Using a payment for different taxes

This guidance is for both individual and corporate taxpayers. It contains information about how the taxpayers’ payments are used for different taxes.

Use the correct reference number

Different tax types have different reference numbers. The reference number determines which tax a specific payment is used for. Tax types that have their own reference numbers include:

  • income taxes, such as prepayments, additional prepayments and back taxes
  • self-assessed taxes, such as employer contributions and VAT
  • inheritance tax
  • gift tax.

In different situations, other references may also be used, such as a reference for overdue taxes (taxpayer reference) or a reference for a payment plan.

You can check the reference numbers in MyTax or in the payment details included in the tax decision. If you receive a summary containing a payment request, you can also find the appropriate reference number there.

How to find the correct reference number in MyTax

Paying tax with the reference number for income tax

Use the reference for income tax if you primarily wish to pay income tax, i.e. prepayments, additional prepayments or back taxes. By using the income tax reference you can make sure the amount you pay is used first for all your income tax instalments – including those not yet due – and only then for other taxes. However, you cannot choose which instalment the payment is allocated to.

When you pay with the income tax reference, the payment is first used for overdue income taxes in the order of due dates. After this, the payment is used for not yet due income taxes in the order of due dates. When all the income tax instalments have been paid, the payment will be used for your other overdue taxes and tax debt liabilities. The rest of the payment will be refunded unless there is an obstacle to refunding or the refund is distrained.

Payments made with the reference number for income tax are used for taxes in the following order:

  1. overdue income taxes
  2. income taxes not yet due
  3. overdue income taxes covered by a payment plan
  4. income taxes that are being collected through enforcement
  5. other overdue taxes
  6. your tax liabilities in the capacity of co-partner, party to an estate, etc.

Emma Example must make prepayments on rental income in three instalments: in February, July and November. Each instalment is €500. The prepayments fall due on the 23rd of each month. Emma has also been imposed back taxes for the previous year, and the first €300 instalment falls due on 3 December 2018.

On 15 November 2018, Emma pays €300 with the intention of paying back taxes and uses the reference number for income tax. She has no overdue taxes at that time. A prepayment falls due before the back tax, so the sum of €300 is used for the prepayment.

If, in addition, Emma pays €500 on 23 November 2018 with the intention of paying November’s prepayment and uses the reference for income tax, €200 of the amount will be used for the prepayment and €300 for back taxes. This is because part of the prepayment has already been settled with Emma’s earlier payment.

Eddie Entrepreneur has been imposed prepayments of €1,000 per month. The first instalment falls due on 23 January. In addition, a VAT payment of €500 falls due on 14 January. He has no overdue taxes to pay.

Eddie’s intention is to pay both the prepayment and the VAT on 9 January. He pays €1,500 using the reference number for income tax. €1,000 of the payment is used for January’s prepayment and €500 for February’s prepayment. The reference number allocates the payment, in the first place, to income tax, including instalments that are not yet due.

In other words, Eddie should pay his income taxes using the reference for income tax and his self-assessed taxes using the reference for self-assessed taxes, so that the payments could be allocated correctly and he would avoid late-payment interest.

A corporate taxpayer has been imposed prepayments of €2,500 per month. The prepayments fall due on the 23rd of each month. The taxpayer also has €3,000 in back taxes from the previous year, and they fall due on 3 August.

On 15 July, the taxpayer makes a payment of €3,000 with the intention of settling the back taxes and uses the reference for income tax. The corporate entity has no overdue taxes at that time. Their July prepayment falls due on 23 July, i.e. before the back taxes, so €2,500 is used for the prepayment and the remaining €500 for the back taxes. If, in addition, the taxpayer pays €2,500 on 23 July with the intention of paying July’s prepayment and uses the reference for income tax, the payment will be used for the previous year’s back taxes. This is because the prepayment has already been settled with the earlier payment.

A corporate taxpayer has requested an additional prepayment of €2,000 for the previous tax year, and it falls due on 21 January. In addition, the corporate entity has employer contributions of €1,500 falling due on 14 January and the current year’s prepayments of €2,800 falling due on 23 January.

They pay €3,500 on 14 January using the reference number for income tax. Their intention is to pay both the additional prepayment and the employer contributions in one go. €2,000 of the payment is used for the additional prepayment and the remaining €1,500 for January’s prepayment. The payment has now been used up, so there is nothing left for the employer contributions.

The taxpayer should always pay income taxes and self-assessed taxes with their dedicated reference numbers. In this case, the taxpayer should pay €1,500 by the due date of the self-assessed taxes, i.e. 14 January, using the reference for self-assessed taxes, and €2,000 by the due date of the additional prepayment, using the reference for income tax. This way, the taxpayer avoids any late-payment charges.

Paying tax with the reference number for self-assessed taxes

Use the reference number for self-assessed taxes if you specifically want to pay self-assessed taxes, such as employer contributions and value added tax. Your payment will be used first for overdue self-assessed taxes. If you have no overdue taxes, the payment will be kept waiting for your future self-assessed taxes. The payment can also be used for other overdue taxes at the end of the month or if the payment would otherwise be refunded.

If you use the reference number for self-assessed taxes, the payment will be used as follows:

  1. overdue self-assessed taxes
  2. self-assessed taxes that are being collected through enforcement
  3. self-assessed taxes covered by a payment plan or an amount according to a payment arrangement set by a court of law – not until the end of the month or if the payment would otherwise be refunded
       
  4. other overdue taxes – not until the end of the month or if the payment would otherwise be refunded
  5. your debt liabilities – not until the end of the month or if the payment would otherwise be refunded

Read more about filing and paying self-assessed taxes

Refund time and refund limit affect the order of use

You can set the refund time and refund limit for self-assessed taxes in MyTax. It depends on the refund time setting whether a refundable amount is kept waiting for future taxes or refunded to you immediately as the processing has ended. It also affects the order in which your payment is used for taxes.

Read more about refunded payments as well as refund times and refund limits

The taxpayer’s self-assessed taxes – €3,000 in VAT and €2,000 in employer contributions – fall due on 12 March. The taxpayer files self-assessed taxes on a monthly basis. In addition, a prepayment of €1,000 falls due on 23 March. The taxpayer’s intention is to pay all the taxes in one go on 9 March, and so they make a payment of €6,000, using the reference for self-assessed taxes.

  • If the refund time and refund limit selected by the taxpayer are ‘immediately after processing’:

€5,000 of the payment will be used for the self-assessed taxes that fall due on 12 March. The remaining €1,000 will be kept waiting. A payment made with the reference for self-assessed taxes will be used for other than self-assessed taxes at the end of the month or if it would otherwise have to be refunded. For this reason, the remaining €1,000 is not used for the prepayment until 31 March, which means that late-payment interest will be calculated on the prepayment for 24–31 March.

Note: If the refund time selected by the taxpayer is ‘immediately after processing’, payments that have not been used will not be refunded unless requested.

  • If the refund time and refund limit selected by the taxpayer are ‘after the next general due date’:

€5,000 of the payment will be used for the self-assessed taxes that fall due on 12 March. The remaining €1,000 is refunded to the taxpayer if they have no other overdue taxes. In this case, the prepayment remains unpaid.

Note: If the refund time selected by the taxpayer is ‘after the next general due date’, then any unused payments will be refunded.

In this example, it would be advisable for the taxpayer to pay

  • €5,000 in self-assessed taxes by the due date of 12 March, using the reference for self-assessed taxes
  • €1,000 in prepayments by the due date of 23 March, using the reference for income tax

This way, the taxpayer avoids any late-payment charges.

Paying tax with the reference number for overdue taxes

You can use the reference number for overdue taxes (taxpayer reference) to pay overdue taxes.

The payment is used for your taxes in the following order:

  1. overdue taxes in the order of due dates (income tax, self-assessed taxes, inheritance tax, gift tax, tonnage tax and income earner’s tax at source)
  2. overdue taxes covered by a payment plan
  3. taxes that are being collected through enforcement
  4. other overdue taxes – not until the end of the month of if the payment would otherwise be refunded
  5. your debt liabilities – not until the end of the month of if the payment would otherwise be refunded.

On 12 December, €800 in employer contributions falls due. In addition, the taxpayer has been imposed back taxes for the previous year, and their first €200 instalment falls due on 3 December 2018.

The taxpayer’s intention is to pay the overdue employer contributions and back taxes in one go on 15 December, and they make a payment in MyTax using the reference number for overdue taxes. The taxpayer can see the tax amount with interest in MyTax. The payment is used first for the back taxes plus interest and then for the employer contributions and their late-payment interest.

The taxpayer’s self-assessed taxes – €2,400 in VAT and €600 in employer contributions – fall due on 14 October. In addition, €1,000 in prepayments falls due on 23 October and €500 in real estate tax on 15 October. The taxpayer is registered for VAT.

They pay €4,500 on 14 October, using the reference number for overdue taxes (taxpayer reference). The taxpayer’s intention is to pay the self-assessed taxes falling due on 14 October, the real estate tax falling due on 15 October and the prepayment falling due on 23 October in one go.

  • If the refund time and refund limit selected by the taxpayer are ‘immediately after processing’:

€3,000 of the payment is used for self-assessed taxes as they fall due on 14 October. The remaining €1,500 is kept waiting for taxes that fall due later. At the end of the month, on 31 October, the payment is used first for the prepayment and its late-payment charges. After that, the remaining part is used for real estate tax plus interest. Interest is calculated on the prepayment for 24–31 October and on the real estate tax for 16–31 October.

  • If the refund time and refund limit selected by the taxpayer are ‘after the next general due date’:

€3,000 of the payment is used for self-assessed taxes as they fall due on 14 October. The remaining part of the payment, €1,500, is refunded to the taxpayer, as they have no other overdue taxes on the date of payment. The payment is thus not used for the prepayment or real estate tax.

  • If the taxpayer makes the same payment of €4,500 using the reference number for overdue taxes on 23 October, the payment is used first for self-assessed taxes and their late-payment charges. After that, the payment is used for the overdue prepayment. At the end of the month, on 31 October, the remaining part is used for the real estate tax plus interest. Interest is calculated on self-assessed taxes for 15–23 October and on real estate tax for 16–31 October.

If you want to avoid late-payment charges, you should pay

  • self-assessed taxes by 14 October, using the reference for self-assessed taxes
  • corporate prepayment by 23 October, using the reference for income tax
  • real estate tax by 15 October, using the reference included in the payment details of the decision.