Special circumstances of income types

The Incomes Register's income types are at the level of detail required by the data users. For this reason, a specific income type that could be used to report paid income to the Incomes Register cannot necessarily be found for all payment situations. The selection of the correct income type must take into account the purpose of use and whether social insurance contributions are paid for the income. See below for a list of the most typical payments for which no specific income type is directly found in the Incomes Register.

Holiday pay does not have its own income type in the Incomes Register.

Income paid for and accrued during a holiday can be reported using income type Time-rate pay (201).

If the income paid for the holiday comprised, for example, performance pay or commission, the holiday pay can be reported using income type Commission (220) or Contract pay (227) according to the grounds of the income.

There is a separate income type for a holiday bonus, Holiday bonus (213).

It is also recommended that the payer report annual leave as the reason of the paid absence and also report the period of absence and the amount of pay for the duration of the paid absence.

Wages for the duration of illness, wages for the duration of training, wages for the duration of military refresher training, and wages for travel time do not have their own income types.

The income type can be selected according to the grounds of the income, for example Time-rate pay (201) or Contract pay (227).

Illness, training or military refresher training, for example, is reported as the reason for the paid absence, also including the period of absence and the amount of pay during the paid absence.

In the case of wages for travel time, "Other" can be reported as the reason for the absence. The reasons for absence are described in the instruction Reporting data to the Incomes Register: absence data.

Performance fee

A performance fee can be paid, for example, for an appearance in a public event or on a radio or TV show. If the performance fee is paid in an employment relationship and the fee is related to a duty agreed in the employment contract, the fee is handled as wages. The performance fee can then be reported as normal wages, for example using income type Time-rate pay (201). Alternatively, income type Other compensation (216) can be used. 

A performance fee paid based on an assignment is a non-wage compensation for work and is reported using income type Non-wage compensation for work (336). The fee is reported to the Incomes Register as a non-wage compensation for work when the recipient is not registered in the prepayment register. In such a case, tax must also be withheld from the income. Read more about non-wage compensation for work.

If the performance fee is paid for work performed in an employment relationship, social insurance contributions are paid from the fee. If the recipient of the performance fee is not in an employment relationship, the obligation to pay an earnings-related pension insurance contribution, the employer's health insurance contribution, and the employee's daily allowance contribution of health insurance varies according to the applicable law.

If the payment is made to a performing artist for a personal performance, you must also remember to include Performing artist as the type of additional income earner data. Performing artists include stage and film actors, radio and television performers, and musicians.

A fee paid for giving a lecture or a presentation is reported using income type Lecture fee (214).

Author's fee

An author's fee is paid for writing an article or a work, for example.  An author's fee is reported on an earnings payment report according to what type the paid income was handled as and in what kind of circumstances the writing was done.

An author's fee is reported using income type Non-wage compensation for work (336) when the fee is not paid in an employment relationship, the author has offered the article or work to the principal, and the recipient is not registered in the prepayment register. Read more about non-wage compensation for work.

If the article or work on which the fee is based was commissioned from the author, the paid fee is considered to be a copyright royalty and reported using income type Compensation for use, earned income (313). If the author's fee is paid to an income earner in an employment relationship, the fee can be reported using income type Time-rate pay (201) or Other compensation (216).

Allowance to witness

An allowance to witness is paid for appearing in court as a witness. An allowance to witness is reported to the Incomes Register using income type Non-wage compensation for work (336), unless it has been agreed to be paid as wages. Tax is withheld from such compensation if the recipient is not registered in the prepayment register. Read more about non-wage compensation for work.

No other social insurance contributions are paid. If the allowance has been agreed to be paid as wages, the income can be reported to the Incomes Register using one of the wage income types, such as income type Time-rate pay (201).

Other remunerations not paid in an employment relationship

If the income earner is not in an employment relationship and is not registered in the prepayment register, any remunerations paid to him/her are, as a rule, handled as non-wage compensation for work and reported to the Incomes Register using income type Non-wage compensation for work (336). However, if it has been agreed that the compensation for work is paid as wages, the remuneration can be reported using wage income types, for example income type Time-rate pay (201). 

As a rule, the 200 series income types used in the Incomes Register are used when payments are made to an income earner in an employment relationship, but some of these income types can also be used when the income earner is not in an employment relationship. These are income types for which an exception to insurance information can be reported, such as Meeting fee (210) and Lecture fee (214).

A remuneration paid to a board member is reported using income type Compensation for membership of a governing body (308), regardless of whether the payment is made in an employment relationship or not. An initiative fee can be reported using income type Initiative fee (202), regardless of whether the payment is made in an employment relationship or not. If the payment is made to an income earner who is not in an employment relationship, and the social insurance contributions to be paid from the income differ from the default value of the income type, the payer must report an exception to insurance information.

The differences between a bonus, commission, profit-sharing bonus, and performance bonus

Some of the income types reported to the Incomes Register may resemble each other but, as a rule, they are used in different payment situations. A bonus, commission, profit-sharing bonus, and performance bonus can be reported using different income types, depending on, for example, whether the performance target was agreed in advance or not, whether the payment was a one-off payment or continuous, and whether it was the organisation's performance target or an individual person's or group's target.

Bonus pay (203) differs from Commission (220) by being one-off in nature, while a commission is a remuneration of a continuous nature. In both, the performance metric can be volume, quality, or some other performance factor. Both of these are based on achieving a preset target for a person or a group.

Bonus pay (203) differs from Profit-sharing bonus (233) in that the profit-sharing bonus is paid without a plan agreed in advance, based on the company's profit. However, a performance bonus is paid based on meeting or exceeding the organisation's performance target agreed in advance.

Construction sector's holiday bonus and tax-exempt kilometre allowance

In the collective agreement of the construction sector, holiday compensation, holiday pay, and holiday bonus have been combined into a single holiday bonus (213). The compensation paid as a holiday bonus is 18.5% of the earnings from the holiday credit year. One third of the construction sector's holiday bonus is usually a holiday bonus and two thirds holiday pay or holiday compensation, depending on whether the employment relationship continues or was terminated. The construction sector's holiday bonus is reported to the Incomes Register using income type Annual holiday compensation (234).

According to the collective agreement of the construction sector, daily travel expenses between residence and place of work are reimbursed according to a special table, not as kilometre allowances set by a decision of the Tax Administration. However, the reimbursement paid according to the collective agreement is lower than the kilometre allowances set by the decision of the Tax Administration, so the reimbursement is tax-exempt. The reimbursement paid is then reported using income type Kilometre allowance (tax-exempt) (311). The number of kilometres does not need to be reported in connection with travel expense reimbursements in the construction sector.

Taxable kilometre allowance, daily allowance, and meal allowance

A taxable kilometre allowance can be paid to both employees and other income earners. There are several criteria for the taxability of kilometre allowances. The Finnish Tax Administration has defined a maximum amount for tax-exempt kilometre allowances paid by an employer to an employee, with the kilometre allowance exceeding this amount being taxable earned income. If the kilometre allowance is paid based on an assignment, the allowance is taxable earned income in its entirety.

A taxable kilometre allowance is reported differently depending on whether the allowance is paid to an income earner in an employment relationship or based on an assignment contract.

If a taxable kilometre allowance is paid to an income earner who is in an employment relationship with the payer, the payment made is reported using income type Kilometre allowance (taxable) (209). If daily allowances or meal allowances are paid to an income earner in an employment relationship on more lenient grounds than the decision by the Tax Administration, the allowances are reported using income type Other compensation (216), in which case they are also subject to social insurance contributions. If the allowances paid on more lenient grounds have been agreed in a collective agreement, they are not subject to earnings-related pension, unemployment or accident and occupational disease insurance contributions. In such cases, the payer reports the income using the Total wages (101) or Other taxable benefit for employees (315) income type, while also reporting what part of the income is subject to pension insurance contribution, unemployment insurance contribution, and accident and occupational disease insurance contributions.

Tax-exempt reimbursements of expenses can only be paid to an income earner in an employment relationship. If kilometre allowances, daily allowances or meal allowances are paid based on an assignment contract, the allowances paid are reported to the Incomes Register using income type Non-wage compensation for work (336), and the income type Kilometre allowance (taxable) (209) may not be used. Reimbursements of expenses related to non-wage compensation for work are added to the amount of income and reported in the total amount of the non-wage compensation for work. Reimbursements of expenses paid in connection with non-wage compensation for work are not tax-exempt. A recipient of non-wage compensation for work can request that travel expenses be deducted from their taxes on the pre-completed tax return. However, business operators must deduct travel expenses in their accounting.

Before tax is withheld, reimbursements of expenses incurred from work cannot, in general, be deducted from non-wage compensation for work. The only exception is the reimbursement of travel expenses paid to natural persons, from which tax does not need to be withheld if the grounds and amounts of the travel expenses are in accordance with the tax-exempt allowances for business travel laid down in the annual decision issued by the Finnish Tax Administration. These allowances are not tax-exempt either, so they are reported in the total amount of the non-wage compensation for work. 

Shareholder's wage receivables and reimbursements of expenses handled in accounting

The wage receivables of a shareholder in a limited liability company and the reimbursement of expenses of a shareholder in a general partnership or a limited partnership, handled in the accounting and invested in the company as a private investment, are reported to the Incomes Register on an earnings payment report. A shareholder's wage receivables are reported using wage income types, and reimbursement of expenses using income types intended for the payment transaction in question. A report must be submitted if the payment is entered into the books as the shareholder's wage receivables or a private investment. Making an entry means accounting's voucher date with which an entry can be allocated to the correct tax year. The payer will report the accounting's voucher date as the payment date with which the entry can be allocated to the correct calendar month and tax year. The data must be submitted within five calendar days of the entry being made into the books.