Construction reporting and the disclosure obligation: what everyone should know

The obligation does not fail on ignorance, it fails on timing

A construction report is rarely a problem because nobody knows what has to be reported. A small construction company knows about the obligation. The problem is that the report is filed two months after the events, and by then the information has scattered into three places: the site manager's memory, the invoicing attachments and a subcontractor's email.

At the turn of the month someone tries to assemble a picture that should have been collected as it happened. This article is about where that assembly actually breaks down, and what can be done about it.

What is reported and who reports it

The obligation splits into two reports with different filers.

Contract details are reported by whoever buys the construction service. The obligation starts when the contract value exceeds 15,000 euros excluding VAT. The report covers the buyer and the contractor, the site, the contract period, the contract sum and the amount invoiced during the month, along with the type of service and whether the reverse charge mechanism applies.

Employee details are reported by the principal contractor of a shared construction site. The obligation starts when the combined value of the contracts on the site exceeds 15,000 euros. The report covers everyone who worked on the site, including the employees of subcontractors and staffing companies as well as self-employed workers.

The difference matters. In contract details each party reports its own purchases, so the chain reports itself from the top down. In employee details one party reports on behalf of everyone, and that party is the principal contractor regardless of who employs the people.

The deadline is far away, which is exactly why it fails

Reports are due by the fifth day of the second month following the month in question. March data is due on 5 May.

Two months sounds generous. It is also the reason the obligation is handled badly. When the deadline is distant, the material is not collected while collecting it would be easy. In early May someone investigates what happened in March, and by then some subcontractors have moved to another site and some workers to another employer.

Compare this with a VAT return, which concerns the same company and whose material appears in the bookkeeping by itself. The material for a construction report appears by itself nowhere, unless something has been set up for it.

What a failure actually costs

There is inaccurate information circulating in the industry on this point, so the figures are worth checking at the source.

The Tax Administration imposes the penalty in full hundreds of euros, and the smallest penalty is 100 euros. The tiers are as follows:

• Up to 2,000 euros if the report has a minor deficiency or error, is filed late without a valid reason, or is filed in a form other than the one prescribed.
• Up to 5,000 euros if the report is substantially deficient or incorrect, or is filed only after a reminder.
• Up to 15,000 euros if the report is substantially incorrect through intent or gross negligence, or is not filed at all.

The penalty can be reduced for a justified reason. A system failure is a justified reason. Being busy is not.

Two things are worth noting. First, the tier rises if the report is filed only after a reminder, so correcting on your own initiative is cheaper than waiting. Second, reports are filed monthly and per site. One badly handled site produces more than a dozen reports over a year, so the risk is not a single figure but a recurring one.

Five places where the report breaks in practice

1. A missing tax number

This is by far the most common. A subcontractor's worker arrives on site, works a few days and leaves. Nobody asked for the tax number because everyone was busy.

The severity comes from the report being processed as a whole. One missing tax number or business ID can reject the entire report, not just the row the detail belongs to. The month is unreported even though 95 per cent of the data was in order.

The fix is simple but takes discipline: the tax number is asked for when the person first arrives on site, not when the report is being prepared. The difference is that in the first case the person is present and the identification card is in their hand.

It is also worth noting that a number on paper is not enough. It has to be entered in the tax number register. A number can exist and still be missing from the register, in which case it does not qualify.

2. An empty month

A contract report is filed for every month the contract is in force. Including months where nothing was invoiced.

This gets forgotten because there seems to be no reason to report. From the Tax Administration's point of view the report is missing, and the sanction is calculated from the missing report, not from the missing euro. A contract that runs for nine months but is invoiced in three instalments produces nine reports.

3. Someone who comes for a short spell

A three day installation job drops off the list more reliably than a three month contract. The reason is not carelessness but that a short visit leaves no trace anywhere. It is not in a contract, it is not on an invoice yet at reporting time, and nobody remembers it.

The only way to capture such a visit is for arriving on site to produce the record itself. If the record is only created from a contract or an invoice, short visits are systematically left out.

4. The self-employed worker

A one person business is reported just like an employee of a ten person company. This surprises people, because such a person is thought of as an entrepreneur rather than as someone working on the site.

The same applies to a company's own managing director who drops by to do an hour of work. If work was done, the person belongs in the report.

5. A sum that changed along the way

The contract sum changes as extra work is agreed, but the original figure stays on the report. The discrepancy is noticed when the tax authority compares what was reported with what the bookkeeping shows.

This is where managing additional work and the reporting obligation meet. If extra work is agreed verbally and recorded nowhere before invoicing, the reported contract sum is wrong for the whole period.

Why a spreadsheet is not enough even when it is well made

A spreadsheet is not bad at arithmetic. It is bad as the instrument for this obligation for three reasons, all of which concern where the data comes from.

It does not collect anything by itself. Someone fills it in, and that someone is usually the same person running the site. When the site is busy, the spreadsheet waits.

It does not check anything. Anything at all can be typed where the tax number goes. The error surfaces when the report is rejected, and by then two months have passed.

It does not know what is missing. The sheet looks complete because there are no empty rows. It does not tell you that four people were on site who were never recorded at all.

The third point is the important one. The dangerous errors in a report are not the wrong details but the missing ones, and missing data cannot be spotted from the material it is missing from.

Where the data should come from

A working answer is not faster assembly but removing the need to assemble. In practice that means two things.

Arriving on site produces a record. When a person checks in, a record appears of who, when and for which employer. The same record serves the personnel list required by occupational safety legislation, which is a separate obligation drawing on the same material.

Missing data shows up straight away. When a tax number is missing, it is listed by name as soon as the person arrives on site, not on reporting day when sorting it out takes the most time.

Once those two are in place, monthly reporting changes character. It is no longer investigation but a check: look at the finished list, correct the exceptions and file.

Contract details come from a different place than employee details

This split is worth keeping in mind, because it tells you where to put the effort.

Employee details originate on the site. They require a record of who is present, and that record has to be made where the people are.

Contract details originate in contracts and invoicing. They are office data, and their quality depends on whether contracts and invoices live in one place or in two different folders.

In a small construction company contract details are usually in better shape than employee details, because contracts and invoices have to be kept in order anyway. Employee details are the side that requires a new way of working.

A subcontractor is not responsible for your report

A common misconception is that the subcontractor handles their own workers. They handle their own contract report about their own subcontractors, but employee details are reported by the principal contractor. For everyone.

The responsibility cannot be transferred by a contract clause. A clause requiring the subcontractor to deliver details before arriving on site is still useful: it does not move the responsibility, but it gives grounds to demand the details and to refuse site access without them.

In practice the most effective formulation ties the matter to site access. The worker is entered into the system before the first working day, and the entry requires a tax number. Then the detail gets asked for, because without it there is no way in.

When the obligation does not apply to you

Not every site falls under the reporting obligation, and the limits are worth knowing so as not to do unnecessary work.

The threshold is 15,000 euros excluding VAT. For contract details it concerns the value of a single contract, for employee details the value of the whole site. A contract cannot be split to stay under the threshold, and if the value is exceeded mid-contract, the obligation begins at that moment.

When the developer is a private individual building or renovating their own property, reporting works differently than for companies. A household does not file monthly contract reports. Instead it reports who did the permit-requiring construction work and what it paid them, before the final inspection, and there is no euro threshold. A household does not report the contractors' workers, but it does report workers it has hired itself and their wages. The contractor is well advised to mention this at contract stage, because the customer usually does not know.

What to do if a report was never filed

Three steps, in this order.

Correct on your own initiative. Information filed after a reminder moves the penalty to the next tier. A correction filed earlier is cheaper than one filed later.

Find out what is missing rather than guessing. A partly correct report is a substantially deficient report, and that is a different tier from a correct report filed late.

Fix the cause, not just the month. If the same point fails every month, a corrective report is only a postponement. The most common cause is that arriving on site leaves no record.

Summary

A construction report is not a difficult obligation. It is an obligation whose material appears scattered and is assembled too late.

The sanctions are real but they are not a percentage of the contract value, as is sometimes claimed in the industry: they are tiered fixed amounts, in which what matters most is whether you correct the matter yourself or only after a reminder.

The working answer is that the data appears when a person arrives on site or an invoice comes in, and missing data is noticed straight away rather than two months later. In FiSAS the contract report is built from purchase invoices and the subcontractor register, and the employee report from time entries and check-ins, with missing details listed by name before the report is built. Tax authority reporting is included in the Master plan. If you still file by hand, the construction reporting template and checker help you collect the details during the month.