been withheld) from the gross amount of the payment later made to the income earner. The benefit payer does not need to adjust the amount of the earlier withholding; it is enough that the benefit payer calculates the withholding from the gross amount of the benefit paid (amount of the benefit after the offsetting).

An exception to this is a situation in which the earlier payment was taxable and the excess amount paid is offset from the tax-exempt benefit paid later. In this case, the benefit payer should preferably use net recovery.

3.1 .1 The payment made previously and the payment made later are both taxable

If the payment made previously and the payment made later are both taxable, the report is submitted in accordance with Example 6.

Example 6: The income earner was paid national pension amounting to EUR 220 per month for the period 1 January–31 May 2021 (totalling EUR 1,100). However, only a pension of EUR 200 per month should have been paid (totalling EUR 1,000). A total of EUR 100 has been paid in excess pension over a period of 5 months. The income earner's withholding percentage is 5. The error is corrected in the August pension payment.

The example of a report (Table 1) features the report submitted to the Incomes Register in January, and corresponding reports are submitted for February–May:

Example 6, table 1/3
Record data Values
Payment date or other reporting date 05.01.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY00020120
Income earner details  
General income type details  
Income type code National pension
Amount 220.00
Earnings period  
Start date 01.01.2021
End date 31.01.2021
General income type details  
Income type code Withholding tax
Amount 11.00

When the benefit payer notices an error or a decision has been made regarding an unjust enrichment, the benefit payer submits the replacement reports for January–May. The example of a report (Table 2) features the replacement report for the January report, indicating the unjust enrichment:

Example 6, Table 2/3
Record data Values
Payment date or other reporting date 05.01.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 99db0fb06b974ebea8d66ae02c3fe675 / 20YY00020120
Report version number n
Income earner details  
General income type details  
Income type code National pension
Amount 200.00
Earnings period  
Start date 01.01.2021
End date 31.01.2021
General income type details  
Income type code National pension
Amount 20.00
Unjust enrichment Yes
Earnings period  
Start date 01.01.2021
End date 31.01.2021
General income type details  
Income type code Withholding tax
Amount 11.00

Recovery is carried out in connection with the August payment of the national pension by offsetting the overpayment, i.e. EUR 100, from the EUR 200 pension paid. Tax is withheld from the gross amount paid, EUR 100 (200 – 100).

The example of a report (Table 3) features the report submitted in August, indicating the offsetting of the income:

Example 6, Table 3/3
Record data Values
Payment date or other reporting date 05.08.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY0009050820
Income earner details  
General income type details  
Income type code National pension
Amount 200.00
Earnings period  
Start date 01.08.2021
End date 31.08.2021
General income type details  
Income type code National pension
Amount 100.00
Recovery Yes
Additional repayment details  
Repayment date 05.08.2021
Original earnings period  
Start date 01.01.2021
End date 31.05.2021
General income type details  
Income type code Withholding tax
Amount 5.00

3.1.2 The payment made previously is tax-exempt and the payment made later is taxable

If the previous payment is tax-exempt and the later payment taxable, the withholding is calculated from the full amount of the taxable payment. The payer submits a report according to Example 7.

Example 7: The income earner has been paid EUR 310 of housing allowance in January. In March, it is found out that no housing allowance should have been paid at all. An agreement has been made with the income earner of the housing allowance being offset in four instalments from the parental allowance of EUR 400 per month paid in the same year (withholding rate 25%). The housing allowance is tax-exempt and the parental allowance is taxable. The payer carries out the first offset in April.

The example of a report (Table 1) features the report submitted in January:

Example 7, table 1/3
Record data Values
Payment date or other reporting date 02.01.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY00020120
Income earner details  
General income type details  
Income type code Housing allowance
Amount 310.00
Earnings period  
Start date 01.01.2021
End date 31.01.2021

Once the error has been detected or a decision on unjust enrichment has been made, the benefits payer submits a replacement report for January. The example of a report (Table 2) features the replacement report indicating the unjust enrichment:

Example 7, table 2/3
Record data Values
Payment date or other reporting date 02.01.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 99db0fb06b974ebea8d66ae02c3fe675 / 20YY00020120
Report version number n
Income earner details  
General income type details  
Income type code Housing allowance
Amount 310.00
Unjust enrichment Yes
Earnings period  
Start date 01.01.2021
End date 31.01.2021

The first recovery is carried out in April by offsetting EUR 77.50 of housing allowance from the parental allowance (310/4). Because the parental allowance is taxable and the housing allowance tax-exempt, the withholding is calculated from the full amount of the parental allowance. The amount of withholding is thus EUR 100 (400×0.25). 

The example of a report (Table 3) features the report submitted in April, in which tax-exempt income is offset from taxable income:

Example 7, table 3/3
Record data Values
Payment date or other reporting date 05.04.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY0009050420
Income earner details  
General income type details  
Income type code Parental allowance
Amount 400.00
Earnings period  
Start date 01.04.2021
End date 30.04.2021
General income type details  
Income type code Housing allowance
Amount 77.50
Recovery Yes
Additional repayment details  
Repayment date 05.04.2021
Original earnings period  
Payment date or other reporting date 02.01.2021
Start date 01.01.2021
End date 31.01.2021
General income type details  
Income type code Withholding tax
Amount (25 % of EUR 400) 100.00

3.1.3 The payment made previously is taxable and the payment made later is tax-exempt

If the previous payment is taxable but the later payment is tax-exempt, the payer offsets the net amount from the payment made later. If the recovery had been made from the gross amount, too much tax would have been withheld from the income earner's income. The payer submits a report according to Example 8.

Example 8: On 4 March 2021, the income earner was paid a labour market subsidy for February. A total of EUR 648 of subsidy was paid for 20 days. 20% tax has been withheld from the labour market subsidy. In May, it is found out that the labour market subsidy should have been paid for only 15 days in February (EUR 486). The gross amount to be recovered is thus EUR 162. In June, the income earner is paid EUR 480 of housing allowance, and it has been agreed that the overpayment is offset from the housing allowance. The labour market subsidy is taxable and the housing allowance is tax-exempt.

The example of a report (Table 1) features the report submitted in March:

Example 8, table 1/3
Record data Values
Payment date or other reporting date 04.03.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY000040220
Income earner details  
General income type details  
Income type code Labour market subsidy
Amount 648.00
Earnings period  
Start date 01.02.2021
End date 28.02.2021
Benefit unit  
Unit Day
Number of units 20
General income type details  
Income type code Withholding tax
Amount 129.60

The example of a report (Table 2) features the replacement report indicating the unjust enrichment. Because this is unjust enrichment, zero (0) is reported as the number of benefit units:

Example 8, table 2/3
Record data Values
Payment date or other reporting date 04.03.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 99db0fb06b974ebea8d66ae02c3fe675 / 20YY000040220
Report version number n
Income earner details  
General income type details  
Income type code Labour market subsidy
Amount 486.00
Earnings period  
Start date 01.02.2021
End date 28.02.2021
Benefit unit  
Unit Day
Number of units 15
General income type details  
Income type code Labour market subsidy
Amount 162.00
Unjust enrichment Yes
Earnings period  
Start date 01.02.2021
End date 28.02.2021
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Withholding tax
Amount 129.60

Because the later payment is tax-exempt, only the net amount paid is offset from the income earner, or EUR 129.60 (withholding EUR 32.40).

The example of a report (Table 3) features the report submitted in June, in which taxable income is offset from tax-exempt income:

Example 8, table 3/3
Record data Values
Payment date or other reporting date 02.06.2021
Report details  
Service data  
Type of action New report
Payer's report reference 20YY0009050820
Income earner details  
General income type details  
Income type code Housing allowance
Amount 480.00
Earnings period  
Start date 01.06.2021
End date 30.06.2021
General income type details  
Income type code Labour market subsidy
Amount 162.00
Recovery Yes
Additional repayment details  
Repayment date 01.06.2021
Withholding from the repayment 32.40
Original earnings period  
Payment date or other reporting date 04.03.2021
Start date 01.03.2021
End date 31.03.2021
Benefit unit  
Unit Day
Number of units 0

3.1.4 The payment made previously and the payment made later are both tax-exempt

If the previous and later payment are both tax-exempt, the report is submitted according to Example 9.

Example 9: After the death of her spouse, the income earner has been paid EUR 450 per month in State artist pension as a survivors' pension. The artist pension was granted to the spouse prior to 1 January 1984, so the pension has been tax-exempt for its recipient. The income earner herself has retired, and the pension amounts have been revised. On 5 April 2021, the benefit payer has made a decision according to which only EUR 420 per month of survivors' pension should have been paid from January 2021 onwards. The recovery is carried out so that the benefit payer offsets EUR 30 in pension overpayment each month from the pensions it pays in May-August.

The example of a report (Table 1) features the report submitted in January, and corresponding reports have been submitted for February–April. It is mandatory to report the taxability of the benefit in connection with reporting the income type.

Example 9, table 1/3
Record data Values
Payment date or other reporting date 04.01.2021
Report details  
Service data  
Type of action New report
Payer's report reference 33ZZxxYY00
Income earner details  
General income type details  
Income type code Survivors' pension (State artist pension)
Amount 450.00
Taxability of benefit Tax-exempt
Earnings period  
Start date 01.01.2021
End date 31.01.2021

The example of a report (Table 2) features the replacement report submitted for January, in which the unjust enrichment is indicated. Corresponding reports have been submitted for February–April.

Example 9, table 2/3
Record data Values
Payment date or other reporting date 04.01.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 33ZZxxYY00
Report version number n
Income earner details  
General income type details  
Income type code Survivors' pension (State artist pension)
Amount 420.00
Taxability of benefit Tax-exempt
Earnings period  
Start date 01.01.2021
End date 31.01.2021
General income type details  
Income type code Survivors' pension (State artist pension)
Amount 30.00
Taxability of benefit Tax-exempt
Unjust enrichment Yes
Earnings period  
Start date 01.01.2021
End date 31.01.2021

The example of a report (Table 3) features the report submitted in May, in which the offsetting of the income is indicated. Corresponding reports have been submitted for June–August.

Example 9, table 3/3
Record data Values
Payment date or other reporting date 02.05.2021
Report details  
Service data  
Type of action New report
Payer's report reference 33ZZxxYY01
Income earner details  
General income type details  
Income type code Survivors' pension (State artist pension)
Amount 420.00
Taxability of benefit Tax-exempt
Earnings period  
Start date 01.05.2021
End date 31.05.2021
General income type details  
Income type code Survivors' pension (State artist pension)
Amount 30.00
Taxability of benefit Tax-exempt
Recovery Yes
Additional repayment details  
Repayment date 02.05.2021
Original earnings period  
Payment date or other reporting date 04.01.2021
Start date 01.01.2021
End date 31.01.2021

3.2 Offsetting in the beginning of the year following the payment year by the Finnish Tax Administration's deadline

If the recovery is carried out by offsetting, the taxation takes place in the same way as when the income earner pays back the payment (section 112 a, subsection 2 of the act on income tax). The decisive factor with regard to reporting and taxation is when the offset is made.

The recovery is allocated to the original payment year if the offsetting takes place no later than on the deadline date confirmed in the Finnish Tax Administration's decision. The benefit payer may then recover the overpayment as a net amount (the amount from which withholding has been deducted). The share of withholding is taken into account in the payer's withholding obligations.

When the offset is made in the beginning of the year following the original benefit payment year and before the deadline confirmed in the Finnish Tax Administration's decision, the recovered amount must be included in the amount from which tax is withheld when calculating the withholding for the new benefit. The benefit payer deducts the recovered amount from the amount paid to the income earner.

Example 10: On 3 February 2021, the benefit payer has paid the income earner EUR 1,100 in pension for February (withholding rate 22%, i.e. EUR 242). In December 2021, it is discovered that the pension was overpaid by EUR 100 in February. In December, the benefit payer has submitted a replacement report to the Incomes Register, reporting EUR 1,000 as the amount of the February pension, and an unjust enrichment of EUR 100 (totalling EUR 1,100).

In January 2022, the income earner receives EUR 1,000 in pension, from which the withholding is EUR 200 (20%). The benefit payer and the income earner have agreed that the benefit payer will offset the EUR 100 pension overpayment in 2021, from which the withholding was EUR 22, from the payment.

The benefit payer withholds EUR 200 tax (20%) from the full EUR 1,000, because this entire amount is taxable income for the repayment year. The benefit payer deducts the net amount of the overpayment, EUR 78 (gross EUR 100, withholding EUR 22), from the remaining EUR 800 and pays EUR 722 to the income earner.

The example of a report features the report submitted in January:

Example 10, table1
Record data Values
Payment date or other reporting date 03.01.2022
Report details  
Service data  
Type of action New report
Payer's report reference 15XX1223333456
Income earner details  
General income type details  
Income type code Survivors' pension
Amount 1000.00
Earnings period  
Start date 01.01.2022
End date 31.01.2022
General income type details  
Income type code Survivors' pension
Amount 100.00
Recovery Yes
Additional repayment details  
Repayment date 03.01.2022
Withholding from the repayment 22.00
Original earnings period  
Payment date or other reporting date 03.02.2021
Start date 01.02.2021
End date 28.02.2021
General income type details  
Income type code Withholding tax
Amount 200.00

3.3 Offsetting after the original payment year

When a payment is recovered in the year following the payment year after the deadline confirmed in the benefit recipient's deadline decision, or in some later year, the recovery can no longer be taken into account in the taxation for the original payment year. The recovered amount is then deducted in the taxation for the recovery year as a recovery deduction.

The benefit payer should not take into account the recovered amount when withholding tax from the payment from which the previous payment is offset. The offset is made as a gross amount.

Example 11: The benefit payer has paid the income earner an earnings-related allowance and a child increase to it (EUR 5.23 per day) during the period 1 March 2021–31 May 2022. In June 2022, it is discovered that there have been no grounds for payment of the child increase. The benefit payer has submitted reports on the payments to the Incomes Register. In June 2022, the benefit payer submits replacement reports in which the payer reports the child increases paid as unjust enrichment. An agreement is made with the income earner that the child increase is recovered in three instalments. The overpayment of child increase is recovered from the earnings-related allowances paid from July 2022 onwards.

The benefit payer has paid the child increase as follows:

  • Year 2021: 1 March–15 December 2021 the benefit was paid for 211 days, totalling EUR 1,103.53
  • Year 2022: 16 December 2021–31 May 2022 the benefit was paid for 116 days, totalling EUR 606.68.

The amount to be recovered totals EUR 1,710.21, and it is recovered as follows:

  • 1st instalment: EUR 570.07 is offset from the earnings-related allowance paid on 11 July 2022 (109 days, earnings period 1 March–31 July 2021). The earlier payments were made during the period 31 March–31 July 2021.
  • 2nd instalment: EUR 570.07 is offset from the earnings-related allowance paid on 12 August 2022:
  • EUR 533.46 (102 days, earnings period 1 August–15 December 2021). The earlier payments were made during the period 31 August–21 December 2021.
  • EUR 36.61 (7 days, earnings period 16 December–31 December 2021). The earlier payment was made on 15 January 2022.
  • 3rd instalment: EUR 570.07 is offset from the earnings-related allowance paid on 11 September 2022 (109 days, earnings period 1 January–31 May 2022). The earlier payments were made during the period 14 February–5 June 2022.

20% tax has been withheld from the income earner's income during the period 1 March 2021–31 January 2022. From the beginning of February 2022, the withholding rate has been 24%.

Because the recovery is not carried out until from July 2022 onwards, the recovery can no longer be taken into account in the income earner's taxation for 2021. The payments made in 2021 are recovered in gross amounts. However, the payments made in 2022 can be recovered using net recovery (see Section 2.2.1 on net recovery and Section 2.2.2 on gross recovery).

The example of a report (Table 1) features the report of the offset submitted in July:

Example 11, table 1/3
Record data Values
Payment date or other reporting date 11.07.2022
Report details  
Service data  
Type of action New report
Payer's report reference 22ZZZZ22222333
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 2363.76
Earnings period  
Start date 08.06.2022
End date 05.07.2022
Benefit unit  
Unit Day
Number of units 21
General income type details  
Income type code Child increase to earnings-related allowance
Amount 570.07
Recovery Yes
Additional repayment details  
Repayment date 11.07.2022
Original earnings period  
Start date 31.03.2021
End date 31.07.2021
General income type details  
Income type code Withholding tax
Amount 567.30

The benefit payer withholds 24% tax from the full amount of earnings-related allowance (2,363.76 × 0.24). EUR 570.07 of child increase is recovered from the amount remaining after the withholding, i.e. EUR 1,796.46. The income earner is paid EUR 1,226.39. The Finnish Tax Administration takes the recovered amount into account in 2022 as a recovery deduction.

Child increases paid in both 2021 and 2022 are offset from the earnings-related allowance for August. For the taxation to be correct, the recovery data must be submitted separately for each year. The 2021 child increase for the period 1 August–15 December 2021 (102 days, EUR 533.46) was paid in 2021, so it is recovered as a gross amount. This recovered payment is taken into account in the taxation for the payment year as a recovery deduction. The child increase for the period 16 December–31 December 2021 (7 days, EUR 36.61) was paid in 2022, so it is taken into account in the taxation by deducting the share from the amount of child increase for 2022.

The example of a report (Table 2) features the report of the offset submitted in August:

Example 11, table 2/3
Record data Values
Payment date or other reporting date 12.08.2022
Report details  
Service data  
Type of action New report
Payer's report reference 22ZZZZ22233334
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 2476.32
Earnings period  
Start date 08.07.2022
End date 06.08.2022
Benefit unit  
Unit Day
Number of units 22
General income type details  
Income type code Child increase to earnings-related allowance
Amount 533.46
Recovery Yes
Additional repayment details  
Repayment date 12.08.2022
Original earnings period  
Start date 31.08.2021
End date 21.12.2021
General income type details  
Income type code Child increase to earnings-related allowance
Amount 36.61
Recovery Yes
Additional repayment details  
Repayment date 12.08.2022
Original earnings period  
Payment date or other reporting date 15.01.2022
Start date 01.01.2022
End date 31.01.2022
General income type details  
Income type code Withholding tax
Amount ((2 476,32 – 36,61) × 0,24) 585.53

The benefit payer withholds tax from EUR 2,439.71 (the overpayment EUR 36.61 paid in 2022 is deducted from the EUR 2,476.32), because this amount is taxable income for the repayment year. The benefit payer deducts the offset amount, EUR 570.07 (gross EUR 533.46 + 36.61), from the remaining EUR 1,890.79 and pays EUR 1,320.72 to the income earner. The Finnish Tax Administration takes EUR 533.46 into account as a recovery deduction and deducts EUR 36.61 from the income earner's taxable income for 2022.

The example of a report (Table 3) features the report of the offset submitted in September 2022:

Example 11, table 3/3
Record data Values
Payment date or other reporting date 11.09.2022
Report details  
Service data  
Type of action New report
Payer's report reference 22ZZZZ23333444
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 2701.44
Earnings period  
Start date 07.08.2022
End date 09.09.2022
Benefit unit  
Unit Day
Number of units 24
General income type details  
Income type code Child increase to earnings-related allowance
Amount 570.07
Recovery Yes
Additional repayment details  
Repayment date 11.09.2022
Original earnings period  
Start date 14.02.2022
End date 05.06.2022
General income type details  
Income type code Withholding tax
Amount ((2 701,44 – 570,07) × 0,24) 511.53

The recovery is carried out by offsetting the overpayment of EUR 570.07 from the earnings-related allowance, i.e. EUR 2,701.44. Withholding (24%) is done from the gross amount to be paid, i.e. EUR 2,131.37.

In 2021 or later, the benefit payer can offset income paid before the year 2021. In such a case, the income paid earlier has not been reported to the Incomes Register. Although the earlier payment has not been reported to the Incomes Register, the payer must submit a recovery report.

Example 12: On 5 July 2021, the benefit payer pays the income earner EUR 540 of labour market subsidy for the period 1 June –30 June 2021 (withholding 20%). The payer recovers EUR 25 of taxable study grant and EUR 30 of tax-exempt housing allowance paid in 2018 from the labour market subsidy.

The housing allowance and the study grant have not been reported to the Incomes Register, as they are income for the year 2018.

The example of a report features the report of the offset submitted in July:

Example 12, table 1/1
Record data Values
Payment date or other reporting date 05.07.2021
Report details  
Service data  
Type of action New report
Payer's report reference 11WW12345678
Income earner details  
General income type details  
Income type code Labour market subsidy
Amount 540.00
Earnings period  
Start date 01.06.2021
End date 30.06.2021
Benefit unit  
Unit Day
Number of units 21
General income type details  
Income type code Study grant
Amount 25.00
Recovery Yes
Additional repayment details  
Repayment date 05.07.2021
Original earnings period  
Start date 01.03.2018
End date 31.03.2018
General income type details  
Income type code Housing allowance
Amount 30.00
Recovery Yes
Additional repayment details  
Repayment date 05.07.2021
Original earnings period  
Start date 01.03.2018
End date 31.03.2018
General income type details  
Income type code Withholding tax
Amount (20% of EUR 540) 108.00

The entire amount of the labour market subsidy, or EUR 540, is taxed as income for the year 2021. The income earner gains a recovery deduction for the year 2021 from the recovered study grant. Because the housing allowance is tax-exempt income, its recovery has no effect on taxation.

3.4 Recovery of a non-statutory benefit by offsetting

The recovery deduction in section 112 a of the act on income tax is not applied to the recovery of non-statutory benefits. If a non-statutory benefit is recovered by offsetting it from a benefit paid later by the same benefits payer, the recovery data is reported in the same way as for other benefits. The benefit can be offset from the same or another benefit paid later.

If the benefit is recovered by offsetting from another benefit in the original payment year or in the beginning of the following year by the deadline confirmed in the payer's deadline decision, the recovery can be carried out and reported to the Incomes Register as instructed in Sections 3.1. and 3.2.

If the recovery is carried out after the original payment year and after the deadline confirmed in the Finnish Tax Administration's decision, the Finnish Tax Administration will adjust the income earner's taxation for the original payment year based on the Incomes Register reports submitted by the payer within the adjustment periods. The income earner can also submit a claim for adjustment. The recovery data is reported as instructed in Section 3.3.

4 Recourse situations

The recovery of a benefit is usually targeted at the income earner. Recovery arising from right of recourse differs from other forms of recovery in this respect. In a recourse situation, the benefit payer can collect a benefit paid without grounds from another social security institution as a recourse, eliminating the need for the payer to recover the groundlessly paid benefit from the income earner. The right of recourse is regulated, for example, by the provision on the order of payment of substitute recipients laid down in section 123 of the Employees Pensions Act (395/2006).

In recourse situations, different benefits are paid simultaneously, and the payer of the first (earlier) benefit is recovering a benefit that has been detected to have been secondary to the second (later) benefit. Instead of the income earner, the recovered amount is paid directly to the payer of the secondary benefit.

Recourse typically has to do with the distribution of liability between two instances paying benefits. However, the same procedure is also applied in internal recourse, or a situation in which the same benefit payer pays both the earlier and later benefits, and the later benefit is paid instead of the earlier benefit.

In order for all data users to receive the data they need for recourse situations, the recourse is reported to the Incomes Register using the Deductions data group. The payer of the first benefit submits a replacement report to the Incomes Register in which it reports "Recourse – Yes" in addition to the previously reported data. This entry indicates that the previously paid income was recovered as a recourse from some other payer based on a recourse claim.

Section 112 a, subsection 3 of the act on income tax states: "If the payer of pension, study grant or other statutory benefit makes a payment for the pension or other payment to the payer of a previous pension or taxable benefit it previously paid to the taxpayer for the same period, the payment shall not be considered to be taxable income in the year it is paid to the payer of the previous benefit. The previously made payment shall be taxable income for the year during which it was received." The act on income tax thus decrees that a payment that the payer of a later benefit pays for the same period directly to the payer of an earlier taxable benefit is tax-exempt. It does not matter with respect to the tax-exempt status whether the recourse is carried out in the year of the payment made earlier or in later years. Because a payment recovered as a recourse in this way is not taxable income for the income earner, no tax is withheld from it.

To ensure that the Tax Administration obtains the information it needs from the Incomes Register, the payer of the later benefit must indicate "Recourse on taxable income" or "Recourse on tax-exempt income” as the Type of deduction, depending on whether the previous payment was taxable or tax-exempt.

The procedure laid down in section 112 a, subsection 3 of the act on income tax is not applicable to non-statutory benefits, which means that the recourse procedure cannot be applied to them.

See below for situations related to recourse, grouped according to the taxation of the payments.

4.1 The payment made previously and the payment made later are both taxable

If, in a recourse situation, both the earlier (secondary) and the later (primary) payment are taxable, the latter payment is tax-exempt under the act on income tax. However, only the part of the payment that the payer of the later benefit pays directly to the payer of the earlier benefit for the same period is tax-exempt. This prevents double taxation of the same income, as the income earner has not received the later payment.

Example 13: The income earner has received an unemployment allowance of EUR 1,500 for the period 2 March–1 April 2021. The payment date is 6 April 2021. A retroactive disability pension starting from 1 March 2021 is granted to the income earner on 5 July 2021. The amount of the disability pension is EUR 800 per month, and it is paid as a lump sum for the period 1 March–31 July 2021 (totalling EUR 9,000). The unemployment allowance is recovered so that the payer of the disability pension pays EUR 1,500 of the retroactive EUR 1,800 pension for March and April to the payer of the unemployment allowance, leaving a total of EUR 7,500 (gross) to be paid to the income earner for the entire period.

The example of a report (Table 1) features the April report of the payer of the unemployment allowance:

Example 13, table 1/3
Record data Values
Payment date or other reporting date 06.04.2021
Report details  
Service data  
Type of action New report
Payer's report reference EE12D5678901
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 1500.00
Earnings period  
Start date 02.03.2021
End date 01.04.2021
Benefit unit  
Unit Day
Number of units 22
General income type details  
Income type code Withholding tax
Amount 420.00

The example of a report (Table 2) features the July report of the payer of the later benefit, i.e., the disability pension:

Example 13, table 2/3
Record data Values
Payment date or other reporting date 05.07.2021
Report details  
Service data  
Type of action New report
Payer's report reference 00XYZ33333333
Income earner details  
General income type details  
Income type code Disability pension
Amount 1800.00
Earnings period  
Start date 01.07.2021
End date 31.07.2021
General income type details  
Income type code Disability pension
Amount 7200.00
Earnings period  
Start date 01.03.2021
End date 30.06.2021
Deductions  
Deduction income type code Basic component of the earnings-related allowance
Type of deduction Recourse on taxable income
Amount of deduction 1500.00
Earnings period of original benefit  
Start date 02.03.2021
End date 01.04.2021
Substitute recipient details  
Period of calculation  
Start date 02.03.2021
End date 01.04.2021
General income type details  
Income type code Withholding tax
Amount (26% of EUR 7,500) 1950.00

When the payer of the unemployment benefit has received the recourse payment, the payer submits a replacement report to the Incomes Register. The payer enters the information "Recourse – Yes” on the replacement report. When paying the basic component of the earnings-related allowance, the benefit unit must be specified. This data is also mandatory on the replacement report (Table 3):

Example 13, table 3/3
Record data Values
Payment date or other reporting date 06.04.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 12ab0fb06b004yyy789tyyr564433 / EE12D5678901
Report version number n
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 1500.00
Recourse Yes
Earnings period  
Start date 02.03.2021
End date 01.04.2021
Benefit unit  
Unit Day
Number of units 22
General income type details  
Income type code Withholding tax
Amount 420.00

If the payment made earlier was larger than the payment made later for the same period, the difference creates an overpayment to the income earner for the period the benefits are paid simultaneously. The payer can recover the overpayment or abandon the recovery. Abandonments of recovery are not shown in the Incomes Register. However, overpayments and unjust enrichment must always be reported to the Incomes Register.

Example 14: The income earner has received a labour market subsidy of EUR 500.01 (gross) per month for the period 1 April2021–1 March 2022. On 4 April 2022, the income earner is granted a retroactive disability pension of EUR 450 per month (gross) for the same period. The benefits are paid simultaneously to the income earner, so the earlier paid labour market subsidy creates an overpayment of EUR 50.01. However, this overpayment is not recovered from the income earner.

The example of a report (Table 1) features the May report submitted by the payer of the labour market subsidy. The payer submits a similar report for each month, specifying the labour market subsidy paid.

Example 14, table 1/3
Record data Values
Payment date or other reporting date 05.05.2021
Report details  
Service data  
Type of action New report
Payer's report reference 11GG23457899
Income earner details  
General income type details  
Income type code Labour market subsidy
Amount 500.01
Earnings period  
Start date 01.04.2021
End date 28.04.2021
Benefit unit  
Unit Day
Number of units 19
General income type details  
Income type code Withholding tax
Amount 100.00

The payer of the disability pension submits a report to the Incomes Register of the retroactive disability pension paid on 4 April 2022 for the period 1 April 2021–31 March 2022 (Table 2). The payer also reports the disability pension for April it paid on the same day. The amounts paid as recourse are shown in the Deductions data group. Although the disability pension is paid as a continuous income, "One-off remuneration Yes" must be specified, as income is paid retroactively for a period of more than three months before the beginning of the tax year.

Example 14, table 2/3
Record data Values
Payment date or other reporting date 04.04.2022
Report details  
Service data  
Type of action New report
Payer's report reference FFTG2223334445
Income earner details  
General income type details  
Income type code Disability pension
Amount 4050.00
One-off remuneration Yes
Earnings period  
Start date 01.04.2021
End date 31.12.2021
Deductions  
Deduction income type code Labour market subsidy
Type of deduction Recourse on taxable income
Amount of deduction 4050.00
Earnings period of original benefit  
Start date 01.04.2021
End date 31.12.2021
Substitute recipient details  
Period of calculation  
Start date 01.04.2021
End date 31.12.2021
General income type details  
Income type code Disability pension
Amount 1350.00
One-off remuneration Yes
Earnings period  
Start date 01.01.2022
End date 31.03.2022
Deductions  
Deduction income type code Labour market subsidy
Type of deduction Recourse on taxable income
Amount of deduction 900.00
Earnings period of original benefit  
Start date 01.01.2021
End date 01.03.2021
Substitute recipient details  
Period of calculation  
Start date 01.01.2021
End date 01.03.2021
General income type details  
Income type code Disability pension
Amount 450.00
Earnings period  
Start date 01.04.2021
End date 30.04.2021
General income type details  
Income type code Withholding tax
Amount (25% of EUR 900) 225.00

When the payer of the labour market subsidy receives a recourse payment from the payer of the disability pension, the payer of the labour market subsidy submits a replacement report for May 2021 to the Incomes Register (Table 3). The recourse payment of EUR 450 received and the overpayment of EUR 50.01 that has changed into unjust enrichment are reported on the replacement report. The payer also submits a corresponding replacement report for the other months. Because unjust enrichment is in question, zero (0) is reported as the benefit unit. The data must not be removed from the replacement report, as it is required by the data users.

Example 14, table 3/3
Record data Values
Payment date or other reporting date 05.05.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 12ab0fb06b004yyy789tyyr564433 / 11GG23457899
Report version number n
Income earner details  
General income type details  
Income type code Labour market subsidy
Amount 450.00
Recourse Yes
Earnings period  
Start date 01.04.2021
End date 28.04.2021
Benefit unit  
Unit Day
Number of units 19
General income type details  
Income type code Labour market subsidy
Amount 50.01
Perusteeton etu Yes
Earnings period  
Start date 01.04.2021
End date 28.04.2021
Benefit unit  
Unit Day
Number of units 0
General income type details  
Income type code Withholding tax
Amount 100.00

If the benefit paid earlier was smaller than the benefit paid later, the benefit payer pays the difference to the income earner.

Example 15: The income earner was paid EUR 1,500 of sickness daily allowance for the period 1 April–30 April 2021. In August 2021, the same benefit payer grants the income earner a retroactive disability pension of EUR 1,800 per month from 1 April 2021 onwards. The disability pension is paid instead of the sickness allowance. The benefit payer collects the sickness allowance it previously paid for the same period from the disability pension (internal recourse).

Because the earlier payment and the later payment are both taxable, section 112 a, subsection 3 of the act on income tax is applied. The payment made later (the disability pension) is therefore not taxable income to the extent it is paid to the payer of the earlier benefit (sickness allowance). The earlier payment remains taxable income.

The benefit payer deducts the gross amount of the earlier payment (amount from which tax has not been withheld) from the gross amount of the payment made to the income earner later. EUR 1,500 of sickness allowance recourse is thus deducted from the retroactive EUR 1,800 pension. In August, the benefit payer also pays the disability pension for April-August.

The example of a report (Table 1) features the benefit payer's May report of the sickness allowance:

Example 15, table 1/3
Record data Values
Payment date or other reporting date 10.05.2021
Report details  
Service data  
Type of action New report
Payer's report reference XX12134RR7890
Income earner details  
General income type details  
Income type code Sickness allowance
Amount 1500.00
Earnings period  
Start date 01.04.2021
End date 30.04.2021
Benefit unit  
Unit Day
Number of units 26
General income type details  
Income type code Withholding tax
Amount 480.00

The benefit payer pays the disability pension retroactively for the period 1 April–31 August 2021. A new report must be submitted to the Incomes Register for this payment (Table 2). The recourse deductions are reported in the Deductions data group.

Example 15, table 2/3
Record data Values
Payment date or other reporting date 28.08.2021
Report details  
Service data  
Type of action New report
Payer's report reference KKK111123456
Income earner details  
General income type details  
Income type code Disability pension
Amount 9000.00
Earnings period  
Start date 01.04.2021
End date 31.08.2021
Deductions  
Deduction income type code Sickness allowance
Type of deduction Recourse on taxable income
Amount of deduction 1500.00
Earnings period of original benefit  
Start date 01.04.2021
End date 30.04.2021
Substitute recipient details  
Period of calculation  
Start date 01.04.2021
End date 30.04.2021
General income type details  
Income type code Withholding tax
Amount (30 % of EUR 7,500) 2250.00

When the benefit payer receives the recourse payment, the payer submits a replacement report and specifies "Recourse – Yes" (Table 3).

Example 15, table 3/3
Record data Values
Payment date or other reporting date 10.05.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference 12ab0fb06b004yyy789tyyr564433 / XX12134RR7890
Report version number n
Income earner details  
General income type details  
Income type code Sickness allowance
Amount 1500.00
Recourse Yes
Earnings period  
Start date 01.04.2021
End date 30.04.2021
Benefit unit  
Unit Day
Number of units 26
General income type details  
Income type code Withholding tax
Amount 480.00

4.2 The payment made previously is tax-exempt and the payment made later is taxable

If the earlier payment has been tax-exempt, and the benefit paid for the same period later is taxable, section 112 a, subsection 3 of the act on income tax cannot be applied. The income paid later is the income earner's taxable income from which tax must be withheld despite the payment being made to the payer of the first benefit.

Example 16: The income earner became unemployed on 1 December 2020. The benefit payer has paid EUR 2,228 of social assistance to the income earner during the period 1 January 2021–15 March 2021 against the upcoming earnings-related allowance. On 23 March 2021, the unemployment fund pays the income earner a total of EUR 4,800 of earnings-related allowances for the period 5 December 2020–15 March 2021, of which amount it pays EUR 2,228 to the earlier benefit payer.

The social assistance is not reported to the Incomes Register.

In March 2021, the unemployment fund submits a report to the Incomes Register:

Example 16, table 1/1
Record data Values
Payment date or other reporting date 23.03.2021
Report details  
Service data  
Type of action New report
Payer's report reference 012222666TH
Income earner details  
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 1014.00
Earnings period  
Start date 05.12.2020
End date 31.12.2020
Benefit unit  
Unit Day
Number of units 15
General income type details  
Income type code Basic component of the earnings-related allowance
Amount 3786.00
Earnings period  
Start date 01.01.2021
End date 15.03.2021
Benefit unit  
Unit Day
Number of units 56
Deductions  
Deduction income type code Other benefit
Type of deduction Recourse on tax-exempt income
Amount of deduction 2228.00
Earnings period of original benefit  
Start date 01.01.2021
End date 15.03.2021
Substitute recipient details  
Period of calculation  
Start date 01.01.2021
End date 15.03.2021
General income type details  
Income type code Withholding tax
Amount (22% of EUR 4,800) 1056.00

The unemployment fund must report the data to the Incomes Register. In addition, it must submit an annual information return of the unemployment allowance days for 2020 to the Finnish Tax Administration.

4.3 The payment made previously is taxable and the payment made later is tax-exempt

Section 112 a, subsection 3 of the act on income tax only applies to situations in which the recovery is carried out as a recourse from a taxable benefit. In such a case, only the part exceeding the recourse is taxed of the payment made later, and the payment made earlier (recovered as a recourse) remains taxable income for the payment year.

The Finnish Tax Administration does not receive information on tax-exempt payments from the Incomes Register. The "Recourse on taxable income" entry is deduction data related to the income type. The Finnish Tax Administration will thus not receive information from the Incomes Register on a recovery carried out as a recourse if the payment made later is tax-exempt and the payment made earlier is taxable.

Once the benefit payer of the payment made first (secondary payment) receives the recourse payment, it reports "Recourse – Yes" to the Incomes Register. The Finnish Tax Administration cannot deduce from this data whether the recourse has already been taken into account as a deduction from the later payment (primary payment). For this reason, the payer of the secondary payment must submit a report of the recovery of the tax-exempt part of payment the payer recovered as a recourse.

Example 17: In July 2021, the income earner is paid a tax-exempt benefit retroactively for the period 1 April–30 April 2021. A taxable benefit was previously paid for the same period. The payer of the taxable benefit has made a recourse claim of EUR 200. EUR 600 of tax-exempt benefit is paid. EUR 200 of this amount is paid as a recourse to the payer of the earlier benefit, and EUR 400 to the income earner. The example of a report (Table 1) features the report submitted by the payer of the tax-exempt benefit, taking the recourse claim into account: 

Example 17, table 1/2
Record data Values
Payment date or other reporting date 01.07.2021
Report details  
Service data  
Type of action New report
Payer's report reference qqWWEE12345
Income earner details  
General income type details  
Income type code (Tax-exempt benefit)
Amount 600.00
Earnings period  
Start date 01.04.2021
End date 30.04.2021
Deductions  
Deduction income type code (Taxable benefit)
Type of deduction Recourse on taxable income
Amount of deduction 200.00
Earnings period of original benefit  
Start date 01.04.2021
End date 12.04.2021
Substitute recipient details  
Period of calculation  
Start date 01.04.2021
End date 12.04.2021

In order for the Finnish Tax Administration to receive information on the taxable benefit having been recovered as a recourse on the tax-exempt income, the payer of the taxable benefit must include the "Recourse from tax-exempt income, payment date" entry in addition to the "Recourse – Yes" entry. Based on this data, the income earner is correctly taxed, and only the part of the taxable benefit that was not recovered as a recourse on tax-exempt income becomes taxable income.

The "Recourse from tax-exempt income, payment date" entry does not have to be reported on the replacement report if the recipient of the recourse payment has not received the information in question from the payer of the recourse payment. Information not available to the report submitter cannot be reported to the Incomes Register.

The example of a report (Table 2) features the replacement report submitted by the payer of the earlier benefit after the payer has received the recourse payment. The recourse payment was made to the payer of the earlier benefit on 1 July 2021. The payment shows on the recipient's account on 3 July 2021 and is allocated in the recipient's system on 5 July 2021:

Example 17, table 2/2
Record data Values
Payment date or other reporting date 30.04.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference EE12D5678901
Report version number n
Income earner details  
General income type details  
Income type code (Taxable benefit)
Amount 200.00
Recourse Yes
Additional recourse details  
Recourse from tax-exempt income, payment date 05.07.2021
Earnings period  
Start date 01.04.2021
End date 12.04.2021
General income type details  
Income type code Withholding tax
Amount 50.00

In some recourse situations, the benefit paid later may be partially taxable and partially tax-exempt. Section 112 a, subsection 3 of the act on income tax only applies to the recourse on a taxable benefit. In order for the Finnish Tax Administration to receive information on the taxable benefit having been recovered as a recourse on tax-exempt income, the payer of the earlier benefit must itemise the recourse payments it has received.

Example 18: On 10 April 2020, the income earner has been paid EUR 1,200 of taxable benefit for the period 2 March1 April 2021. EUR 300 has been withheld from the benefit. Later, a taxable pension of EUR 500 and a related tax-exempt supplement of EUR 30 are granted for the same period. The payer of the taxable benefit paid earlier has made a recourse claim of EUR 530.

The example of a report (Table 1) features the report submitted by the payer of the benefit paid later:

Example 18, table 1/2
Record data Values
Payment date or other reporting date 05.07.2021
Report details  
Service data  
Type of action New report
Payer's report reference KKK111123456
Income earner details  
General income type details  
Income type code (Taxable pension)
Amount 500.00
Earnings period  
Start date 01.03.2021
End date 31.03.2021
Deductions  
Deduction income type code (Taxable benefit)
Type of deduction Recourse on taxable income
Amount of deduction 500.00
Earnings period of original benefit  
Start date 02.03.2021
End date 01.04.2021
Substitute recipient details  
Period of calculation  
Start date 02.03.2021
End date 01.04.2021
General income type details  
Income type code (Tax-exempt supplement to a taxable pension)
Amount 30.00
Earnings period  
Start date 01.03.2021
End date 31.03.2021
Deductions  
Deduction income type code (Taxable benefit)
Type of deduction Recourse on taxable income
Amount of deduction 30.00
Earnings period of original benefit  
Start date 02.03.2021
End date 01.04.2021
Substitute recipient details  
Period of calculation  
Start date 02.03.2021
End date 01.04.2021

The payer of the benefit paid earlier submits a replacement report, in which the payer includes the "Recourse – Yes" entry. Additionally, the payer reports the "Recourse – Yes" entry for the payment received from the tax-exempt income as well as the "Recourse from tax-exempt income, payment date" entry. Because the benefit payer has received recourse payments for both taxable and tax-exempt income, the recourse payments must be itemised as follows (Table 2):

Example 18, table 2/2
Record data Values
Payment date or other reporting date 10.04.2021
Report details  
Service data  
Type of action Replacement report
Incomes Register or payer's report reference EE12D5678901
Report version number n
Income earner details  
General income type details  
Income type code (Taxable benefit)
Amount 500.00
Recourse Yes
Earnings period  
Start date 02.03.2021
End date 01.04.2021
General income type details  
Income type code (Taxable benefit)
Amount 30.00
Recourse Yes
Additional recourse details  
Recourse from tax-exempt income, payment date 12.07.2021
Earnings period  
Start date 02.03.2021
End date 01.04.2021
General income type details  
Income type code (Taxable benefit)
Amount 670.00
Earnings period  
Start date 02.03.2021
End date 01.04.2021
General income type details  
Income type code Withholding tax
Amount 300.00

5 Recovery of a partial payment

In certain situations, income paid earlier can change retroactively. A decision is made for the income earner of a new benefit that is granted for at least partially the same period as the previously paid benefit. The previously paid income is taken into account as part payment of the benefit paid later. The income earner has been entitled to the previously paid income, so the income was correct at the time of payment. The reported income type is therefore not corrected, because the income is taxed according to the originally reported income type. A partial payment is not unjust enrichment or recourse discussed earlier in these instructions.

The retroactive change to the income is reported to the Incomes Register on a replacement report. Specify 'Income type changed, new income type code' for the original income type, and enter the new income type code as its value. When income changes retroactively, the previously paid pension or benefit is not recovered; instead, it is taken into account as part payment of the benefit paid later. The reporting of a partial payment is discussed in more detail in the instructions Benefits: Reporting data to the Incomes Register (see Section 4.6, Income changes retroactively, and a benefit paid earlier is taken into account as a part payment).

A partial payment can also have been paid without grounds, in which case the payer recovers it. Example 19 discusses the recovery of a partial payment.

Example 19. The income earner has been paid EUR 1,100 per month of partial early old-age pension for the period 1 January –31 October 2021. The payer has made a retroactive decision on a disability pension on 15 October 2021. The same amount of disability pension has been paid as of 1 June 2021 as the partial early old-age pension, i.e. EUR 1,100 per month. The payer has taken the previously paid partial early old-age pension into account as a partial payment for the disability pension. The payer has reported the change in the pension type on a replacement report and specified the "Income type changed, new income type code" entry on the reports submitted from 1 June 2021 onwards.

The example of a report (Table 1) features the January 2021 report of the partial early old-age pension. Corresponding reports have been submitted until 31 May 2021.

Example 19, table 1/4
Record data Values
Payment date or other reporting date 02.01.2021
Report details  
Service data  
Payer's report reference zzyy1
Type of action New report
Income earner details  
General income type details  
Income type code Partial early old-age pension
Amount 1100.00
Earnings period  
Start date 01.01.2021
End date 31.01.2021
General income type details  
Income type code Withholding tax
Amount 220.00

The next example of a report (Table 2) features the replacement report submitted by the benefit payer for June, reporting the change of the partial early old-age pension into a disability pension. The payer also submits corresponding reports for the other months for which the partial early old-age pension has been considered to be a partial payment of the disability pension.

Example 19, table 2/4
Record data Values
Payment date or other reporting date 01.06.2021
Report details  
Service data  
Incomes Register or payer's report reference xxyz2
Report version number n
Type of action Replacement report
Income earner details  
General income type details  
Income type code Partial early old-age pension
Income type changed, new income type code Disability pension
Amount 1100.00
Earnings period  
Start date 01.06.2021
End date 30.06.2021
General income type details  
Income type code Withholding tax
Amount 220.00

However, in August 2022, the payer has realised that the income earner has been paid a partial early old-age pension and disability pension on incorrect grounds in 2021. EUR 1,050 per month of pension should have been paid instead of EUR 1,100. The payer has made a recovery decision on 30 August 2022. It has been agreed with the income earner that the EUR 600 overpayment (EUR 50 per month for a period of 12 months) is recovered with an invoice in October.

The payer has submitted an unjust enrichment report after noticing the overpayment. The example of a report (Table 3) features the new replacement report for June, and corresponding replacement reports have also been submitted for the other months.

Example 19, table 3/4
Record data Values
Payment date or other reporting date 01.06.2021
Report details  
Service data  
Incomes Register or payer's report reference xxyz2
Report version number n
Type of action Replacement report
Income earner details  
General income type details  
Income type code Partial early old-age pension
Income type changed, new income type code Disability pension
Amount 1050.00
Earnings period  
Start date 01.06.2021
End date 30.06.2021
General income type details  
Income type code Partial early old-age pension
Income type changed, new income type code Disability pension
Amount 50.00
Unjust enrichment Yes
Earnings period  
Start date 01.06.2021
End date 30.06.2021
General income type details  
Income type code Withholding tax
Amount 220.00

The payer also submits corresponding reports for January–May 2021, i.e., for the period in which the partial early old-age pension was paid. The "Income type changed, new income type code" entry is not specified on these reports.

The payer recovers the overpayment from the income earner in October 2022. The example of a report (Table 4) features the payer's recovery report (the share of the partial early old-age pension for 1 January–31 May 2021 totals EUR 250 and the share of the disability pension for 1 June–31 December 2021 totals EUR 350):

Example 19, table 4/4
Record data Values
Payment date or other reporting date 20.10.2022
Report details  
Service data  
Type of action New report
Payer's report reference yyzz2
Income earner details  
General income type details  
Income type code Partial early old-age pension
Amount 250.00
Recovery Yes
Additional repayment details  
Repayment date 15.10.2022
Original earnings period  
Start date 01.01.2021
End date 31.05.2021
General income type details  
Income type code Disability pension
Amount 350.00
Recovery Yes
Additional repayment details  
Repayment date 15.10.2022
Original earnings period  
Start date 01.06.2021
End date 31.12.2021