Using a payment for different taxes

This guidance is for corporate taxpayers: limited-liability companies (Oy, Ab), cooperative societies, associations, foundations. It contains specific information about how the transfers of payments from corporate taxpayers are applied on the taxes they owe.

It is important to select the correct reference number

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

  • self-assessed taxes
  • income taxes for limited-liability companies and other corporate entities: prepayments, additional prepayments and back taxes
  • inheritance tax
  • gift tax.

You can check the reference numbers in MyTax or in the payment details of your tax decision.

How to find the correct reference number in MyTax

Paying taxes with the reference number for self-assessed taxes

When you make a payment, use the reference number for self-assessed taxes if you specifically want to pay these taxes. The payment will first be used for overdue self-assessed taxes. If there are no taxes overdue, the payment will remain waiting for upcoming self-assessed taxes. However, this depends on the refund time and refund limit that you have selected.

Please note: If you use the reference number for self-assessed taxes and also have other overdue taxes to pay, your payment will be used

  • first for self-assessed taxes
  • then for other overdue taxes, always on the last day of the month.

At the end of the month, payments are also used for

  • taxes that are included in a payment arrangement
  • tax debts that the payer is responsible for.

A payment with the reference number for self-assessed taxes is used for settling taxes in the following order:

  1. overdue self-assessed taxes
  2. self-assessed taxes that are being collected through enforcement
  3. self-assessed taxes included in a payment arrangement or a neglected amount of a payment plan set by a court of law – used only at the end of the month
  4. other overdue taxes – used only at the end of the month
  5. debts that the payer is responsible for – used only at the end of the month.

Read more about filing and paying self-assessed taxes

Refund time and refund limit affect the order in which taxes are used

You can define the refund time and refund limit for self-assessed taxes. By changing the refund time you can choose whether refunds remain on the account to cover any future taxes, or if they are paid out immediately after processing. This also affects the order in which payments are used for taxes.

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

On 12 March, €3,000 in VAT and €2,000 in employer's contributions fall due for a taxpayer. Furthermore, a corporate prepayment of income tax amounting to €1,000 falls due on 23 March. The taxpayer files self-assessed taxes each month. The taxpayer intends to pay all taxes at once on 9 March, and pays €6,000 using the reference for self-assessed taxes.

  • If the refund time and refund limit that the taxpayer has selected are immediately after processing:

€5,000 of the payment is used for overdue self-assessed taxes on 12 March. The €1,000 that is left over remains unused at this point. At the end of the month, the payment with the reference number for self-assessed taxes is used for settling other than self-assessed taxes. For this reason, the remaining €1,000 is used for prepayment only on 31 March, which means that the tax also accrues late-payment interest from 24 to 31 March.

  • If the refund time and refund limit that the taxpayer has selected are after the next general due date:

€5,000 of the payment is used for overdue self-assessed taxes on 12 March. The remaining €1,000 is refunded to the taxpayer if there are no other overdue taxes. In this case, the prepayment remains unpaid.

In the example case, it is best for the taxpayer to pay

  • €5,000 in self-assessed taxes, using the reference for self-assessed taxes, no later than the due date 12 March
  • €1,000 in corporate prepayment of income tax, using the reference for corporate income tax, no later than the due date 23 March

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

Paying tax with the reference number for income tax

Use the reference for income tax when you make a payment if you primarily wish to pay corporate income tax, i.e. prepayments, additional prepayments or back taxes. By using the income tax reference you make sure that the amount you pay is used for all – including not yet due – instalments of corporate income tax before other taxes.

When you pay with the income tax reference, the payment is first used for corporate income taxes in the order of the due dates, from earliest to latest. The payment is also used for such already imposed income taxes that will fall due later. If all instalments of income tax get paid, the rest of the payment is then used for other overdue taxes and on any debts you carry responsibility for. Any remaining part of the payment is refunded to the taxpayer.

A payment with the reference number for income tax is used for settling taxes in the following order:

  1. income taxes in the order of the due dates, from earliest to latest
  2. overdue income tax included in a payment arrangement
  3. income tax that is being collected through enforcement
  4. other overdue taxes
  5. debts for which you are responsible.

A monthly prepayment of €500 has been imposed on a taxpayer. The prepayment falls due on the 23rd of each month. The taxpayer also has €3,000 in back taxes from the previous year, which fall due on 27 January.

On 10 January, the taxpayer makes a payment of €3,000 with the reference for corporate income tax with the intention of paying back taxes. On 10 January there are no overdue taxes. The prepayment of corporate income tax falls due before the back taxes. Thus, €500 of the payment is immediately used for January's prepayment. After this, the remaining €2,500 is used for the back taxes that fall due on 27 January. If the taxpayer were to pay another €500 with the income tax reference with the intention of paying January's prepayment, this payment would be used for the back taxes from the previous year. This is because the prepayment was already paid from the taxpayer's earlier payment.

A taxpayer's additional prepayment of €2,000 falls due on 20 December. Furthermore, €1,500 in VAT falls due on 12 December. The taxpayer has no other liabilities to pay.

The taxpayer intends to pay both the additional prepayment and the VAT on 9 December, and pays €3,500 using the reference for corporate income tax. €2,000 of the payment is used immediately on 9 December for settling the additional prepayment. The rest is refunded to the taxpayer as an excessive payment, because the VAT has not yet fallen due. However, if the taxpayer pays the VAT only on the due date 12 December, the remainder of the payment is after the additional prepayment used for VAT, and there is nothing left to be refunded.

It is always best to pay corporate income tax and self-assessed taxes with their own respective references. In this case, the taxpayer would pay €1,500 with the reference for self-assessed taxes by the due date 12 December, and €2,000 with the reference for corporate income tax by the due date 20 December. This way, the taxpayer avoids any late-payment charges.

Paying overdue taxes with the taxpayer-specific reference number

When you pay overdue taxes, you can use your taxpayer reference number regardless of the tax type.

A payment with the taxpayer-specific reference number is used for settling taxes in the following order:

  1. overdue taxes according to statute date (concerns corporate income tax, self-assessed taxes, inheritance tax, gift tax, tonnage tax and income earner's tax at source)
  2. overdue tax included in a payment arrangement
  3. tax that is being collected through enforcement
  4. other overdue taxes
  5. debts that the payer is responsible for – used at the end of the month or during refund.

On 12 October, €2,400 in VAT and €600 in employer’s contributions for August fall due for a taxpayer. Furthermore, €1,000 in corporate prepayment falls due on 12 December and €500 in real estate tax falls due on 15 October. The taxpayer is registered for VAT.

They use the taxpayer-specific reference number and pay €4,500 on 12 October. All at once, the taxpayer intends to pay the self-assessed taxes that are due on 12 October, the real estate tax that falls due 15 October and the prepayment that is due 23 October.

  • If the refund time and refund limit that the taxpayer has selected are immediately after processing:

€3,000 of the payment is used for settling the self-assessed taxes immediately on the due date 12 October. The remaining €1,500 is left to wait for taxes that fall due later. At the end of the month on 31 October, the necessary amount is first used for the prepayment and its late-payment charges. The amount that remains after this is used for the real estate tax. Late-payment interest is calculated for the prepayment from 24 October to 31 October, and for the real estate tax from 16 October to 31 October.

  • If the refund time and refund limit that the taxpayer has selected are after the next general due date:

€3,000 of the payment is used for settling the self-assessed taxes immediately on the due date 12 October. The rest of the payment (€1,500) is refunded to the taxpayer because there are no other overdue taxes on the payment date. This means that the taxpayer’s payment is not used for prepayment or real estate tax.

  • If the taxpayer makes the same payment of €4,500 using the taxpayer-specific reference number only on 23 October, the payment is first used for self-assessed taxes and their late-payment charges. After this, the necessary amount is immediately used for the overdue prepayment. The amount that remains at the end of the month on 31 October is used for the real estate tax. Late-payment interest is calculated for the self-assessed taxes from 13 October to 23 October and for the real estate tax from 16 October to 31 October.

If the taxpayer wants to avoid late-payment charges altogether, it is best to pay

  • the self-assessed taxes by 12 October, using the taxpayer-specific reference (or the reference for self-assessed taxes)
  • the corporate prepayment by 23 October, using the taxpayer-specific reference (if the taxpayer pays earlier, they must use the reference for corporate income tax)
  • the real estate tax by 15 October, using the reference included in the payment details of the decision.

On 12 September, €800 in employer's contributions falls due for a taxpayer. €200 in real estate tax falls due on 15 October. The taxpayer has not registered for VAT or as an employer.

The taxpayer intends to pay the overdue employer's contributions and the real estate tax on 15 October, and pays €1,000 using the taxpayer-specific reference number. The necessary part of the payment is immediately used for the employer's contributions and their late-payment charges. The part that remains after this is used for the real estate tax. Late-payment charges are calculated for the employer contributions from 13 September to 15 October.

If the taxpayer pays taxes with the taxpayer-specific reference number before the due date for the real estate tax, the payment is first used for the overdue employer contributions. The part that remains after this is returned to the taxpayer as an excessive payment. This means that the real estate tax remains unpaid.

AnswerBank

Go to AnswerBank