Interest on corporate tax payments
The tax authorites charge tax interest if they are unable to issue an assessment in time, for example, because you filed a tax return too late.
You pay tax interest if the tax authorities impose an assessment on or after July 1 following the tax year. You pay interest on the amount of tax you have to pay.
However, you will not pay tax interest if you file a tax return before June 1 following the tax year and the tax authorities adopt the information from your return unchanged.
Note!
This may be different if the fiscal year does not coincide with the calendar year. For example, with a broken, shortened or extended fiscal year.
Example: You file a tax return before June 1 and the tax authorities adopt the data without changes.You file a tax return for 2022 on May 25, 2023. You receive a provisional assessment with a date of June 23, 2023, showing an amount payable.
Because the tax return was filed before June 1 and the information from your return was adopted without changes, the tax authorities do not charge tax interest.
You will not pay tax interest if you request a provisional assessment before May 1 following the tax year and the tax authorities impose the provisional corporate tax assessment as you requested.
Example: You request a provisional tax assessment and the tax authorities adopt the data without changes.Do you not yet have all the data to file the tax return? Then you can request a provisional assessment or change a previously imposed provisional assessment.
You request a provisional assessment for 2022 on April 25, 2023. You will receive a provisional assessment with the date of September 1, 2023.
For this assessment, the tax authorities have adopted the data from your request unchanged. You do not pay tax interest because you submitted your request before May 1, 2023, and the data were adopted without change.
Over what period will you pay tax interest?
Tax interest is calculated over a period from July 1 following the tax year to 6 weeks after the date on the assessment.
Do the tax authories take longer than 3 months to impose an assessment? And do they adopt the data from your tax return unchanged? Then the period over which you pay interest is limited to a maximum of 19 weeks after receipt of your tax return.
Do you request a provisional assessment and do the tax authorities impose the assessment as you requested? Then tax interest will be charged up to a maximum of 14 weeks after receipt of your request.
Is there a broken fiscal year? Then interest will be charged if the tax authority imposes an assessment later than 6 months after the end of the fiscal year.
What is the interest period for an additional assessment?
Have you already received a final assessment? And do the tax authorities see new facts that require them to change the assessment? Then you will receive an additional assessment. With such an assessment the interest period runs from July 1 after the tax year until 1 month after the date on the assessment.
With a broken fiscal year you pay interest from the 7th month after the fiscal year until 1 month after the date on the assessment.
Do you request an additional assessment yourself? Then you pay tax interest up to a maximum of 12 weeks after receipt of your request.
Percentages interest corporate tax
Period | Percentage |
---|---|
From 1 January 2022 | 8 |
1 October 2020 to 31 December 2021 | 4 |
1 June 2020 to 30 September 2020 | 0.01 |
1 September 2016 to 30 May 2020 | 8 |
1 March 2015 to 31 August 2016 | 8.05 |
1 September 2014 to 28 February 2015 | 8.15 |
1 April 2014 to 31 August 2014 | 8.25 |
1 January 2013 to 31 March 2014 | 3 |
1 October 2012 to 31 December 2012 | 2.25 |
1 July 2012 to 30 September 2012 | 2.50 |
1 April 2012 to 30 June 2012 | 2.30 |
1 January 2012 to 31 March 2012 | 2.85 |
The intention was to increase the interest rate to 10.5% from July 1 this year but that did not get through. We don’t know yet what will happen on January 1, 2024.
Interest on overdue tax
Interest on overdue tax is charged when the statutory payment period for the tax debt is exceeded (in case of late payment or when a deferral of payment has been granted by the tax authorities. The interest rate was temporarily reduced to 0.01% due to COVID regulations, but is gradually increased. Up to July 1, 2023 the rate was 2%, since July 1, 2023 it has become 3%, and from January 1, 2024 it will again match the then current tax interest rate for other tax resources.
Is the tax interest deductible as a business expense?
The tax interest and the interest on overdue tax are indeed deductible as a business expense.
What to do?
Take action if you believe you have to pay corporate tax, you don’t want to pay interest on the tax claim and you have the funds available to pay the tax now. By filing the corporate tax return early or by requesting a provisional tax assessment as soon as possible you can limit the interest to zero or a reduced amount.
A provisional tax assessment can already be requested during the tax year. You don’t have to wait till the year is over. A provisional tax assessment during the year can also be paid in monthly installments. This way you don’t have to pay the full amount later at once. Discuss this with your advisor if you know or suspect that your company will have to pay corporate tax.
The tax authorities can also issue a provisional tax assessment on their own initiative if they believe that your company will have to pay corporate tax. This can be done at any moment, also for 2 years at the same time. For example for the previous year and for the current year. The assessment for the previous year must then be paid for the full amount and the provisional assessment for the current year can be paid in monthly installments till the end of the tax year.
A provisional assessment for the coming year can be filed around the end of the current tax year. Put this item on the list of items you want to discuss with your tax advisor or accountant at the end of the year.
To prevent tax on overdue tax it is of course important that you pay the tax in time.