The Incomes Register: What will

change in the reporting of wages in

2019?

Webinar, 8 February 2018, 1–2.30 p.m.

Contents of the presentation• Introduction to the Incomes Register

– Schedules

• Key principles of the procedure

– What will it mean for citizens?

– What will change in the work of a payroll officer?

• Reporting information

– Reporting channels and authentication

– What information will be reported and how?

• Correction of information

• Sanctions

• What current data flows will the Register replace?

• Summary

15.6.2018

One register – one standardised way to act• The Incomes Register is a national online database. It contains comprehensive

wage, pension and benefit data at individual level.

• Payers have an obligation to report the details of payments to the Incomes

Register

– In real time (payment date + 5 days)

– Individually for each payment

– According to commonly accepted standards

• The purpose of the Incomes Register is simple

– The Incomes Register collates data and distributes it to the parties that need it. The Incomes

Register does not modify or refine the data entered in it, but acts as a distributor of raw data.

15.6.2018

Two-phase implementation

• During the first phase, beginning in 2019, earnings payment data will be

reported to the Incomes Register

• As of 2020, pension and benefit data will also be reported to the Incomes

Register

• The reporting of data to the Incomes Register will immediately apply to all

earned income payers as of 1 January 2019, and to all benefit payers as

of 1 January 2020.

15.6.2018

Incomes Register

15.6.2018

Incomes

Register

Kela (Social Insurance Institution of Finland)

Earnings-related pension providers and the

Finnish Centre for Pensions

Unemployment Insurance Fund

Finnish Tax Administration

The Education Fund

Labour protection authorities

Administrative sector of the Ministry of Economic

Affairs and Employment

Statistics Finland

Unemployment funds

Non-life insurance providers

Local authorities

Data users

Wage earner or recipient of benefits income

Bank account

Employer 1

Employer n

Benefit payer 1

Benefit payer n

€Payslip

or benefit

decision

2019

2019

2020

2020

2019

2019

2019

2019

2020

2020

2020

2020

2020

2020

2020

Key principles of the Incomes

Register

Key points of the procedure

• Online transactions are a basic requirement

– Only in commonly accepted, standardised formats

– The formal correctness of the data should be checked at source whenever possible

• Payers report the information of individual income earners to the Incomes

Register whenever they make payments to them

– The data is stored in the Incomes Register in real time

– Payment triggers reporting

• Payers can view their own data in the Incomes Register

– Payers can request matching reports on the information they have submitted

15.6.2018 7

Key points of the procedure

• Payments made on 1 January 2019 and later are reported to the Incomes Register, along with any corrections to be made to such earnings.

– Wages and earned income paid in 2018 and before will be reported separately to each authority as before.

• Data submitted to the Incomes Register is retained in the income information system for a period of ten years, which matches the time for which employers are obliged to retain their payroll and other bookkeeping information.

• The Incomes Register does not create new data access rights– not all data in the Incomes Register is freely available to all

– the legislation specifies which data each user may view or use

15.6.2018

What will it mean for citizens?

• All income information registered in the Incomes Register and concerning the income earner will be available through an e-service

– Earnings payment data, pension income information and information on benefits paid will be easily accessible in one place and in real time via an e-service.

– In the future, income earners will not have to deliver the income information, reported to the Incomes Register, to data users such as Kela or unemployment funds.

– Income earners can order an Incomes Register extract stating their earned income.

– For the first time, the Incomes Register will provide income earners with a real-time, overall view of their pay and benefit information.

• The Incomes Register will not impose new obligations on income earners

• Wages paid by households will also have to be reported to the Incomes Register

15.6.2018

What will change in the work of a payroll

officer?• The rhythm of reporting earnings payment data will change

– Reporting will occur in real time and payment-specifically. In practice, there will be a

transition from annual reporting to payment-specific reporting

– The last annual information returns for earnings will be filed for the year 2018.

– Reporting-related work will be more evenly distributed over the year.

• The obligation to report the same earnings payment data multiple

times will be eliminated.

• The number of retroactive investigations will be reduced – if the data

has been submitted once, it will not be requested again.

15.6.2018

What will not change in the work of a

payroll officer?• The Incomes Register will have no effect on payment obligations or

cash flows – the change only applies to reporting

• The Incomes Register will not change payroll accounting or

obligations concerning the storage of accounting information

• The Incomes Register will not eliminate salary slips

• Certain statistics-related obligations will remain

• The Incomes Register will not eliminate income tax returns

15.6.2018

Channels for reporting to

the Incomes Register

Information reporting channels

• Information can be reported to the Incomes Register via different

channels:

1. Technical interface: Data will be transferred to the Incomes Register

directly from the payroll management system • No separate login will be required when submitting a report

• The Incomes Register will be integrated with the payroll management system

• Use of the interface will require the retrieval of a certificate

2. Electronic upload service: Data can be uploaded as files • Will require login

• The login page for the e-service will be incomesregister.fi

• Suomi.fi authentication will be used to log into the e-service

• Certificates will not be used in the e-service

• Will require authorisation for Incomes Register roles from a person with the authority to

sign on behalf of the company

15.6.2018

Information reporting channels

• Information can be reported to the Incomes Register via different

channels:

3. Online form in the e-service: manual data entry• Requires logging into the Incomes Register's electronic customer service

• Suomi.fi authentication is used for the login

• No connection to the payroll management system

• No certificates used

4. Paper: The information is submitted on a paper form• Special reasons

15.6.2018

Authentication• The Suomi.fi authentication shared by the public administration is used to log into the

Incomes Register's e-service.

– Available roles:• Earnings payment data reporting

• Viewing earnings payment data

– Authorisations are generated in the suomi.fi authorisation service according to specific guidelines

• Companies can authorise the necessary persons for reporting data from August 2018 onwards

• Companies must check that signing authorisations entered in the Trade Register are up to date

– Katso authentication will no longer be available to private employers• Foreign companies and public administration actors can authorise persons via the Katso service

• More detailed schedules and instructions will be published later on the incomesregister.fi website

15.6.2018

Reporting information

Data contents of earnings payment data

• The data contents are divided into two reports:

1. Earnings payment report

• Mandatory information (M)

• Complementary information (V)– Complementary income types

– Other complementary additional data

2. Employer's separate report

• Information not reported on an earnings payment report

• Earnings payment data contents have been constructed in cooperation with data users and providers. Because every piece of data in the Incomes Register is needed by a user, there is no unnecessary data.

15.6.2018

Reporting information with the earnings payment report

• The employer or other payer reports paid wages and other earned income with a separate earnings payment report for each income earner.

• Each report contains information on a single payment made to a single income earner.

• Several income items of different types, such as monetary wages, fringe benefits and kilometre allowances, can be reported for the same income earner on the same report.

• Even if several income types are reported, deductions made from the pay can be reported as a total sum for all income types.

• Households will also use the earnings payment report to report wages paid by them.

15.6.2018

Reporting information with the earnings

payment report• In the Incomes Register, pay types equal income types

– In the Incomes Register, income has been divided into separate income types at the level of accuracy needed by the data users.

– The payroll system may use more pay types than the Incomes Register.

– The system must encode the pay types used in the payroll system to match the income types used in the Incomes Register.

• There is no monetary minimum threshold for information reported to the Incomes Register

– At present, there are limits on the annual returns submitted to the Tax Administration, for example when reporting payments made by households.

• Travel compensations must be reported even if no monetary wages are paid, as must advances.

• Compensations paid to the employer are not reported.

• All mandatory information must be reported.

15.6.2018

Deadlines for reporting information with the earnings

payment report1. Monetary payments

– The information must be reported to the Incomes Register no later than on the fifth calendar day after the payment date.

– The payment date is the date on which the payment is available for use by the income earner, i.e. the payday.

2. Non-monetary benefits and payments, if the income earner does not receive monetary payments.– The information is reported on a monthly basis by the fifth day of the calendar month following the

month in which the benefit was received.

– If the income earner also receives monetary wages, the information must be reported by the fifth calendar day after the payment date.

• Information can also be reported to the Incomes Register in advance, but no earlier than 45 days before the payment date.

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Deadlines for reporting information with the earnings

payment reportExceptions to the general deadline

• Payments by individuals and estates– Individuals and estates not entered in an employer register must report payments monthly,

no later than on the fifth day of the calendar month following the payment month.

• Wages for insurance purposes– The information must be reported monthly, no later than on the fifth day of the calendar

month following the work.

• Information related to working abroad– The information must be submitted no later than on the fifth calendar day after the payment

date of the first wages paid for work abroad.

– However, information on periods of residence in Finland can be reported by the end of

January of the year following the year of payment.

15.6.2018

Deadlines for reporting information with the earnings

payment reportExceptions to the general deadline

• Wages paid by a substitute payer– Employers must report the information of wages paid by a substitute payer for which the

employer is obliged to pay social insurance contributions by the fifth day of the following

calendar month.

• Unjust enrichment and recovery– Unjust enrichment must be reported without undue delay and no later than within one month of

having become aware of the unjust enrichment.

– The information on amounts paid back must be reported no later than on the fifth calendar day

after the day of becoming aware of the payment of the collected amount, its payer and the

unjust enrichment to which the payment is connected.

• Deadline for reports submitted on paper forms– The deadline for reporting information on a paper form is 8 days instead of the usual 5.

15.6.2018

Mandatory and complementary information on the

earnings payment report• The data content of the Income Register's earnings payment report includes both

mandatory and complementary information

• Mandatory information

– Replaces the annual information returns to the Tax Administration, earnings-related pension providers,

TVR and occupational accident insurers, along with certain monthly reporting streams to the Tax

Administration and earnings-related pension providers.

– The benefits will be minor if only the mandatory information is submitted.

– The mandatory information includes, for example, the pay period and payday, along with certain income

types if wages in those types are paid.

• The submission of complementary information is voluntary

– Complementary information provides further detail on mandatory information.

– The data in question is additional data that is mainly available from the payroll information systems of

companies and is related to certain income data subject to the mandatory reporting obligation.

– Such complementary information includes absences, employment relationship information and earning

periods for individual income types.

15.6.2018

Two methods of reporting wages

• Primary method: Itemised reporting of monetary wages (reporting method 2)

– The payer uses specific, complementary income types. Reported in this manner, the wages will be generated from the reported income, and there is no need for the payer to add up the earnings.

– The income types in the Incomes Register provide the level of detail required by all or some data users.

– When the information is reported with the complementary income types (36), all parties using the information stored in the Incomes Register can use it in their operations.

• E.g. time-rate pay, contract pay, overtime compensation, holiday pay, meeting fee and working condition compensation.

– Reporting the information with reporting method 2 is subject to the same deadlines as other mandatory information.

15.6.2018

Two methods of reporting wages

• Reporting monetary wages as a total sum (reporting method 1

– The payer adds up the pay types of the monetary wages in the payroll system and reports

them as a total sum.

– This information corresponds to the current payment types 'wages for primary job' and

'wages for secondary job' in the Tax Administration's annual returns.

– If the wages are reported as a total sum, some of the data users may have to request

additional information, because this more limited level of detail is not sufficient for all users.

• For example, Kela needs more detailed information on monetary wages for granting sickness

allowances or parental allowances.

• Reporting method 1 and reporting method 2 cannot be combined in the same

report.

15.6.2018

Separating earnings from work and other wages in a

report

• The concept of wages is not identical for every data user.

• The income types specify, by default, which social insurance contributions

they are subject to.

– Social insurance contributions include earnings-related pension, health, unemployment and

accident and occupational disease insurance premiums.

• The social insurance contributions for some income types can vary by

payment situation.

– In such cases, the payer can change the default social insurance contribution values for the

income type.

– The information will be entered with the insurance data item linked to the income type.

15.6.2018

Separating earnings from work and other wages in a

report• With the Incomes Register's earnings payment report, payers can use a single report to

notify various social insurers of the income on which contributions are based, even if

the income amounts differ.

• If monetary wages are reported with reporting method 1, their total sum will include the

total wages and earnings from work from which the employer's and employee's social

insurance contributions are calculated.

• If part of the payment is not compensation paid for work and thus not a basis for a

social insurance contribution:

– A notification that the income is not subject to the insurance contribution in question must be added to

the Total wages income type, using the Type of insurance information data group.

– In addition, the payer must separately report the part of the income that constitutes a basis for the social

insurance contribution in question with the separate income subtypes related to reporting method 1.

15.6.2018

Separately reported income types

• In addition to monetary wages, certain payments must be reported

separately if they are made.

– The information must be itemised at the level of detail required by the users.

– The separately reported income types largely match the payment types currently

itemised for the Tax Administration.

– Such income types include, for example, fringe benefits, reimbursements of

expenses, compensations for work and use, employee stock options, the fees of

informal carers and household employees, and private day care allowance.

• The total sum of the wages paid to the income earner consists of

– the monetary wages reported with reporting method 1 OR

– reporting method 2 IN ADDITION TO

– the separately reported income types.

15.6.2018

Contents of an earnings payment report

15.6.2018

• Basic information/contact information– Basic details of the payer and the income earner

– Pay period and payment date

• Employment details– Type, duration and validity of employment relationship, payment type, pay unit, regularly agreed

weekly working hours, percentage of part-time employment, occupational class, work place of the income earner and applied collective agreement

• Insurance information – The earnings-related pension provider's business ID and pension policy number, occupational

accident insurer's business ID and policy numbers

– Other insurance information: income earner is not entitled to Finnish social security, income earner is not subject to an insurance obligation

• Wages/earned income in total (either as a total sum or itemised)– Various types of pay (contract, performance-based and time-rate pay)

– Compensation and supplements for non-standard working hours and exceptional situations

– Compensation related to termination of employment and lay-offs

29

Contents of an earnings payment report

15.6.2018

• Separately reported income types– Fringe benefits – as a rule, itemised in the same way as on the current annual information return of

the Tax Administration.

– Reimbursement of expenses – as a rule, itemised in the same way as on the current annual information return of the Tax Administration.

– Rewarding employees and payments based on the organisation's distribution of profit: e.g. share bonuses, employee stock options.

– Only payments subject to withholding tax: e.g. compensation for work or use

• Items deducted from income – All items and fees deducted from pay, withholding tax, employee's pension insurance contributions,

employee's disability benefit, net wage, distraint

• Absence data– Absence reporting period

– Paid and unpaid absences, duration and cause of the absence, the amount of wages for the duration of the paid absence, Kela's compensation application information

• Unjust enrichment – Amount and information on which pay period and income type it involves

• Recovery – Amount and the pay period and income type involved

30

Employer's separate report

• Employer-specific information not reported on the employee-specific earnings

payment report

– The information is reported monthly, no later than on the fifth day of the calendar

month following the month of payment.

• Information to be reported:

1. No wages payable data item

• A regular employer must report monthly, if there are no wages payable

2. Employer's health insurance contribution (total)

• The payer reports the amount of employer's health insurance contribution calculated

from the wages it has paid during the month in question

3. Deductions made from the employer's health insurance contribution, of

which the employer pays the health insurance contribution

• Deductions made from the payer's voluntary health insurance contributions

15.6.2018

Correction of information

Erroneous reports must be corrected

15.6.2018

• The payer is responsible for the accuracy and correction of any data it has submitted to the Incomes Register.

• The payer must correct any erroneous reports without delay.

– This means that erroneous reports must be corrected immediately when the error is noticed.

– Income earners who notice errors in their information must request the payer to correct them.

• The data submitted to the Incomes Register can be corrected for as long as it is retained in the Incomes Register.

– Only corrections made to reports submitted on or after 1 January 2019 will be made to the Incomes Register.

– If payments made prior to 2019 are corrected in 2019 or later, the corrections are not reported to the Incomes Register.

33

Replacement procedure

• Earnings payment data in the Incomes Register is corrected using the

replacement method

– All information must be submitted again on a replacement report, i.e. it must

contain the information that was correct on the original report in addition to

changes and new information.

– The replacement report is made for the same payment date as the original.

– Overpayments cannot be corrected in the Incomes Register by entering a

negative sum.

• If a payment has been made unjustly to an income earner, the payer must correct the

previous report by marking the overpayment as unjust enrichment.

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Report references

15.6.2018

• An income earner may have several valid reports with the same pay period and

payment date

– "New report" will not replace a previously submitted report.

– When correcting a previously submitted report, ”Replacement report” must be selected as the

procedure type.

• When correcting information, the correction is matched to the right report with the

report reference.

– When submitting a new report, the payer always receives an Incomes Register report reference

that can be used to allocate the corrections to the correct report.

– The payer can also use the payer's own report reference, if the report reference generated by the

Incomes Register cannot or will not be used for the correction.

35

Sanctions

Sanctions• Neglect of the reporting obligation can lead to penalty fees.

– The Finnish Tax Administration is the only authority that imposes penalty fees

related to Incomes Register reports.

• The late fee provided for in the Act on the Income Information System is

imposed as a penalty fee for the late submission of reports to the Incomes

Register.

• The late fee is imposed on the basis of the information reported late by the

report submitter.

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Imposing the late fee• The late fee will be imposed on the basis of the information reported for the

calendar month.

• Only the late reporting of mandatory information is subject to the late fee.

• The late fee will be imposed if the information on payments made during the

calendar month is reported later than the deadline for reporting the

transactions of the last day of the month in question.

– The late fee is calculated from the eighth day of the calendar month following the payment

month.

– Separate late fees are not imposed for earnings payment reports and employer's separate

reports. The reports are considered a single entity from the perspective of imposing late fees.

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Amount of the late feeThe late fee for Incomes Register information is composed of two

components:

1. Daily late fee component – EUR 3 in daily late fees will be imposed for each day the report is late until the information has

been reported to the Incomes Register.

– The daily late fee for reporting the payment month's wages is imposed for a maximum of 45

days, i.e. the maximum fee is EUR 135.

2. Component calculated from the amount of the payment reported late– If the first report for the payment month is submitted more than 45 days late, the late fee will be

EUR 135 plus 1 percent of the amount of the payment reported late or amount of earnings from

work from which the pension is calculated, whichever is greater.

• The maximum late fee is EUR 15,000 per calendar month

15.6.2018

Sanctions for the correction of

information• Information reported on time can be corrected or complemented for 45

days from the deadline without penalty fees.

– If information for the payment month is corrected later than 45 days after the

deadline, a late fee of 1 percent of the reported taxable payment or the earnings

from work from which pension is calculated, whichever is greater.

• However, no late fee will be imposed if the amount of the taxable

payment or earnings from work from which pension is calculated will

not increase due to the correction based on the replacement report.

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Calendar month's

first

report

Correction report

1–45 days More than 45 days

Correction report

EUR 3/day

Maximum

EUR 135

Late

fee

not imposed

1% of the late

report's

taxable

income or earnings

from work

from which pension

is calculated

Calendar month's

first

report

1% of the late

report's

taxable

income or earnings

from work

from which pension

is calculated

EUR 135 +

Maximum

EUR 15,000

per month

Determination of the late fee

41Finnish Tax Administration16.11.2016

What data flows will the

Incomes Register replace?

What Tax Administration data flows will the Incomes

Register replace?From the beginning of 2019

• Replaces the following data flows concerning employer contributions:

– Employer's or payer's annual information return (form 7801 and VSPSERIE)

• Payer-specific details of an employer's annual information return (form 7801, VSPSVYHT)

• Employer's or payer's annual information return, recipient-specific itemisation without cost reimbursements

(data flow VSPSERIK)

• Income earner's cost reimbursements (data flow VSPSKUST)

– Non-resident taxpayer's annual information return (form 7809 and VSRAERIE)

• In the tax year 2019, applies to wage payment types starting with A or R.

– Tax return of self-assessed taxes, employer contribution information (form 4001, VSRTASKV)

– Tax return on self-assessed taxes, information on other self-assessed taxes, tax ID 25 "Amount

withheld from a payment to a limited company, cooperative or other corporation" (form 4001 and

record description VSRMUUKV)

– Tax return on self-assessed taxes, information on other self-assessed taxes, tax ID 69 “Tax at

source from interest and royalties (for compensation for use paid by entities with limited liability for

tax to entities with limited liability for tax” (form 4001 and record description VSRMUUKV)

15.6.2018 43

What Tax Administration data flows will the Incomes

Register replace?From the beginning of 2019

• Replaces the following forms related to international work:

– Monitoring notification (5053a, Report of foreign pay for which the six-month rule

has been applied in tax withholding)

– Form NT2 (5052a, Notice of the non-withholding of tax in Finland – work abroad)

– Form NT1 (6134a, Notice of the withholding of tax in Finland when the work is

performed in another Nordic country)

– Employee leasing notice (6147a, Notice of a leased employee whose employer and

wage payer are abroad)

15.6.2018 44

• From 2020, the Incomes Register will replace the following annual

information returns of the Tax Administration:

– Itemisation of pensions and benefits (form 7803, data flow VSELERIE)

– Itemisation of retrograde pensions (form 7817, data flow VSTAKELE)

– Compensation days of the unemployed person (data flow VSKORVPV)

– Payment types B and P (7809 and VSRAERIE) on the annual information

returns of bodies with limited liability for tax

15.6.2018 45

What Tax Administration data flows will the

Incomes Register replace?From the beginning of 2020

What Tax Administration data flows will the

Incomes Register not replace?

• Labour union membership fees and unemployment fund contributions

• Fees for elected officials paid directly by the income earner to a political party

• Grants and scholarships

• Dividend and interests (interest provided for in the Income Tax Act and interest

subject to tax at source)

– Capital income paid by the employer, such as interest on wage receivables and

guarantee commissions, are reported to the Incomes Register

• Annual information returns related to securities trading

• Timber buyer's annual information return

• Shareholder loans granted by limited liability companies that are considered

capital income for a natural person, and the repayment of such loans

15.6.2018

Replaced data flows of other data users

• From 2019, the Incomes Register will replace

– Annual and monthly information returns to earnings-related insurance providers

– Annual information returns to the Unemployment Insurance Fund (TVR)

– The annual information return for occupational accident insurance

• The register will also replace pay reports and payslips requested from

employers and income earners, if complementary information is reported

• Data reported to the Incomes Register will be used, among other tasks, for the

calculation of benefits and determination of customer fees, as well as by

various authorities in their supervisory activities and for statistical purposes

15.6.2018

Summary

The changes in a nutshell• Information is reported individually for each income earner

• Payment triggers the reporting obligation

– A report consists of the information of a single payment made to a single income

earner

• Information is reported within 5 days of the payment date

• No monetary minimum threshold, all information must be reported

• Annual information returns for 2018 will follow the current procedure

• The total amounts of withholding tax and tax at source will not be reported

separately as they now are

– The total amount of health insurance contributions is reported on a monthly basis

• Reporting both mandatory and complementary information and use of the

technical interface is recommended

15.6.2018