Expansion of Contractor Obligations and Liability and Introduction of Individual Tax Numbers on 1 September
Announcement by the Ministry of Employment and the Economy, Ministry of Finance, and Tax Administration
From 1 September 2012, contractors and contracting units will have greater opportunities for ensuring that their contract partners are reliable and comply with the basic terms of employment. In addition, as of the same date, every person working at a construction site must display a personal ID that includes his or her tax number. These changes support efforts to prevent the grey economy from thriving in the construction industry.
In the future, a contractor in the construction industry will, in most cases, be obliged to request that the subcontractor provide the accounts and certificates required by the Act on the Contractor’s Obligations and Liability When Work Is Contracted Out. These accounts must also be requested from companies with established operations, or when the contractual relationship between the contractor and subcontractor can be regarded as established.
The information to be clarified includes data related to the entry of the enterprise in various registries, pension insurance, tax payment, and the collective agreement or other principal terms of employment applicable. A certificate of accident insurance will be added as a new element to the list of items for clarification.
A regional state administrative agency can levy an elevated fine if the contractor either has made an agreement with a party that is barred from conducting business or is aware that the contracting party has no intention of fulfilling its legal obligations. The minimum fine is 16,000 EUR and the maximum 50,000 EUR.
In the future, all contracting units must, within the terms of the construction contract, require that the building contractor comply with the minimum terms of employment. Defined by legislation and collective agreements, the minimum terms of employment address issues such as pay, working hours, and holiday. What is meant by a contracting unit is specified by a definition provided in the Act on Public Contracts.
Tax number to be used at all construction sites
From 1 September 2012, every person working at a construction site must display a personal ID that includes the tax number. At new work sites, the tax number will be obligatory from 1 September 2012, but at old work sites (where work started before 1 September 2012), they are mandatory only after the transition period – by 1 March 2013, at the latest.
Finnish construction-sector workers have been assigned tax numbers with their tax cards for 2012. Self-employed persons will obtain a tax number with their prepayment tax notice.
Foreign workers can obtain a personal ID and tax number from a local tax office (for contact information, see www.tax.fi/taxnumber). An employer may order tax numbers for its employees in a centralised manner by sending its employees’ personal identity codes electronically to the Finnish Tax Administration, which will then send tax numbers to the employer. In connection with this, the employees are entered in the construction-sector tax number register automatically.
The tax numbers of persons working at a specific construction site are entered in the public tax number register for the construction sector. Employers and other ID card providers can use this register to check that the tax number reported by the employee is the same as the one found in the Finnish Tax Administration’s register.
A brochure on a contractor’s obligations and liability and on individual tax numbers available in five languages
The Ministry of Employment and the Economy and the Tax Administration have jointly prepared a guidebook for the construction industry on the contractor’s obligation to do checks and the individual tax numbers used at construction sites. This guide provides comprehensive information on the contractor’s obligations and liability and on the tax number.
The amendments apply to the Act on the Contractor’s Obligations and Liability When Work Is Contracted Out, the Act on Public Contracts, and the Act on Tax Numbers and the Public Tax Number Register for the Construction Industry. These amendments form part of the Government’s action plan for the elimination of the grey economy and financial crime for 2012–2015.
information, please contact:
Jan Hjelt, Senior Adviser for Legal Affairs, Ministry of Employment and the Economy, tel. +358 50 396 0199
Panu Pykönen, Ministerial Counsellor, Ministry of Finance, tel. +358 29 553 0225
Sari Wulff, Senior Adviser, Tax Administration, tel. +358 20 612 3833