Benefits: Reporting data to the Incomes Register
Changes have been made to the schedule for deployment. The instructions are being updated.
1 General information on reporting
1.1 Reporting obligation for benefits payment data
This document describes, on a general level, the reporting of Incomes Register benefits payment data on benefits and pension income (or benefits payment data in short) to the Incomes Register. The document uses 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 making a decision in the matter in question. In the examples, the values of different data items do not correspond to the technical forms allowed in benefits payment reports – income types, for example, are given using names instead of codes. Data-related checks are described in more detail in the document "Technical interface – Delivering data to the Incomes Register" and in the benefits payment report schema.
A benefits payment report submitted to the Incomes Register contains the data on pension and benefits income reported to the instances specified as data users in section 13 of the act on the incomes information system (laki tulotietojärjestelmästä 53/2018) in order that they could perform the duties decreed to them in the section. Data can be disclosed only to data users specified in the act. The Incomes Register will forward data submitted to the Incomes Register to data users entitled to receive it in accordance with their individual statutory right to receive information. The Incomes Register does not create new data access rights for data users.
The deployment of the Incomes Information System will change the benefit and pension payers' obligations to report and provide information. Several data streams submitted to the Tax Administration at different times and in different formats will be replaced by reporting taking place in one go and in a uniform format. The data streams entirely replaced by the benefits payment report from 2020 onwards are the itemisation of retroactive pensions (VSTAKELE), the unemployment benefits payment days (VSKORVPV) and the annual information return on the pension of benefits payer's contact person (VSELVYHT). The benefits payment report will partially replace the data streams non-resident taxpayer's annual information return (VSRAERIE), tax return on self-assessed taxes, and the itemisation of pensions and benefits (VSELERIE).
In addition to these, the data contents of the benefits payment report include data that an insurance company or other benefits payer must report to the Tax Administration under section 28 a of the act on inheritance and gift tax (perintö- ja lahjaverolaki 378/1940) for tax assessment purposes. Data reported to the Incomes Register does not need to be separately reported to the Tax Administration.
The Incomes Register benefits data is used for example for the following purposes:
- tax assessment;
- granting of basic social assistance;
- resolving a compensation matter;
- resolving recourse collection;
- assistance in the determination and coordination of the right to benefits;
- detection of disqualifying benefits;
- identification of benefit periods to be bypassed;
- determination and deciding of customer fees; and
The payer reports the data to the Incomes Register once. After the deployment of the Incomes Register, the total amount of benefits and pensions paid for the tax year does no longer need to be separately reported in annual returns. The data users require the benefits payment data to be reported to the Incomes Register with a precision of one day. This precision requirement has been implemented in benefits payment reports by making the income earning period mandatory data that is entered with a precision of one calendar day. The amount of compensation granted for each hour, day or for example month in a benefit decision can be indirectly deduced from the Incomes Register data by comparing the data given for the payment in the Benefit unit data group with the reported euro amount of the payment.
The benefits and pensions paid are reported to the Incomes Register separately for each income earner. A report refers to data on one payment transaction paid to a single income earner. Several different income types can be reported for one income earner on a report for the same payment date. Even if several income types are specified, income types comparable to deductions can be reported as a total amount. These include withholding and tax at source. Deductions that must be connected to an individual income item reported are itemised in more detail in the Deductions data group. More detailed information on these itemised deductions can be found, for example, in section 4.3 of these instructions.
1.2 Transition period for certain data
In 2020, a transition period applies to the reporting of unjust enrichment and recourse between institutions. The payer specifies in the benefits payment report whether they, as a data provider, can submit unjust enrichment reports or recourse data in 2020. This allows the actors applying the transition period to be identified from the Incomes Register data. For example, when a payer applies the transition period in the reporting of unjust enrichment, they will specify "Benefit payer does not report unjust enrichment" as the Benefit payer type in the report. The payer can also interrupt the application of the transition period before the end of 2020 by no longer specifying the additional data item Benefit payer type.
In practice, this alleviation in the reporting of unjust enrichment means that during the transition period the payer does not need to report a benefit payment previously reported to the Incomes Register as unjust enrichment (the Unjust enrichment – Yes entry is not made). Correspondingly, a maker of a recourse claim does not need to report recourse to the Incomes Register during the transition period insofar as they are the recipient of the recourse payment (the Recourse – Yes entry is not made for the income type on a replacement report). The transition period does not apply to the benefits payer receiving the recourse claim; they will make a recourse deduction from the benefits payment paid later. The reporting of unjust enrichment is described in section 7.1 of the instructions and the reporting of recourse, in chapter 8.
Only benefits and pension income paid on 1 January 2020 or later are reported to the Incomes Register, along with any corrections made to such income. Corrections to income data from before 2020 are reported directly to each data user, for example on a replacement annual information return of the Tax Administration. As an exception, recovery or a recourse deduction taking place on 1 January 2020 or later is reported to the Incomes Register, even if the original income has been paid prior to 2020.
1.3 The time of reporting data
1.3.1 Date of payment and reporting deadline
Data is reported to the Incomes Register in real time, or, as a rule, no later than on the fifth calendar day after the date of payment. The date of payment refers to the date on which the payment is available to the income earner, for example withdrawable from the income earner's account. The five-calendar-day deadline specified in the act on the incomes information system applies to the regularly reported mandatory data specified in sections 6 and 8 of the act.
Benefits and pension payments made on 1 January 2020 or later are reported to the Incomes Register, along with any corrections made to such income. The retention period of the benefits payment data submitted to the Incomes Register is based on the statutory rights of the Incomes Register's data users to receive information. Data is stored in the Incomes Register for ten years from the beginning of the year following the year in which the data was registered. After ten years, the data stored in the Incomes Information System will be deleted.
If benefits have been paid in advance, each payment is still reported on a cash basis for the days on which it was available to the income earner (see example 3).
Time of reporting unjust enrichment and recovery
The obligation to report unjust enrichment is linked to the procedure for correcting an incorrect benefit decision. If a factual error has occurred during the making of the benefit decision, its correction may require the consent of the income earner. Finding that a benefit is to be an unjust enrichment may also be preceded by the revocation or dismissal of the decision, for example by a judgement ruling of the Insurance Court. Information on unjust enrichment must be submitted no later than one month after the party's consent to the recovery of the unjust enrichment has been obtained or a decision has been issued on the dismissal of an incorrect benefit or compensation decision. Such decisions may be called, for example, revision decision, adjustment decision or termination decision.
In some situations, no decision on the termination of a pension or a benefit is issued even if there has been an overpayment, for example when the benefit recipient has died. If a recovery decision is the only decision to be made in the case, the time limit for reporting unjust enrichment starts counting from the date the decision is issued. If an income earner returns an overpayment without that a new benefit decision or recovery decision has been issued, only the recovery data will be reported on the payment within the time limits concerning recovery.
The detection of unjust enrichment is an independent event. The reporting of unjust enrichment is not affected by whether the benefit is forgiven in some parts or whether it can ever be recovered. Forgiving or modification of unjust enrichment is not reported to the Incomes Register. This is seen in the Incomes Register only indirectly when a recovery report is not submitted or the recovered amounts cover only part of the unjust enrichment.
When recovery proceedings are initiated, the amounts paid back must be reported no later than on the fifth day after the day of receiving information on the payment of the recovered amount, the payer and the benefit to which the payment relates.
1.3.2 Reporting data in advance
Data can also be submitted to the Incomes Register before the date of payment. Reporting data in advance is, however, limited in such a manner that payments can be reported to the Incomes Register no earlier than 45 days prior to the date of payment. The values for the start and end date of the earnings period of the payments reported to the Incomes Register are not limited in this way. Thus, a payment far in the future can be reported if the payment is made within 45 days.
1.3.3 Electronic reporting only
Benefits and pensions cannot be reported to the Incomes Register on paper. An exception to this are pensions paid by the employer from its payroll system: they can be reported to the Incomes Register on an earnings payment report either electronically or on paper. If a taxable pension or benefit is exceptionally paid by a private person or some other payer that is not deemed a benefits payer in the act on the incomes information system, the payer must, as a rule, fulfil their reporting obligation by reporting their payments directly to the competent authority.
The Incomes Register offers the following electronic reporting methods: the technical SFTP and Web Service interfaces and the e-services, where data can be submitted with an online form or a separate record upload service. Submitting a benefits payment report via the e-services requires that the payer has specified themselves as the benefits payer in the service settings. Private persons cannot do this. For more information on the concept of benefits payer, see section 2.1 of the instructions.
1.4 Regularly submitted mandatory data
A majority of the data reported to the Incomes Register is mandatory; such data must be submitted and present in each record. Mandatory data includes items such as the payer's identifying information, date of payment, and the technical record data. The last-mentioned data is mandatory when data is reported via a technical interface or by uploading a file. The reports in the record must also uniquely identify the income earners either with Finnish identifiers or, when there are none, using other identifying information.
See the benefits payment report schema for a more detailed description of what data is mandatory. The mandatory data is mainly the same as the data currently collected by the Tax Administration, but the data is collected from a larger set of income types for the purposes of other data users.
1.5 Administrative consequences for neglecting to submit data
The penalty fee system provided in the act on the incomes information system applies to the data specified in sections 6 and 8 of the act, i.e. the mandatory data to be reported to the Incomes Register. The penalty fees are imposed by the Tax Administration.
A late filing penalty replaces the payer's late filing penalty laid down in the act on assessment procedure for self-assessed taxes (laki oma-aloitteisten verojen verotusmenettelystä 768/2016) and the negligence penalty laid down in the act on assessment procedure (laki verotusmenettelystä 1558/1995) insofar as a late filing penalty is imposed based on the late submission of data that must be reported to the Incomes Register.
According to the applicable act, a late filing penalty is imposed only based on the mandatory data that a party with a reporting obligation reports late to the Incomes Register. When the payer does not report any data to the Incomes Register of the taxable payments they have made, or the data is incomplete, and the payer does not correct the neglect of their own volition before taxes and contributions are levied, no late filing penalty is issued. In such a situation, the consequences for neglecting the reporting obligation laid down in the provisions of the act on assessment procedure and the act on assessment procedure for self-assessed taxes, such as a punitive tax increase, are applied.
The provisions of the tax laws on the consequences of neglect do not apply to tax-exempt benefits. If data reported to the Incomes Register has a deficiency or error that has no significance for the taxation of the benefit recipient, no negligence penalty is imposed.
1.5.1 Late submission of the first report
The late filing penalty for late submission of the first report containing data to be reported for a calendar month is, as a rule, determined based on how late the report is. Although as a rule the data must be submitted within five calendar days of the payment date, the late filing penalty is not linked to the same deadline. Under section 22(1) of the act on the incomes information system, a late filing penalty is imposed based on the lateness of the reporting of benefits payment data, if all data on the benefits paid during the calendar month is not reported by the eighth day of the next month.
Under the act, the consequence for late submission of the first report is EUR 3 for each day the report is late for a period of 45 days, or a maximum of EUR 135. If the report is submitted more than 45 days late, the late filing penalty is EUR 135 plus one per cent of the amount of the taxable payment reported late. No late filing penalty is imposed for late reporting of a tax-exempt benefit.
1.5.2 Correcting submitted data
No late filing penalty is imposed is data submitted on time is corrected within 45 days of the deadline. If previously submitted data is corrected more than 45 days after the deadline, a late filing penalty of one per cent of the amount of the taxable payment reported late is imposed. However, no late filing penalty is issued if the above-mentioned amount does not increase due to the correction.
The percentage-based late filing penalty imposed based on the payment amount is adjusted if the payment amount is reduced due to the correction of data, adjustment of a decision, appeal or other such reason.
This chapter presents some preliminary concepts of the act on the incomes information system in the form the act and its amendments come into effect in 2020. The names and exact contents of these concepts may change as the legislative work on benefits payment data proceeds.
2.1 Benefit payer referred to in the act on the incomes information system
In the act on the incomes information system, benefit payer means a legal person governed by public or civil law whose status, as decreed by Finnish law, is a payer of benefits, pensions or other equivalent payments, or whose actions as the payer of these payments is decreed to be supervised by a Finnish authority, such as the Financial Supervisory Authority. A corresponding foreign actor with a permanent establishment for income taxation in Finland is also deemed to be a benefit payer. Benefit payers are obligated to use the Incomes Information System in their reporting, and they always have a Finnish Business ID due to their registration obligations.
The benefits payment report submitted to the Incomes Register will replace the benefit payer's reports on benefits and pension payments currently required to be submitted to the Tax Administration. With respect to the payer's other obligations to provide information, the benefits payment reports are supplementary, not replacement data.
2.2 Income earner
In section 3 of the act on the incomes information system, income earner means a natural person, estate or a legal person to whom or which a payment has been made or who or which has received a non-monetary benefit, as referred to in this act. The income earner in benefits payment reports, or the benefit recipient, must always be a natural person or an estate. The benefit recipient can also be a foreign estate treated as an organisation in taxation. While in the role of a benefit recipient, an income earner does not receive non-monetary benefits. In these instructions, the benefit recipient is mainly referred to as an income earner.
2.3 Substitute recipient
Substitute recipient means the payment recipient in situations where the payment recipient is someone else than the benefit recipient. A substitute recipient is reported, for example, in recourse situations and situations where the income of the benefit recipient is fully or partially paid to some other party. In a benefits payment report, the substitute recipient can be, for example, a trustee, a guardian, the Social Insurance Institution of Finland Kela, the Employment Fund, a municipality, a motor insurance company, an earnings-related pension provider or an employer. The substitute recipient can also be the payer themselves.
2.4 The concepts of pension and benefit
Statutory pensions that are based on an employment relationship or a voluntary pension insurance or paid from some other insurance, and other payments that are deemed to be pensions in legislation or in the established taxation and judicial practice and are paid by a benefit payer referred to in the act on the incomes information system, are reported to the Incomes Register.
A compensation or financial support (benefit) that is based on such a law, insurance, membership in a fund, decision of a public sector organisation or some other factor that is taxable as personal income or taken into account when basic social assistance is granted and that is paid in money by a benefit payer referred to in the act on the incomes information system to a party entitled to the benefit or to their substitute recipient, is also reported to the Incomes Register. This means that tax-exempt income that does not affect social assistance is not, as a rule, reported to the Incomes Register.
Additionally, the following incomes and payments are deemed benefits to be registered in the Incomes Register:
- damages for personal injury under chapter 5, section 1 of the Tort Liability Act, with the exception of damages to cover medical costs and other necessary costs referred to in section 2 of chapter 5;
- payments to be reported to the Tax Administration referred to in section 28 a of the act on inheritance and gift tax, even if they are tax-exempt in income taxation and do not affect the granting of basic social assistance; and
- income from a capital redemption policy.
As an exception to the definitions above, a payment based on a long-term savings agreement or other agreement related to investment activities is not regarded as a benefit, not even if the payment is made by a benefit payer as referred to in the act. Payments considered to be sensitive in nature, such as strike pay, disability allowance for a person of 16 or over and social assistance, are also not deemed benefits to be reported to the Incomes Register.
The set of pensions and benefits to be reported to the Incomes Register is also limited by the concept of benefit payer in the act on the incomes information system. The instances that have an obligation to provide information on the payments they have made but that are not covered by the definition of payer (such as private persons) do not report pensions and benefits to the Incomes Register; instead, they report them directly to the competent authority. However, it is technically possible to report income types included in the data contents of the Incomes Register on behalf of a payer with no Business ID or obligation to report data.
The set of pensions and benefits to be reported to the Incomes Register is additionally limited by the fact that data used only by the data provider is not reported to the Register. It would violate the principle of data minimisation relating to the processing of personal data to register data with no purpose of use. This exception applies mainly to some payments made by Kela.
3 Basic reporting situations
Examples of basic situations of reporting data are given below. The examples do not include all mandatory data, only the data necessary for processing the matter. The data group headings in bold appearing in the report structure are included after the first occurrence only when necessary.
3.1 Reporting pension income
All pensions paid by Finnish payers are reported to the Incomes Register. Benefits payment reports can be submitted only electronically. The report includes information on the income earner, the payment and the grounds for the payment. Payer details are record data. One record can include reports on pensions paid to several different income earners. However, all reports in the record must have the same payment date.
Example 1: On 2 May 2023, a pension provider (1234567-8) pays thousands of pensions and the benefits payment reports on them are collected into one record. One of the pension provider's employees acts as the contact person for the record. One of the reports is for a person living in Finland (ddmmyy-1234) to whom the pension for May has been paid as a continuing pension. The time period that the pension paid on the said payment date concerns is reported as the earnings period.
3.2 Reporting benefits income
Example 2: On 3 January 2020, the Social Insurance Institution of Finland Kela pays a person the labour market subsidy for the last month of 2019, with 20% tax withheld.
The Benefit unit data group is mandatory when unemployment benefits are reported in order that the days qualifying for unemployment benefits could be determined. 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 taxpayer has been paid unemployment benefits referred to in section 93(4) of the act on income tax (tuloverolaki 1535/1992) (Decision of the Tax Administration on a general obligation to provide information). Unemployment benefits include the unemployment allowance and the labour market subsidy.
The unemployment benefit 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. For these unemployment benefits, the benefit unit is day. The number of units entered is the number of qualifying days in the earnings period of the income type in question.
When reporting the above-mentioned unemployment benefit to the Incomes Register, the payer must specify income data separately for each year if the earnings period concerns more than one year. If in example 2 the payer also paid a labour market subsidy to the income earner for the period between 2 and 3 January 2020, they should specify separate Income type details for these days in the report. In this income type itemisation, the number of benefit units would be 2, and the amount paid would be the portion based on these days of the full amount paid. The qualifying days of 2019 are reported in accordance with example 2, although the payer also has to submit an annual information return on days qualifying for unemployment benefits (VSKORVPV).
3.2.1 Advance and additional payment
It is not separately reported in the Incomes Register's benefits payment report if the reported amount is not equal to the final amount of the benefit decision. The Incomes Register is based on registering of payment transactions and contains only a limited amount of so-called benefit decision data.
Example 3: On 11 November 2021, an unemployment fund pays EUR 900 in an earnings-related allowance to an income earner. The fund handles the payment as an advance that is around 70% of the estimated final earnings-related allowance. The rest of the allowance is paid when the final amount of the adjusted allowance can be calculated. The income earner has a zero-rated tax card for the benefit. The benefits payment report for the November payment:
The income earner is later found to be entitled to an additional payment of EUR 300 for a previously reported earnings period. The rest of the granted benefit is paid on 3 December 2021. The report for the December payment:
Because the payment is an additional payment that has not added to the number of days qualifying for unemployment benefits, the number of units reported is, exceptionally, zero (0).
The use of Incomes Register data for purposes defined in section 93 of the act on income tax and for other purposes requires that the benefit unit is not reported cumulatively. Attention to this must be paid particularly when a benefit accrued over a specific earnings period is paid in several instalments. Only such benefit units on which a payment is based that have not been previously reported are reported to the Incomes Register. If the benefit unit is day, the total number of units on the same payer's reports must therefore not exceed 31 units per month or, for example 7 units in a one-week period. On the other hand, an income earner may receive more than one pension during the same month. In this case, the different payers use Month as the unit value and enter 1 as the number of units.
3.3 Reporting the earnings period
When reporting income to the Incomes Register on a benefits payment report, the payer must always specify the Earnings period for the income type. The actual, uninterrupted earnings period is entered as the earnings period with a precision of one calendar day. Only one Earnings period can be specified for each reported income type. Payments made simultaneously on different earnings periods are thus reported in different income type itemisations. The earnings period is the period over which the income has been accrued. In some cases, the earnings periods of benefits or pension income can be very long, for example over one year.
If a lump sum payment made in advance is allocated to an undefined time in the future, the payment date of the income is reported as the end date of the earnings period. Alternatively, the lump sum payment may be allocated to a pension period with a length of one month, for example. In this case, the start and end date of the month are reported in the earnings period details.
In the case of retroactive one-off income, the income must be allocated with a precision of at least calendar year using several income type itemisations if at least three months of the earnings period are in the year preceding the payment year. It is recommended, however, that the income type itemisations of a retroactive payment are always allocated to annual level – also when a period of less than three months of the earnings period is in the previous year. Annual revisions and index raises to benefit amounts make it more difficult to use data in which the reported income is allocated to more than one year. In example 29 of section 8.4 of these instructions, a retroactive pension of EUR 6,000 is reported, specifying that EUR 4,000 of the total amount was earned in 2020 and EUR 2,000 in 2021.
If the earnings period of the income cannot be determined, the payment date is entered as the earnings period. Incomes that have no earnings periods include most compensations for temporary or permanent disability, paid from personal insurance policies. No data is collected in the Incomes Register on the times of insurance events such as traffic accidents or deaths, so the payment date of the income is reported as the start and end date of the earnings period. The procedure is the same for one-off benefits such as baby money, funeral grant or surrender of insurance policy. Likewise, in situations where unjust enrichment is reported to the Incomes Register using its own income type, the payment date can be used as the earnings period. For more information on unjust enrichment, see section 7.1 of these instructions.
In the case of a random income that does not recur, not even annually, One-off remuneration – Yes is specified for the income type in addition to the earnings period. The earnings period of such random payment can be one day or, for example, one year. Any retroactive part of pension paid in connection with the granting of a continuous pension, for example, is also considered to be a one-off remuneration.
4 Other reporting situations
4.1 Payments reported under section 28 a of the act on inheritance and gift tax
When reports under section 28 a of the act on inheritance and gift tax are submitted to the Incomes Register, the details of the policy holder and the policy number or other identifier must be submitted in the report in addition to the income earner (insurance beneficiary). In situations where the payment reported to the Incomes Register is a gift as defined in Section 18 a of the act on inheritance and gift tax, the policy holder is the gift giver. When the policy holder's identifying information is reported for inheritance taxation (Section 7 a of the act on inheritance and gift tax), the policy holder is, as a rule, the deceased. However, when a death benefit or funeral grant is reported to the Incomes Register, the information of the deceased is given in the Policy holder details data group also when the benefit is based on, for example, a group life insurance policy taken out by the employer.
Example 4: On 1 June, the Farmers' Social Insurance Institution pays a group life insurance payment including the child increase to the beneficiary of a scholarship recipient (ddmmyy-1235) deceased on 3 May 2021. The basic amount and child increase of the group life insurance payment are itemised as separate income types on the benefits payment report. The Farmers' Social Insurance Institution uses the Taxability option "Tax-exempt, data according to the act on inheritance and gift tax is given" on its report (in the example, this is shortened to: Tax-exempt, PerVL data).
By entering the inheritance and gift tax specifier for Taxability, the payer states that the income type in question and its data belong to a report under section 28 a of the act on inheritance and gift tax. If, however, part of the payment were taxable in income taxation, the payer should report the part subject to income tax in a separate income type itemisation and with a different Taxability entry (e.g. Taxability – Capital income). Insofar as the insurance indemnity or comparable financial support is taxable in income taxation, it is not considered to be a gift or subject to inheritance tax.
If a payment belonging to a report submitted under Section 28 a of the act on inheritance and gift tax is made to a pledgee instead of the beneficiary, the procedure is the same as in the example above. However, the details of the pledgee acting as a substitute recipient are also specified in the Deductions data group on the report. Instructions on payments to substitute recipients can be found in section 4.3 of these instructions.
4.2 Penalties for late payments paid to the income earner
Should a benefit payment be late, the income earner can be paid late payment interest that is independent of the taxation of the main payment and taxed as capital income, or an increase for late payment that is taxed according to section 61 a of the act on income tax in the same way as the main payment. The late payment interest is not included in the data contents of the Incomes Register; it will continue to be reported to the Tax Administration on annual information return 7805, which includes interest income in accordance with the act on income tax. Increases for late payment, however, are reported to the Incomes Register using the income type of the main payment and a special Late payment increase entry on the report.
Example 5: On 2 June 2021, the income earner is paid EUR 3,500 in care allowance retroactively from the period 1 June 2020 to 31 December 2020. At the same time, a EUR 150 increase for late payment is paid for a period starting from the date on which the insurance company should at the latest have made the first payment. In its entirety, the period is from 28 July 2020 to 2 June 2021. Both payments are tax-exempt income for the income earner. Because the increase for late payment concerns a time period of which more than three months were before the payment year, it is reported separately for years 2020 and 2021.
Increases for late payment sometimes also have to be paid separate from the main payment when, for example, the main payment has already been made and the need for paying the increase is not noticed until later. Even then, the late payment increase is reported according to the payment date. The main payment is always deduced from the Income type code. The use of Late payment increase– Yes indicates that the entire income amount is an increase for late payment.
4.3 Benefit payment to a substitute recipient
A substitute recipient is reported, for example, in recourse situations and situations where the income of the benefit recipient is fully or partially paid to some other party than the income earner. On a benefits payment report, the type of substitute recipient can be specified as, for example, guardian, trustee, municipality, lessor, employer, unemployment fund or earnings-related pension provider. The enforcement authorities and the Tax Administration are not deemed substitute recipients, because the deductible instalments paid to them (distraint, tax withholding) have their own income types.
The Deductions income type code is used to indicate the original income type to which the deduction applies. If part of the income is paid to a substitute recipient and it does not apply to any previously paid income type, the same income type is used for the deduction as for the paid income (for example, if a housing allowance is paid directly to the lessor or the income earner's benefit is paid to the employer). The earnings period of the Deductions data group is also often the same as that of the payment's income type.
If the substitute recipient is paid an instalment that is connected to a previously paid income type (in recourse situations, for example), the income type previously used is used for the deduction. The earnings period of the previously paid income type is reported as the earnings period of the Deductions data group and it can be different from that of the income type paid.
If no suitable income type code can be found for the deduction, for example because the deduction applies to a previously paid income type that should not have been reported to the Incomes Register (such as social assistance or other benefit of a sensitive nature), either the Other benefit or Other pension income type is used for the deduction.
The Deductions data group is also used in situation where the income is paid in full to a substitute recipient and nothing is paid to the income earner.
Example 6: A total of EUR 3,000 in disability pension for June is paid to the municipality instead of the income earner under section 122 of the Employees Pensions Act. First EUR 600 is withheld from the benefit to be paid. Furthermore, EUR 100 is deducted from the net income in accordance with a payment ban issued by the enforcement authority. Once the municipality has received the remaining EUR 2,300, the income earner does not pocket any income at all. However, a benefits payment report on the income is still submitted to the Incomes Register. Income type details on the report:
The Tax Administration uses the value given in the Type of deduction field to determine whether the deduction affects the income earner's taxable income. If, for example, the Type of deduction is "MATA and MYEL collection", the deduction is made from the net income, not the amount of taxable income.
Example 7: An employee has an occupational accident at the end of August 2020 and receives EUR 2,050 in sick pay for September. Based on the occupational accident insurance, the insurance company pays a daily allowance equalling the sick pay directly to the employer. No employee contribution deductions are made nor tax withheld from the daily allowance paid to the employer. The employee's benefit paid to the employer is reported on the benefits payment report indicating the employer as a substitute recipient.
The insurance company submits the following report to the Incomes Register:
One month after the occupational accident, the insurance company starts paying a daily allowance to the injured person based on their annual earnings. The employee has provided the company with a tax card (10%) for the payment of the benefit. Before tax is withheld, the employee contributions are deducted from the daily allowance in accordance with section 62 of the Workers' Compensation Act. When reporting the payment to the Incomes Register, the insurance company links the deduction to the gross amount of the daily allowance by using the Deductions data group of the benefits payment report.
The insurance company submits the following report to the Incomes Register:
If necessary, the payer repeats the earnings period of the benefit they have paid at "Earnings period of original benefit" and "Period of calculation", which are mandatory data for all deductions.
4.4 Reporting income that is partially taxable, partially tax-exempt
The Finnish tax legislation decrees that in some cases, a certain euro amount or percentage of a benefit is tax-exempt. The full amount of such a benefit is still reported to the Incomes Register, because even the tax-exempt part affects the basic social assistance.
If part of each benefit payment is taxable and part tax-exempt, the benefit is reported to the Incomes Register in two separate income type itemisations. The Taxability field of the itemisations is used to indicate which part is tax-exempt and which taxable. Such payments include one-off pension payments. If the benefit payer first pays the tax-exempt part of income that is partially taxable and then the taxable part, they must report accordingly.
Example 8: Each month, an accident insurance company pays EUR 855 in assistance pension to a family member of a person who died in an occupational accident prior to the year 1993. According to section 80, paragraph 1(2) of the act on income tax, EUR 3,400 of the annual amount of the pension is tax-exempt. The payer pays the first EUR 3,400 to the family member exempt from tax, reporting the payments to the Incomes Register using "Tax-exempt" as the Taxability value. When the limit for tax exemption is reached in April, the payer reports the taxable part using a separate income type itemisation and states that tax (5%) has been withheld. Payer's report for April:
From the next month's report until December, the accident insurance company reports the entire monthly payment as taxable income. By December, the Incomes Register has accumulated data indicating that EUR 3,400 in tax-exempt assistance pension and EUR 6,860 in taxable assistance pension have been paid to the income earner.
5 Reporting data in international situations
5.1 Obligation to inform in international situations
The benefits and pension income paid to an income earner living in Finland, along with other relevant data, are reported to the Incomes Register. Corresponding obligations to inform also apply to Finnish payers when the income earner lives abroad.
Income data must be reported to the Incomes Register in international situations whenever the payer has an obligation to inform a user of the Incomes Register data. Foreign payers of benefits and pensions do not have an equally extensive obligation to inform as foreign employers. The third parties' obligation to inform laid down in the act on assessment procedure applies to foreign payers of pensions and benefits only if the payer has a permanent establishment in Finland for purposes of income tax. They are then considered comparable to a payer in Finland with respect to the tax-related obligation to inform.
Pensions and benefits must thus be reported on a benefits payment report when a benefit payer referred to in the act on the incomes information system makes payments regarded as pensions or benefits to a person living in Finland or abroad.
The payer can report payments made to non-resident taxpayers and resident taxpayers in the same record. Persons whose residence and home are abroad and who do not reside in Finland for more than six months without interruption, are deemed non-resident taxpayers. A report must be submitted on payments made to a person who is a non-resident taxpayer, regardless of whether the payment has been subject to tax at source or tax withholding or whether the person is insured in Finland. Such a report must also be submitted on compensation paid to a non-resident taxpayer for an accident that has occurred abroad.
5.2 Reporting data on an income earner living abroad
The data must be reported using a Finnish personal identity code. If the income earner does not have a Finnish personal identity code, the data is reported using a foreign identifier. If the income earner does not have a Finnish personal identity code, their first and last name, date of birth, gender and address details must also be provided. It is recommended that if the income earner has both a Finnish and a foreign identifier, both should be reported. For an income earner who is a non-resident taxpayer, the Tax Identification Number (TIN) of the country of residence must be reported, if it is known. Furthermore, a non-resident taxpayer's address in the country of residence and the country code for the country of residence must always be reported.
Example 9: On 3 June, a pension provider pays an earnings-related pension for June to a person who lives in Sweden but has a Finnish personal identity code. The pension provider also reports the person's Swedish Tax Identification Number.
Grounds for a pension paid to a non-resident taxpayer are specified in the additional income type details if the income earner is a non-resident taxpayer who is a recipient of a statutory pension. An earnings-related pension decision issued under the last payer principle may contain different grounds: for example, part of the pension may have been earned in public sector business activities and part in the private sector. In such a case, the portions are reported separately in their own income type itemisations, where the total pension amount is divided between the different grounds for pension.
In some exceptional situations, the payer may be unable to obtain the address in the country of residence for the income earner living abroad, and the person may also not be registered in the Population Information System. In such situations, the person's Finnish address, if any, or the agent's address can be entered (using the c/o specifier). The country code of the country of residence of a non-resident taxpayer cannot be Finland (FI).
Example 10: An occupational accident insurance company pays a compensation to a Swedish family member of an injured person for participation in adjustment training. The insurance company can report the payment exceptionally using a virtual identifier, so they must specify the income earner in more detail by giving the date of birth, for example. The income earner has a tax at source card including a tax at source deduction.
5.3 Non-resident taxpayer's benefit subject to withholding
Example 11: (Alternative to example 10) The income earner has decided to request a progressive non-resident taxpayer's tax card for income before the payment date of the income. The income is now subject to withholding instead of tax at source. The income earner must have a Finnish personal identity code for the tax card. The insurance company reports the income using the personal identity code.
The payer reports the data of the new report to the Incomes Register:
The Income subject to withholding data item can be submitted only when the income earner is a non-resident taxpayer and has, in accordance with the act on assessment procedure, applied for (progressive) taxation of income that would otherwise be subject to tax at source. The payer can see from the non-resident taxpayer's tax card that the benefits income is subject to progressive taxation. Data is thus not submitted on those income types that are subject to withholding regardless of the tax liability status (e.g. pension income).
5.4 Tax at source changes to a resident taxpayer's withholding
The income earner's circumstances may change such that the original benefits payment report must be corrected retroactively using the replacement method. This may happen, for example, when an income earner living abroad moves to Finland and changes from a non-resident taxpayer to a resident taxpayer.
If in the payment of a continuous benefit an international situation occurs where both withholding and tax at source must be reported for the same income earner during the same year, the payer must ensure that these instalments are never reported on the same benefits payment report.
Example 12: A person living in Haparanda has been working in Tornio and has been covered by Finnish health insurance. After falling ill, he has received a sickness allowance from Finland, and it has been subject to tax at source. He moves to Finland on 1 April 2020, but the payer has not been informed of this. No tax card has been delivered to the payer. The payer reports the benefit for April based on earlier information:
--> The system responds by sending the payer the Incomes Register report reference 4270f21849364c093786291fh9809520.
A resident taxpayer's tax card (20%) comes into effect in April but the person does not deliver it to the payer until May. The already submitted benefits payment report for April must be corrected such that the collected tax at source is converted into withholding. The actual amount of tax withheld from the income is reported. Due to the new tax card, the amount of tax will also be corrected, but because the payment already made cannot be changed, the correction is indicated on the following Incomes Register reports.
The payer corrects the April report by submitting a replacement report from which they have removed the Non-resident taxpayer – Yes entry. When the entry has been removed, the income earner is considered to be a resident taxpayer. The data contents include no data item for resident taxpayer. The checks related to the original report's Non-resident taxpayer entry are removed when the entry is deleted. Data such as address details thus become voluntary data.
On 16 May, the payer submits a replacement report for April:
When the payer submits a benefits payment report for May, they can reduce the withholding by the amount withheld in excess in April, i.e. EUR 150. The pre-assessment and the tax card are now in alignment. In the example, after the reduction of EUR 150 from May's EUR 200 withholding, EUR 50 remains. This amount is reported as Withholding on the report for May.
If, however, the amount withheld in excess were refunded to the income earner separately, a separate, new report would be submitted. The return is reported as a negative withholding:
In accordance with the payment date, the refund is allocated to the payer's tax liabilities for June and, in accordance with the payment year, to the taxes withheld from the income earner in 2020. The latter were EUR 150 too high as a result of the excessive withholding in May.
The excess amount withheld must be refunded during the same calendar year. This is because the negative withholding amount is recorded for the payment year indicated in the record data. For example, a negative withholding supposed to be allocated to the previous December's excessive withholding cannot be reported in January; instead, the excessive withholding will be credited to the income earner in taxation.
5.5 Health insurance contributions in international situations
Persons insured in Finland under the Health Insurance Act participate in funding the benefits under the social security legislation by paying the health insurance medical expenses contribution and the health insurance daily allowance contribution, collected in connection with taxes. Together, the health care contribution and the daily allowance contribution form the health insurance contribution of the insured person.
Pension recipients who live abroad and for the compensation of whose medical expenses Finland is responsible under the EU's social security regulation (No. 1408/71) or "basic Regulation" (No. 883/2004) pay the health care contribution to Finland even after they are no longer insured in Finland under the Health Insurance Act.
The payer is obliged to withhold tax from all income items subjct to withholding. If the person is insured in Finland, the withholding includes the health insurance contribution.
The reporter of pension and benefits income does not need to include an itemisation on their Incomes Register benefits payment reports to indicate what part of the withholding is health insurance contribution. The correct contribution amount has been taken into consideration in the income earner's withholding rate.
5.5.1 Only health care contribution is collected from the income earner
In some international situations a tax treaty prevents Finland from taxing the income. However, tax treaties do not apply to the health insurance contribution. Health care contribution must thus be paid from pension income if Finland is responsible for compensating the pension recipient's medical expenses. When the income earner is a resident taxpayer, the payer uses the Taxability entry to specify, in accordance with the tax card's instructions, that only the health care contribution is collected from the income.
Example 13: A resident taxpayer who has moved to France has earned their pension in public sector business activities in Finland. The taxation of the pension is prevented by the tax treaty between France and Finland. Under the provisions of the basic Regulation, Finland is responsible for the person's medical expenses, however, so the health care contribution must be imposed on the income.
Having seen the person's tax card, the pension provider knows of the obligation to collect the health care contribution. Each month, the provider submits a benefits payment report on which they specify the Taxability of the pension as "Earned income, only health care contribution is collected". Report for March:
5.6 Non-resident taxpayer's pension income
In international situations, different additional details of the pension reported to the Incomes Register are submitted on the benefits payment report depending on whether the income earner is a resident or non-resident taxpayer. Even when the pension of a resident taxpayer is paid to abroad, the reporting procedure corresponds to domestic situations. An exception to this are the situations specified above, where the decision of the Tax Administration on the income earner's pre-assessment specifically directs the payer to withhold only an amount equalling the health care contribution from a non-resident pension recipient.
Example 14: A Finnish citizen who is a resident taxpayer but lives in France has earned their statutory earnings-related pension as an entrepreneur (YEL portion), in the private sector (TYEL portion) and as an official of a Finnish public sector organisation (JUEL portion). The pension totals EUR 1,500, of which each portion is EUR 500. Taxation of the YEL and TYEL portions of the pension is prevented by the tax treaty between France and Finland. Under the provisions of the basic Regulation, Finland is responsible for the person's medical expenses, however, so the health care contribution must be imposed on all the income.
The pension provider has been delivered a tax card according to which the common average withholding rate (10%) applies to all the portions of the pension. The rate has been calculated in such a manner that in addition to the health care contribution, the tax collected on the JUEL portion is withheld. Each month, the pension provider submits a benefits payment report on which they report the total amount of the monthly pension to the Incomes Register without the Taxability entry. All portions of the pension are reported to the Incomes Register with the same income type (code 1081) and in the same income type itemisation. The withholding is reported as its own income type.
Report for January:
After the January payment, the payer is informed that the pension recipient has been deemed a non-resident taxpayer as of the beginning of the year. As a non-resident taxpayer, the person has received two tax cards for the pension income. One is for the pension earned in the service of a public sector organisation (25%) and the other for other earnings-related pension (1.5%) including the YEL and TYEL portions.
The payer submits a replacement report to the Incomes Register and reports the TYEL and YEL portions using "Other payment based on social security legislation" at Grounds for pension paid to a non-resident taxpayer. The JUEL portion, in turn, is reported using "Earnings-related pension from a public body, not earned from business activities".
When the grounds for different portions of an earnings-related pension paid to a non-resident taxpayer are different, the withholding on the different portions must be reported to the Incomes Register using different income type itemisations. In the itemisations, the same additional data on the grounds for pension is given to the Withholding income type as to the income item that the withholding concerns. This ensures, for example, the successful automatic exchange of taxation information required by the European Union legislation.
Example 14: (continued) Because the person is a non-resident taxpayer, the replacement report, where the pension payments are itemised in detail, must also include the Non-resident taxpayer entry and the country of residence and address details. Replacement report for the January payment:
In the example, the income earner's taxes and contributions have decreased as their tax liability status has changed. The payer has originally withheld EUR 10 more than they should have withheld according to the new tax cards. On a replacement report, the excessive withholding need not be allocated to the different pension items of the non-resident taxpayer.
Example 14: (continued) The payer refunds the excessive withholding to the income earner on 14 February of the same year. A separate benefits payment report is submitted on the refund. The day on which the refunded withholding is available to the income earner is reported as the payment date:
6 Correcting benefits payment data in the incomes register
6.1 General information on correcting data
According to section 4 of the act on the incomes information system, the payer is responsible for the accuracy and correction of any data they have submitted to the Incomes Register. If incorrect data in the Incomes Register is based on the payer's report, the income earner must submit a correction request to the payer in question. The payer thus has an obligation to correct any incorrect data they have reported.
Replacement has been selected as the data correction method. This means that the original report is corrected by resubmitting all the report data, both the data that was correct in the original report and the new and changed data. The replacement report replaces the report of the payment date that the error concerns.
If the type of action is "New report", the report does not replace a previously submitted report. Because the income earner can have several valid reports with the same payment date, it must be possible to allocate a correction to the correct report. For this reason, the Incomes Register uses report references, which allow corrections to be allocated correctly. When submitting a new report, the payer always receives an Incomes Register report reference, which helps to allocate the corrections to the correct report. The payer can also use their own internal report reference in corrections, if they do not want or are unable to use the report reference generated by the Incomes Register. The payer's report reference must be specified when a new report is submitted via the technical interface or the download/upload service.
Benefits payments made on 1 January 2020 or later, and any corrections to them, are reported to the Incomes Register. If data on payments made prior to 2020 are corrected in 2020 or later, the corrections are not reported to the Incomes Register. Corrections to payments made prior to 01/01/2020 should be submitted directly to each data user. However, payments recovered on 01/01/2020 or later are reported to the Incomes Register, even if the original income has been paid prior to 2020. For information on the transition period concerning the year 2020, see section 1.2 of these instructions.
Data submitted to the Incomes Register is stored in the Incomes Information System for ten years from the beginning of the year following the year in which the data was registered. The data submitted to the Incomes Register can be maintained and corrected as long as it is retained in the Incomes Register.
6.2 Replacement or cancellation of submitted benefits payment reports
Corrections to data in the Incomes Register are usually made using replacement reports. However, there are situations where the replacement method cannot be used; instead, the previously submitted report must be cancelled and then a new report with corrected data submitted. These situations are listed in Section 6.5 of these instructions, Cancelling data. The cancellation of data means the deletion of data from the Incomes Register.
When a benefits payment report is cancelled, the previously submitted report is deleted. The deletion is allocated to the correct report based on the Incomes Register's report reference or the payer's report reference. When an entire record is cancelled, the record reference of the record in question is used.
6.3 Correcting an error in a report
The need to correct a report may arise from a payment error or a reporting error. Payment errors are situations where the report as such is correct, but the amount of income paid was too big or too small. These situations are discussed in section 6.4 of these instructions. Reporting errors refer for example to situations where the income was paid correctly but reported incorrectly to the Incomes Register due to mistyping, for example. The income may also have been reported using a wrong income type. In the case of reporting errors, the original data must, as a rule, be corrected using the replacement method.
Example 15: A pension recipient is paid EUR 2,730 in disability pension in March. The payer withholds tax (EUR 365) from the pension. The payer makes a typing error when entering the data, incorrectly reporting the amount to the Incomes Register as EUR 3,730.
First report before the error is detected:
--> The data submitter receives the report reference 4270f21849164c0937862978cc809500 from the Incomes Register.
--> The payer can use the payer's report reference in the correction instead of the report reference generated by the Incomes Register.
The typing error is detected at the end of May. The payer must correct the report submitted for March. All data, including data that was correct, must be resubmitted in the replacement report.
The replacement report for March after the error was detected:
The correction can be allocated to the correct report by using either the Incomes Register's report reference or the payer's own report reference. Both references can also be submitted in the report. The recommendation is that the payer specifies a version number on the replacement report, allowing the correction to be allocated to the correct report.
The Incomes Register assigns version number 1 to a new benefits payment report. The first replacement report is allocated to the previous report by entering its version number (1) under Service data. The first replacement report, in turn, is stored in the Incomes Register as version number 2. If a version number is not used when submitting a replacement report, the Incomes Register will always perform the action on the latest version of the report. The use of the version number is described in more detail in the document, Technical interface – Delivering data to the Incomes Register.
6.4 Correcting payment errors
6.4.1 Too little benefit has been paid
If too little benefit has been paid to the recipient, but the amount corresponds to the data on the benefits payment report, the original report is not corrected. The original report remains valid, and a new report is submitted on the missing payment for the date on which the missing part is paid.
Example 16: In March, an earnings-related pension provider has paid EUR 1,150 in rehabilitation allowance to a person participating in occupational rehabilitation and reported the payment to the Incomes Register:
The Benefit unit entries can be used to provide more detailed information on the grounds for the benefit. In the example, the payer states that in March, benefits were paid based on 10 days.
At the beginning of April, the earnings-related pension provider detects that the payment was based on too few rehabilitation days and that the payment was EUR 200 too small.
The missing part of the rehabilitation allowance is agreed to be paid in connection with the next payment. The first report is not corrected, because the missing part will be paid on a different payment date. The benefit payer submits a new report, reporting both the April rehabilitation allowance and the missing part of the March rehabilitation allowance.
6.4.2 Too much benefit has been paid
If a recipient has been erroneously paid too much, the benefit payer submits a replacement report. The overpayment is regarded as unjust enrichment, and the new report replaces the original report. For more information on unjust enrichment, see section 7.1 of these instructions.
Example 17: In February, a benefit recipient was paid EUR 5,000 in disability pension, of which EUR 1,000 was withheld. The benefit payer reports the payment to the Incomes Register:
The benefit payer later detects that the payment was too big. Only EUR 3,000 should have been paid to the recipient. The benefit payer must submit a replacement report to the Incomes Register, indicating the overpayment (unjust enrichment):
6.4.3 Incorrect amount of benefit paid to a substitute recipient
In situations where a payment error concerns a substitute recipient, the benefit payer may have to recover the overpayment from the income earner or from the substitute recipient. The recovery of unjust enrichment from the income earner comes into question in a situation where too little has been paid to the substitute recipient whereas the income earner has received too much.
Example 18: On 15 January 2022, a benefit recipient is granted a monthly rehabilitation allowance of EUR 1,200 from 1 January 2022 onwards. The rehabilitation allowance is paid to the employer to offset the wages. The excess part of the benefit is paid to the person in rehabilitation.
On 16 January 2022, the employer reports that the employee's fixed salary per month is EUR 800. EUR 1,200 in retroactive rehabilitation allowance is paid on 25 January 2022 for the period between 1 and 31 January 2022, and a continuous rehabilitation allowance is paid on the first day of each month. The benefit payment is divided such that EUR 800 is paid to the employer and EUR 400 to the person in rehabilitation, of which 10% is withheld, i.e. EUR 40.
After the rehabilitation allowance for February has been paid on 3 February 2022, it turns out that the employee's salary has been higher from 1 February 2022 onwards, totalling EUR 1,000 per month. The person in rehabilitation has already been paid the excess part of EUR 400 from the period between 1 and 28 February 2022. First report for February before the error is detected:
In fact, EUR 1,000 should have been paid to the substitute recipient, and only EUR 200 to the income earner. The income earner has thus been paid EUR 200 too much. The overpayment is marked as unjust enrichment on a replacement report once a decision on unjust enrichment has been made. The following report data is submitted on the replacement report (the record data does not change):
When the employer is paid the missing EUR 200 of the rehabilitation allowance on 5 February 2022, a new benefits payment report is submitted on the payment:
The benefit payer has thus made payments totalling EUR 1,400, but EUR 200 of this is unjust enrichment for the income earner. A total of EUR 1,000 in rehabilitation allowance has been paid to the employer for February in two instalments.
When the person in rehabilitation pays back the first EUR 90 instalment on 1 May 2022 after receiving a recovery decision, the payer submits a benefits payment report on the recovery:
For more information on recovery, see section 7.2. of these instructions.
If, in turn, the substitute recipient has been paid too big a portion of the benefit or pension, the portion lacking from the income earner must be paid to them at a later date. Because no data on substitute recipients' unjust enrichment and on recovery is collected in the Incomes Register, the original report must exceptionally be corrected by decreasing both the income type amount and the deduction amount in accordance with the overpayment made to the substitute recipient. The amount of taxable income received by the income earner on the payment date and the amount remaining in pocket are now correct.
6.5 Cancellation of data
If necessary, a record or a report can be cancelled, or erased from the Incomes Register. Cancellation is not made with the same benefits payment report record type as is used when new and replacement benefits payment reports are submitted. Cancellation has been separated into a dedicated schema.
When, for example, the type of a record uploaded to the Incomes Register is "Cancellation of benefits payment reports", the following data must be provided in addition to the technical record data:
- record owner's (payer's) identifying data; and
- the Payer's report reference or the Incomes Register report reference of the report to be cancelled.
Additionally, the report's version number can be provided. The version number is optional supplementary data.
The cancellation record types can be used to cancel, for example, an individual benefits payment report (record type 107) or an entire record containing benefits payment reports (111). Because cancellation has been separated into a dedicated schema, the mandatory data of an individual benefits payment report described in section 1.4 of these instructions are not required when a cancellation is made. When a report is cancelled, the previously submitted report is deleted. The deletion is allocated to the correct report based on the Incomes Register's report reference or the payer's report reference. When an entire record is cancelled, the record reference of the record in question is used.
A benefits payment report must always be cancelled when you correct data on which data distribution is based. Data distribution is based on the following data (data group in parentheses):
- Date of payment or other report date (Record data)
- Identifier (Payer's identifiers)
- Identifier (Income earner's identifiers)
- Identifier (Substitute recipient identifiers)
- Start date/End date (Earnings period)
- Start date/End date (Original earnings period)
- Start date/End date (Earnings period of original benefit)
6.6 Correcting data by cancelling a previously submitted report
This subsection gives examples of situations where data must be corrected by cancellation. The cancellation method must be used so that data users who have received an incorrect report from the Incomes Register learn when the report is changed.
6.6.1 Correction of a payment date
An incorrect payment date or other report date must always be corrected by cancelling the previously submitted report. If other payments made to the same income earner have been reported on the same report, all data on the cancelled report must be resubmitted on one or several new reports and corrected where necessary. This must be done even when some of the reported payments have actually been paid on the reported payment date.
An incorrect payment date is not always caused by inadvertence or oversight. The payer can make a payment and submit a report to the Incomes Register correctly, and yet the payment may be returned from the bank and does thus not reach the income earner. The report must then be cancelled. The payer submits a new report with new data once the income has been successfully paid.
Example 19: The payer has incorrectly reported funeral grant in their record for 22 February, although the payment was actually received by the income earner on 25 February. First report before the error is detected:
--> The Incomes Register provides the following report reference: 2ecf7de328dc464f85b2191d44906076.
After noticing the error, the payer immediately takes action to cancel the incorrect report. The following data is submitted in a cancellation record:
Next, the payer submits a new benefits payment report resubmitting all data:
6.6.2 Correcting the earnings period
An incorrect earnings period must always be corrected by cancelling the previously submitted report. This applies to earnings periods submitted in all data groups: Earnings period, Deductions and Additional recovery details. If several payments made to the same income earner have been reported on the report, all data on the report must be resubmitted and corrected where necessary.
Unlike the earnings payment report, the Incomes Register's benefits payment report does not include period data on the entire record. The only data indicating the time of benefit payment that applies to the entire record is "Date of payment or other report date". At report level, the precise earnings period of the type of income paid must be submitted. For one-off incomes, the start and end dates of the earnings period can be reported to be the same as the payment date.
Example 20: The payer has reported 25 September as the end date of the earnings period, although the benefit was actually paid only until 23 September. First report before the error is detected:
--> The Incomes Register provides the following report reference: 2ccf7de328dc464f85b2191d44906086.
After noticing the error, the payer immediately takes action to cancel the incorrect income earner report.
And resubmits a new report including all data:
6.6.3 Correction of payer identifiers
If there is an error in the payer identifiers, all reports included in the record must be resubmitted, because the incorrect payer identifier is most likely found in all of them. One record must never contain data on payments made by several different payers, such as payment data of two different customer companies. In the cancellation of an entire record, the item to be cancelled is specified using the payer's record reference or the Incomes Register's record reference rather than report references.
6.6.4 Correction of income earner's identifier or substitute recipient identifiers
An incorrect income earner's identifier or substitute recipient identifier must always be corrected by cancelling the previously submitted report. An income earner may have several identifiers that can be submitted on a report. If even one of the submitted identifiers is incorrect, the report must be cancelled and all data on the report must be resubmitted and corrected where necessary.
Example 21: The payer has reported the income earner's Finnish personal identity code and foreign identifier, which the payer also knows. The check character (E) in the foreign identifier is later detected to be incorrect, and the error is corrected.
First report before the error is detected:
--> The Incomes Register provides the following report reference: 3ecf7de328dc464f85b2191d44944556.
After noticing the error, the payer immediately takes action to cancel the incorrect report:
And resubmits a new report including all data:
7 Reporting unjust enrichment and recovery
7.1 Reporting an unjust enrichment
In some situations, the income earner is not entitled to a payment made to them and reported to the Incomes Register. A case of unjust enrichment occurs when, for example, a benefit has been granted or paid groundlessly, for example to the wrong person or in an incorrect amount. Unjust enrichment may also occur when the circumstances of the benefit change at a later date. Once the unjust enrichment is detected, the data must be corrected in the Incomes Register without undue delay and no later than one month after the decision on the unjust enrichment was made. When an overpayment is in dispute, the decision on unjust enrichment means the final decision on the adjustment or removal of the benefit.
The unjust enrichment may be recovered from the gross amount of a benefit paid later, or a payment request may be sent to the income earner. The payment can also be recovered as a net amount. There are two different ways of reporting unjust enrichment, depending on whether the income was already reported to the Incomes Register as other income before the error was detected, or whether the payment error was detected before the report was submitted.
If the error is detected before the report is submitted, the separate Unjust enrichment income type is used. This income type is used only when a groundless payment is detected before the first report is submitted, and the income has not been previously reported to the Incomes Register as other income.
Example 22: Due to the payer's error, a EUR 2,500 pension intended to income earner A has been paid to B (ddmmyy-123B) as a EUR 2,250 net payment. The mistake was noticed on the very next day, before the report had been submitted to the Incomes Register. The payer knows the identity of B, but the income has not yet been recovered from B. Income earner A receives the pension on the next payment date, with EUR 250 withheld, and the payment is reported to the Incomes Register in the normal manner. However, the payer reports the amount paid to B as follows:
If it is not just a case of using the wrong account number, but the payment made to an incorrect benefit recipient has been entered into the payment system including the withholding, the withheld amount must also be reported on the incorrect recipient's benefits payment report in the amount collected. However, the payment is often just entered in the name of the actual income earner and paid to them. In such a case, the withholding is reported only on the actual income earner's benefits payment report. Ungrounded payments to legal persons or unidentified parties are not reported on the benefits payment report.
If the unjust enrichment has already been reported to the Incomes Register as other income, the data must be corrected by using the income type specified on the report and the separate Unjust enrichment entry provided in connection with it. The original report is corrected using the replacement method.
Example 23: Income earner C was paid EUR 1,100 on 15 September. The payment was reported to the Incomes Register as the labour market subsidy. However, Kela accidentally paid EUR 550 too much in addition to the normal benefit amount of EUR 550. EUR 275 was withheld from the payment (25%). Kela submits a report indicating the amount of benefit paid and does not notice the mistake before submitting the report.
First report before the error is detected:
The error is detected in October. The previously submitted report must be corrected using the replacement method by specifying the overpayment (previously paid and reported to the Incomes Register using the Labour market subsidy income type) as Unjust enrichment. Because the income has already been reported to the Incomes Register as other income, the Unjust enrichment income type is not used; instead, a separate Unjust enrichment entry connected to the income type is made for the previously reported income.
The payer's replacement report:
Based on the submitted data, the income earner's amount of unemployment benefit for August is considered to be EUR 550, and the erroneous overpayment (EUR 550) is regarded as unjust enrichment. Based on the report, the data users learn that the overpayment was previously reported to the Incomes Register as the labour market subsidy. In the case of unjust enrichment, the value given at Benefit unit, which is mandatory data for the Unemployment benefit income types, is zero (0) days. The tax withheld from the income earner is reported on a replacement report, stating the actual amount collected from the income earner.
7.2 General information on the recovery of benefits
When the income earner pays back unjust enrichment or another groundless payment made, this must be reported to the Incomes Register. The procedure is the same if the recovery takes place such that the payment is offset against a later benefit payment. 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 recovered. This is also done when money is returned to the benefit payer from the enforcement authority and, for example, when the employer or spouse pays back the benefit on behalf of the income earner.
A recovery report is created by submitting the Recovery entry linked to the income type and the related additional data for the payment date on which the income earner pays the overpayment back or the overpayment is offset against a later benefit payment. The original payment date is optional data.
The following mandatory data is submitted on the recovered payment:
- Income type
- Recovery – Yes
- Recovered amount
- Recovery date
- Start and end date of the original earnings period.
If the income is recovered from the income earner as a net amount, the tax withheld from the amount is reported under "Withholding from the recovered amount". A corresponding entry exists for tax at source collected from the recovered amount; it is used when income subject to tax at source is recovered as a net amount. If the income is recovered from the income earner as a gross amount, the payer does not report the tax previously withheld from the recovered amount. The previous withholdings are credited to the income earner in taxation.
Benefits recovered can be reported to the Incomes Register with a precision of one calendar year, when it comes to specifying the start and end dates of the original earnings period. If the original payment date is not specified, the Tax Administration has to use the data on the original earnings period in the adjustment of self-assessed taxes transferred to it. The data submitter may thus lose interest benefit by fulfilling only its minimum reporting obligation.
The recovery data must be submitted no later than on the fifth calendar day after information was received on the payment of the recovered amount, and on the payer and the payment or remuneration that the payment relates to. Of this data, the actual date when the amount is paid back is reported as the recovery date in the Additional recovery details data group.
7.3 Net recovery
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 and before the income has been credited to the income earner in the tax assessment. The Tax Administration will rectify the payer's withholding obligation for the original payment month after receiving information on the original payment date of the income. If the recovery takes place after the year following the payment year so late that it cannot be taken into consideration in the payment year's taxation, gross recovery must be used. The payer must check with the Tax Administration to find out whether the taxation has already been completed. If this is the case, net recovery is no longer possible.
Example 24: On 10 November, an income earner pays back an overpayment of EUR 550 paid in September (cf. example 23). The payer recovers the payment from the income earner as a net amount, taking into account the withholding (25%). The income earner thus pays EUR 412.50 to the payer's account.
Once the payer has allocated the amount paid back in its systems, they submit a benefits payment report on the recovery. In the record data, instead of specifying the income earner's payment date, the payer specifies the date on which they were notified of the payment of the recovered amount, and of the payer and the benefit to which the payment relates ("allocation date").
When the payment is recovered from the income earner as a net amount, the payer reports the tax withheld using the "Withholding from the recovered amount" entry. In example 24, the entire amount of EUR 550 could also be recovered from the income earner as a gross amount.
7.4 Recovery by offsetting against a later benefit
Example 25: On 3 January, an income earner who has been in an accident is paid compensation for loss of earnings for the previous year's December and a tax-exempt compensation for temporary functional limitation. The compensation for loss of earnings paid for the previous year's November was EUR 700 too big, and the income earner has agreed to the overpayment being offset in connection with the January payment. The offset is treated as a gross recovery.
On the November report, the payer has reported a compensation for loss of earnings of EUR 1,300, with EUR 350 withheld. On a replacement report, the payer submits an Unjust enrichment entry, reporting that EUR 700 of the November compensation for loss of earnings is overpayment:
On the report for the January payment, the benefits for December and the offset of the overpayment are reported:
EUR 600 of the December benefits is taxable income, of which EUR 160 is withheld. Because EUR 700 is offset against the remaining overall income of EUR 740, the income earner receives EUR 40 on their account.
If the original benefit to be paid back is taxable and the later paid benefit is tax-exempt, the recovered amount is taken into account in taxation either as a recovery deduction or by adjusting the amount of taxable benefit for the payment year. In example 25, no recovery deduction is generated, because the recovery date is in next January and the taxation has not yet been completed. If, however, the earlier benefit is tax-exempt and the latter benefit taxable, the latter payment is taxed in full in the payment year, including the portion used to offset the original payment.
Example 26: In 2019, an income earner is paid a rehabilitation allowance from the occupational accident insurance. It is later noticed that due to an evident calculation error, part of the rehabilitation allowance has been ungrounded. In this case, the decision on the income earner's unjust enrichment is the insurance company's adjustment decision issued on 1 February 2020. According to the decision, the amount of the rehabilitation allowance for August 2019 is actually EUR 500 smaller than the benefit paid. The total benefit paid for August is EUR 1,500, of which EUR 500 is thus unjust enrichment. The insurance company must correct its August report no later than on 1 March 2020 by specifying Unjust enrichment for the overpayment. Replacement report:
The insurance company decides to recover the overpayment by offsetting it against the occupational accident pension they pay to the income earner in 2020. The income earner does not consent that the maximum amount laid down in section 247 of the Workers' Compensation Act could be exceeded in the recovery, so the insurance company offsets only one sixth of the portion of the occupational accident pension remaining after withholding each month. The recovery of the overpayment is reported in connection with the benefits payment reports submitted for the 2020 occupational accident pensions. Report for March:
At the beginning of June, EUR 200 of the overpayment still remains, and the income earner decides to pay off the amount. The income earner and benefit payer agree on a bank transfer taking place on 2 June 2020 to end the recovery process. The benefit payer allocates the received payment on 4 June and submits the following benefits payment report:
7.5 Waiving the recovery
Legal sources on the recovery of benefits typically include a provision on the possibility of the benefit granter to waive the recovery either partially or in full in certain situations. When the granter considers waiving the recovery, they take into account, for example, considerations of equity and the income earner's sincere intentions. In addition to the waiving of recovery, there are situations where a decision is made to continue the payment of a benefit of a continuous nature even though the benefit has been found to be groundless.
If income has been groundlessly paid to an income earner, a report on unjust enrichment must be submitted to the Incomes Register regardless of how the recovery will be implemented or, for example, whether it will be waived fully or in part. In some cases, therefore, more unjust enrichment may be registered as income for an income earner than has been or ever will be recovered from them. If the paying of income continues without a decision granting the benefit, the income is reported to the Incomes Register using the Unjust enrichment income type.
8 Reporting recourse situations to the incomes register
8.1 General information on recourse situations
The recovery of a benefit is usually targeted at the recipient. A recourse situation occurring based on the right of recourse differs from other forms of recovery in this respect. In a recourse situation, the benefit payer can receive compensation for a groundlessly paid benefit from another social security institution or private actor, such as an accident, motor or patient insurance company. 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. In recourse situations, a benefit can be offset or recovered without the income earner's consent.
Recourse thus refers to the income earner's entitlement to receive compensation for the same damage or benefit on the same grounds under various legal bases. Generally, different payers are responsible for benefits paid under different legal bases. In recourse situations, different benefits are paid simultaneously, and the payer of an earlier benefit is claiming back a benefit that has been detected to be secondary to a later benefit. Instead of the income earner, the recovered amount is paid to the payer of such secondary benefit. For example, when a person who receives a sickness allowance is also entitled to a disability pension for the same period, part of the retroactive disability pension can be has paid to the instance that paid the sickness allowance.
According to the benefits legislation, the payer of a secondary benefit must send an advance notice to the payer granting a primary benefit in order that it could recover the overpayment from the payer of the primary benefit. As a rule, this advance notice starts the recourse process. Based on the advance notice, the payer of the primary benefit withholds the benefit retroactively, notifies the payer that sent the advance notice, and remains waiting for the actual recourse claim, or recovery notification. In the recourse claim, the payer of the secondary benefit indicates the overpayment amount.
Data is reported to the Incomes Register on a recourse process on which data users referred to in section 13 of the act on the incomes information system are entitled to receive information. The data is submitted only insofar as the data user needs it for the purposes referred to in section 1.1 of these instructions.
8.2 Recourse on taxable income
Recourse typically has to do with the distribution of liability between two instances paying benefits. Recourse where the previous benefit has been taxable income takes place before withholding. Because derived data such as subtotals is not submitted on benefits payment reports, the income subject to withholding is not directly evident from the data on the benefits payment report.
Example 27: A person has received a total of EUR 1,800 in sickness allowance for the period between 1 May and 31 May. The benefit was paid on 2 May, and the report was submitted to the Incomes Register on time.
An earnings-related pension provider grants the person a monthly disability pension of EUR 2,000 retroactively, starting from 1 May. The earnings-related pension provider does not pay the pension to the income earner retroactively for the period of 1 May to 31 May until Kela sends them a recourse claim. After receiving the claim, the pension provider pays the sickness allowance portion of the May pension to Kela on 1 June 2021. The remaining portion (EUR 200) is paid to the pension recipient, with the amount of withholding deducted.
For May, the earnings-related pension provider submits the following report:
After receiving the recourse payment, Kela must correct its original benefits payment report on the sickness allowance paid. Kela reports that the groundlessly paid sickness allowance has been recovered by recourse by using the Recourse entry:
The person's taxable income for May is considered to be EUR 1,800 in sickness allowance (based on Kela's original report) and EUR 200 in disability pension. In total, EUR 450 in withholding is credited to the person for this income in tax assessment.
8.3 Recourse on tax-exempt income
If the deduction income type, or previous benefit, has been tax-exempt, section 112 a of the act on income tax is not applied during taxation. This is indicated by using "Recourse on tax-exempt income" as the deduction type. Regardless of the recourse, the benefit paid later is taxed in full if it is taxable.
Example 28: Part of Kela's rehabilitation allowance is paid as a recourse payment to Kela's own unit responsible for financial aid for students, which has made a net payment claim for the housing allowance. The rehabilitation allowance was retroactively granted for partially the same period during which a tax-exempt housing allowance was paid to the student. For this reason, the housing allowance paid was too big. The income earner's withholding rate for the rehabilitation allowance is 10% on the benefits tax card.
The income earner is thus paid a total of EUR 1,500 in rehabilitation allowance, of which EUR 150 is withheld before the EUR 300 related to the housing allowance is deducted. EUR 1,050 remains to be paid to the income earner's account.
8.4 Overlapping recourse claims
A single benefit payment may be subject to recourse claims from several different parties. The claim recipient follows the priority order laid down in law and, for example, the payment ban imposed by enforcement authorities, when determining how much of the benefit should be paid to the different substitute recipients. In such a situation, the Deduction details data group occurs several times in the details of the income type where the payment of the later primary benefit is specified.
Example 29: On 1 September 2020, a person has to stay away from work due to illness, and they receive a sickness allowance from Kela from that day onwards. The payment of the sickness allowance is stopped on 31 December 2020. The person becomes unemployed and starts receiving an unemployment allowance paid by an unemployment fund from 1 January 2021 onwards. Furthermore, due to a difficult financial situation, the person receives social assistance for the period from 1 September 2020 to 15 February 2021.
On 19 February 2021, the person is granted a retroactive disability pension starting from 1 September 2020. However, the pension is subject to recourse claims from Kela (sickness allowance and social assistance) and the unemployment fund (unemployment allowance). Due to the recourse claims, the pension provider does not pay the pension for the retroactive period but starts paying the continuous pension from 1 March 2021 onwards. Of this continuous payment, the pension provider submits a normal new benefits payment report to the Incomes Register, specifying 1 March 2021 as the payment date.
Later, on 8 March 2021, the pension provider pays the retroactive disability pension following the recourse claims from Kela and the unemployment fund.
The amount of the person's disability pension is EUR 1,000 a month (index increase not taken into account). The pension for the retroactive period from 1 September 2020 to 28 February 2021 thus totals EUR 6,000. The person has not provided a valid tax card for the retroactive period, so the pension provider withholds 50% of the taxable portion of the retroactive benefit.
The pension provider takes into account the following information on the recourses:
- Pension payment for the period from 1 September 2020 to 30 September 2020
- Pension income totals EUR 1,000.
- Kela claims a total of EUR 900 in sickness allowance for the period from 1 September 2020 to 30 September 2020.
- The portion exceeding the sickness allowance claim, EUR 100, can be paid as compensation for the social assistance paid by Kela for the same period, i.e. from 1 September 2020 to 30 September 2020. After withholding, a total of EUR 50 is paid to compensate for the social assistance.
- Pension payment for the period from 1 October 2020 to 31 October 2020
- Pension income totals EUR 1,000.
- Kela claims a total of EUR 900 in sickness allowance for the period from 1 October 2020 to 31 October 2020.
- The portion exceeding the sickness allowance claim, EUR 100, can be paid as compensation for the social assistance paid by Kela for the same period, i.e. from 1 October 2020 to 31 October 2020. After withholding, a total of EUR 50 is paid to compensate for the social assistance.
- Pension payment for the period from 1 November 2020 to 30 November 2020
- Pension income totals EUR 1,000.
- Kela claims a total of EUR 900 in sickness allowance for the period from 1 November 2020 to 30 November 2020.
- The portion exceeding the sickness allowance claim, EUR 100, can be paid as compensation for the social assistance paid by Kela for the same period, i.e. from 1 November 2020 to 30 November 2020. After withholding, a total of EUR 50 is paid to compensate for the social assistance.
- Pension payment for the period from 1 December 2020 to 31 December 2020
- Pension income totals EUR 1,000.
- Kela claims a total of EUR 900 in sickness allowance for the period from 1 December 2020 to 31 December 2020.
- The portion exceeding the sickness allowance claim, EUR 100, can be paid as compensation for the social assistance paid by Kela for the same period, i.e. from 1 December 2020 to 31 December 2020. After withholding, a total of EUR 50 is paid to compensate for the social assistance.
- Pension payment for the period from 1 January 2021 to 31 January 2021
- Pension income totals EUR 1,000.
- The unemployment fund claims a total of EUR 800 in unemployment allowance for the period from 1 January 2021 to 31 January 2021.
- The portion exceeding the unemployment allowance claim, EUR 200, can be paid as compensation for the social assistance paid by Kela for the same period, i.e. from 1 January 2021 to 31 January 2021. After withholding, a total of EUR 100 is paid to compensate for the social assistance.
- Pension payment for the period from 1 February 2021 to 28 February 2021
- Pension income totals EUR 1,000.
- The unemployment fund claims a total of EUR 800 in unemployment allowance for the period from 1 February 2021 to 28 February 2021.
- The portion exceeding the unemployment allowance claim, EUR 200, can be paid as compensation for the social assistance paid by Kela for the same period, i.e. from 1 February 2021 to 15 February 2021. After withholding, a total of EUR 100 is paid to compensate for the social assistance.
The pension provider submits the following report on its retroactive payments:
No portion of the pension provider's payment remains to be paid to the pension recipient. After the recourse of the taxable sickness allowance and unemployment allowance, EUR 800 remains in the name of the income earner, of which half has been withheld and half recovered as social assistance paid in excess.
If something remains to be paid to the income earner's account after taxes and the instalments paid to substitute recipients, this is not reported on the benefits payment report. The data users themselves must calculate the benefit amount remaining in pocket and the taxable amount on the basis of the Incomes Register data they receive.
The recipients of recourse payments, such as the unemployment fund in example 29, must submit replacement reports on those benefits reported to the Incomes Register for which a payment is received from the payer of the primary benefit. All data in the previous report, such as the benefit unit and withholding, remains unchanged. Only a new entry, Recourse – Yes, is added to the general income type details.
Example 29: (continued) Unemployment fund's replacement report for February:
8.5 Recourse on benefit outside the Incomes Register
A previous benefit referred to in a recourse claim is not found in the Incomes Register if it has been paid before the deployment of the Incomes Register or, for example, if the data is of sensitive nature and has therefore not been reported to the Incomes Register. In these situations, recourse is visible only in the data submitted in the Deductions data group by a later payer. If the Incomes Register's set of income type codes does not include a code for the original benefit, the codes for the Other benefit or Other pension income types can be used as a deduction income type code in the details of the original benefit.
Example 30: On 10 March 2020, an income earner is granted a disability pension starting from 1 January 2020. The pension for the period from 1 January to 28 February 2020 is paid to a Swedish instance called Försäkringskassan, which has already paid a secondary benefit to the income earner. The recourse provision of the act on income tax does not apply to this situation, because the Finnish payer does not know whether the previous income is taxable in Finland. The pension provider thus reports the recourse using the "Recourse on tax-exempt income" deduction type.
The pension provider's report on the retroactive pension paid to the substitute recipient: