Annual payroll tax report

What it means

The annual payroll tax report is the employer’s yearly filing. For each employee it shows total income, advances withheld, allowances claimed and the outcome of the annual reconciliation.

Unlike the monthly return, which carries only totals, this one is by name. The office can therefore match the employer’s data with individual tax returns.

The report concerns advances of tax on employment income. Tax collected by withholding, such as withholding tax on dividends to individuals or on fees paid to non-residents, is notified in a separate filing for each payment. A company that pays both therefore tracks two different obligations with different deadlines.

How it works in practice

It is filed electronically by the end of April for the previous year. Payroll sheets are the source, and it must agree with the monthly returns filed across the whole year.

It covers non-employment agreements and people who left mid-year. Those are the ones most often missed, since they no longer appear in the December payroll close.

Employees who did not ask for the annual reconciliation, or who file their own tax return, get a certificate of taxable income from us. Its figures must agree with the report, because the tax office compares what the employer stated with what the employee put in the return.

What to watch out for

A gap between the annual report and the sum of the monthly returns is a signal to the office. It is corrected by an amended report, and the later it is found the more periods have to be reworked.

An error in the tax bonus or the tax-free allowance in the annual reconciliation is only mirrored in the report, not fixed by it. An employer that refunded an employee too much must correct the reconciliation and deduct the difference from pay, and if the employee has left in the meantime, getting the money back is much harder.