If the receiver of a payment is a corporation or consortium which does not have a valid registration in the Prepayment register, tax must be withheld when the payment is compensation for work, labour, performance of an assignment or service or compensation for the use of an object. Read more about the instructions of the Tax attorney here. This instruction explains how it is done in Procountor.
If the withholding tax must be reported to Income register the tax has to be deducted from the purchase invoice and a salary slip has to be created in order to report the deducted withholding tax.
- It is possible to report the withholding tax in Income register's web page.
Handling the purchase invoice
The purchase invoice will be delivered straight to Procountor or it will be delivered via post or email. If the invoice does not exist in Procountor's software yet, create it in New > Purchase invoice. Fill in all the necessary information of the invoice and please note that:
- By creating a purchase invoice, VAT can be reported in the tax return for self-assessed taxes.
- Withholding tax has to be deducted from the purchase invoice payable sum.
- Withholding tax is reported eater by creating a salary slip or straight in Income register's website.
Reporting withholding tax
1. Create the corporation to the Person register (Payroll > Person register > Add person)
- Fill in the name of the corporation.
- The ID fields should be filled as FI and the business ID of the corporation.
- Fill in the bank account number of the corporation.
- All other fields are optional.
2. The created person can be seen in the Employee register (Payroll > Employee register), after which the salary information can be filled.
- Go to Salary info view by clicking Edit salary info.
- Fill in the value of the compensation to the Base salary field and select Compensation for work.
- Select the Additional income earner types if necessary.
- Add a new tax card and fill in the field according to the withholding tax of the corporation.
- Select the type of pension insurance TyEL, YEL, MyEL or Not used (The field is mandatory even if the insurances are not deducted) and if the insurances are not calculate select No obligation to provide insurances to the insurance exception types fields.
- Save the made changes.
3. Go to Payroll > New salary list and create a salary list for the corporation.
- Fill in the amount of the compensation to the salary slip and the amount of the withholding tax.
- Approve the salary slip and mark it as Payed elsewhere status in the Payment view (Go to > Payment).
- In order to be able to report from Procountor the Income register certificate should be fetched before hand.
5. Check and correct the accounting of the salary slip, purchase invoice and payment transaction if needed.
Please note that all the salary slips can be seen in the salary reports.
It should be also noted that the above-mentioned steps can't be made if the recipient is a foreign entity or company.