Benefits: unjust enrichment and recovery
Unjust enrichment
If an excess benefit has been paid to an income earner, the excess part of the payment must be corrected as an unjust enrichment by submitting a replacement report. The overpayment cannot be corrected by submitting a negative amount to the Incomes Register.
Unjust enrichment must be reported irrespective of whether the excess benefit is recovered or whether it is not recovered at all or only in part.
Unjust enrichment cannot be reported in connection with deductible items, such as withholding or distraint.
Report unjust enrichment as soon as the error is discovered
You should report unjust enrichment as soon as you have noticed the error but no later than 30 days of the erroneous decision.
There are two ways to report unjust enrichment. The reporting method depends on whether the payment has already been entered in the Incomes Register or whether you become aware of the overpayment before the information has been entered in the register.
How to report unjust enrichment
- If you notice the overpayment before the information has been entered in the Incomes Register, you must report the excess amount by specifying the income type as ‘unjust enrichment’ (1270).
- If you notice the overpayment after the income has been entered in the Incomes Register, you must correct the original report by submitting a replacement report and report the overpayment as unjust enrichment by specifying the income type as ‘Unjust enrichment’. In that case, you do not need to enter the income type separately as ‘Unjust enrichment’.
Note that if a benefit unit has been entered for the income type, you must change the number of units to zero on the replacement report to the extent that you report the income as unjust enrichment.
Recovery of a payment
The payer must report the recovery of a payment if an erroneously paid amount is recovered from an income earner or it is offset from a benefit to be paid later.
The recovered amount is not corrected in the original benefits payment report; instead, it is reported using a new report regarding the payment date on which the income was recovered.
Recovery also includes cases where funds are returned to the benefit payer, for example, if the employer or another party repays the benefit on the income earner’s behalf.
Recovery data must be reported no later than on the fifth day after information about the repayment of an overpayment was obtained and recovery was allocated to the correct benefit in the benefit payer’s system.
Reporting an unjust enrichment precedes reporting a recovery
Reporting recovery data requires that an overpayment has been corrected as an unjust enrichment on the report of the original payment date of the income. Income cannot be reported as recovered, unless it has first been reported as an unjust enrichment.
Note that in certain situations, an income earner may repay a benefit unprompted even if the benefit had not been paid on an unjust basis. Thus, an unprompted repayment is not a repayment of unjust enrichment. However, you must report the repaid amount under ‘Additional repayment details’ in the same manner as recovery. Read more about unprompted repayment in Section 6.5 of the instructions Benefits: Reporting data to the Incomes Register.
How to report a recovery
The recovered amount is reported using a new report, allocated to the repayment date. The recovered income must be reported using the same income type used to report the income as an unjust enrichment.
Report the following information on the recovery:
- Income type
- 'Recovery – Yes' data
- Recovered amount
- Repayment date
- Start date and end date of the original earnings period.
Recovered income cannot be reported to the Incomes Register as a negative amount.
There are three ways to recover an overpayment
An overpayment can be recovered in three different ways:
Gross recovery means that the payer recovers the amount paid to the income earner, plus the original withholding carried out from the income.
In gross recovery, the payer can, for example, send an invoice to the income earner, or recover the overpayment from a benefit paid later to the income earner. Payers can also use gross recovery if net recovery was also possible.
In gross recovery, the withholding from the recovered amount is not reported.
Net recovery means that the payer recovers the overpayment, from which they have first deducted the proportion of withholding carried out on the original payment date, from the income earner. The payer deducts the withholding in question from other taxes paid to the Finnish Tax Administration.
The income can be recovered from the income earner as a net amount if the income is repaid during the same year or at the beginning of the following year by the date defined in the Finnish Tax Administration’s decision (30 April). As a result, the Finnish Tax Administration can access the data before the person’s tax period ends, and the withholding will not be accredited to the income earner in taxation.
The Finnish Tax Administration will allocate the withholding correction to the payer’s withholding obligations for the original payment month.
Offsetting refers to a situation where a single benefit payer recovers a benefit that they previously paid groundlessly from a benefit they have paid later.
Read more about offsetting in Section 3 of Benefits: recovery and recourse.
Data users need data about unjust enrichment and recovery for their decision-making processes
Each data user in the Incomes Register has defined how they use the data disclosed to them in their decision-making processes. Some data users only need data about unjust enrichment, while others only need data about recovery and some need both.
It is important that data about unjust enrichment and recovery is reported so that decisions made by data users are based on correct income amounts.