Pay tax prepayment in installments
Tax prepayments are a necessary evil in order to withhold income tax in a timely manner and to avoid high final payments when the income tax assessment is issued. Fixed advance payments, however, have the advantage that you know exactly which payments you have to make to the tax office on which dates. In contrast, the amount and time of the final payment of the income tax assessment depends on the person responsible and is therefore often uncertain.
Tax prepayments - what you should know
- The determination of advance tax payments is regulated in Section 37 of the Income Tax Act. Tax prepayments are only set if they are at least EUR 200 per year or EUR 50.00 per quarter.
- Tax prepayments have to be made by the persons who earn income above the basic tax allowance (8,004 euros single or 16,008 euros married persons) and, in addition, no or too little wage tax is withheld. The self-employed, tradespeople, farmers, landlords, etc. basically to make advance tax payments.
- The advance payments are made on the 10th March, 10. June, 10. September and 10. Due December of each year. The tax prepayments are made punctually to the Tax office to be paid, otherwise late payment surcharges will apply.
- The amount of the advance tax payments is determined on the basis of the most recent income tax assessment.
- However, if your profit expectations for the current year have deteriorated compared to the previous year, the prepayments are of course set too high. It therefore makes sense to submit an informal application for a reduction in advance tax payments to the tax office. You should also include your tax number with the address or in the subject of the letter, as this means that your letter will reach the person responsible more quickly. In the informal application, explain exactly what profit you can expect for the current year. If necessary, you can also state the amount of the new advance payments to be determined in the letter.
- In contrast to this, if you expect a profit increase compared to the previous year, you should also contact the tax office in order to have the advance payments increased. With this approach you avoid a high final payment, which could possibly lead you into liquidity problems.
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How to make advance tax payments in installments
- If the amount of your income has not changed and you still cannot pay the advance tax payments to the tax office, So it is advisable if you submit an informal deferral request for the advance payments to the deferral and remission office of the tax office place.
- In your application for deferral, explain exactly why you are currently not economically in a position to make the advance payments to the tax office. Also note that deferral interest will apply for a granted deferral.
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