The common objective of the Act on the Contractor's Liability, the reverse charge system in value added taxation, the identity card, the individual tax number and the tax number register is to prevent black market economic activity and economic offences in the construction sector. Black market economic activity is especially prevalent in broad subcontractor chains in which individual subcontractors are often small and unorganized companies. The black market economy simultaneously distorts competition and weakens the position of employees. Moreover, black market economic activity may draw international criminal organizations to the Finnish construction sector.
The amendment to Occupational Safety and Health Act concerning identity card came into effect on 22.12.2005. According to Occupational Safety and Health Act section 52a, the client directing or supervising a shared construction site shall ensure that each person working on the site wears visible photo identification while on site. The identification shall indicate whether the person is a worker in an employment relationship or a self-employed person. The identification must bear the name of the employer.
In connection with enacting the Act on Individual Tax Number and Tax Number Register, an amendment was made to Occupational Safety and Health Act section 52a on 9.12.2011. On the basis of the amendment, the identification shall also display an individual tax number registered in the tax number register. At the same time, a specification concerning the client was made. According to this specification, the obligation of the client to ensure that each person working on the site wears visible photo identification shall also apply to the main contractor, other developers/supervisors, as well as the employer in relation to its own employees and contracting parties.
According to Occupational Safety and Health Act, identification shall not, however, be required for persons who temporarily carry goods to the site or for persons who work on a site where a building or a part thereof is built or renovated for private use.
Individual tax number
Pursuant to section 2 of the Act on Individual Tax Number and Tax Number Register, every natural person registered in the Tax Administration's customer database can have an individual tax number consisting of 12 numbers registered in Tax Administration's database. An individual tax number is permanent, and it does not change even if the person is temporarily not in the tax number register. According to the Act on Individual Tax Number and Tax Number Register section 1 subsection 3, the Occupational Safety and Health Act includes specific provisions for marking the individual tax number on construction employee's identification tag.
Individual tax numbers have already been distributed to Finnish construction employees in connection with the deliveries of the 2012 tax cards. Construction employees who come to Finland temporarily must obtain the Finnish identity number and individual tax number from the tax office. If a foreign construction employee works in Finland for at least a year, he must obtain a Finnish identity number from the Local Register Office and, after that, an individual tax number from tax office.
Use of individual tax numbers began on 1.9.2012. On new construction sites, individual tax numbers have been compulsory since 1.9.2012. On old construction sites, tax numbers will become compulsory as of 1.3.2013, following a transition period.
The employer has the possibility of obtaining the tax numbers for all his employees at the same time. The employer may also request that the tax office enter the employees in the tax number register. In order to obtain the tax numbers, the employer shall provide the employees' identity numbers to the tax office. If the employer obtains the tax numbers, the tax office will provide them to employer.
Tax number register
The use of the tax number register is defined in the Act on Individual Tax Number and Tax Number Register. Its purpose is to supervise the authenticity of identification of the persons operating in the construction sector and to supervise the fiscal responsibilities of both employers and employees. The tax number marked on the identification tag makes it easy to identify and supervised the employees.
The tax number can be registered at the request of the employee's employer or main contractor or at the employee's own request. The Tax Administration may also register the tax number without request. However, the registration does not happen automatically when the employee gets the tax number. The person's name, Finnish identity number and the tax number given by the Tax Administration will be registered in the tax number register.
The tax number register is public. Everyone has a right to request information, on the basis of person's first or last name and tax number, regarding whether the person is registered in the tax number register. This way the client directing or supervising a shared construction site can supervise and ensure that the employee working on a construction site is the person registered in the tax number register.
Changes to Act on Taxation Procedure are also in preparation. According to government proposal (92/2012), the purpose of the proposed changes is to bring into use a system in which the main contractor's or client's duty is to report the employee information to the Tax Administration monthly. As per government proposal, the change is to take effect on 1.10.2013. Further information on the identity card, the tax number, the tax number register and the changes to the Act on Taxation Procedure can be found on the Tax Administration website www.vero.fi.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.