Applying for an extended tax period

For self-assessed taxes such as VAT and employer’s contributions, the default tax period is the calendar month.  If the VAT taxpayer is a primary producer or a creator of works of art with no other operations subject to VAT, the default tax period is the calendar year.   

Taxpayers are entitled to submit an application for changing their tax period to a longer one.  In addition, taxpayers who are primary producers and creators of works of art may ask for a shorter tax period instead.  Once the selection of the tax period has entered into force, it cannot be changed until a year has passed. Instead of one single period length that applies to all taxes, the periods are now allowed to be different for reporting VAT and for reporting employer's contributions.  However, the tax period still has to be the same (either the calendar quarter or the calendar month) for filing and paying withheld tax, tax at source and employer's contributions.  

.Example 1: Choosing different tax periods for VAT and for employer contributions.  If a business registered for VAT is also a payer of employer's contributions, it may select the calendar year as its VAT tax period while filing and paying its employer's contribution by the month.

 Applications for extended tax periods can be accepted if the following requirements are satisfied:

  1. You are a VAT payer and your net turnover per calendar year (or other comparable annual sales) is below the threshold of €30,000. On application, the calendar year or the calendar quarter are the possible tax periods, and VAT must then be filed and paid either once a year or once every quarter.
  2. You are a VAT payer and a regular employer (or other similar payor), and your net turnover per calendar year (or other comparable annual sales) is below the threshold of €100,000. On application, the calendar year or the calendar quarter are the possible tax periods, and VAT must then be filed and paid either once a year or once every quarter.

The extended tax period is not available to casual employers. They must file and pay their employer's contributions every month.  Read more: Casual employers

Submitting an application for an extended tax period

Newly established businesses may use the Start-Up Notification (Forms Y1 - Y3) or the Request form for change of reporting and payment periods (Form 4071e).  Businesses that are already on the Tax Administration's registers either use MyTax, the Notifications on changes form (Y4 – Y6) or the Request form for change of tax period of self assessed taxes (Form 4071e). The Tax Administration sends the applicant an acknowledgement of the changed tax period enclosed with information on the the start date of the new tax period.

Up to the time when the letter arrives, the applicant must continue to file and pay within the framework of its original tax period. If the turnover of the business has gone over the threshold, the Tax Administration sends the applicant a letter stating that the requested extension of the tax period cannot be granted. Similarly, if the applicant has neglected its tax returns or has overdue taxes, the Tax Administration will not be able to grant the extension.

How to ask for a changed tax period

You must keep the same tax period for at least one year. A business may ask for having its tax period changed when at least 12 months have elapsed since the start of its operation, or from the date when a change was last requested.  

You can apply for a changed tax period for VAT or employer's contributions in MyTax or by using the Notifications on changes form (Y4 – Y6) or the Request form for change of tax period of self assessed taxes (Form 4071e). The Tax Administration sends the business a letter confirming the changed period and its start date. However, not all requests are granted. The Tax Administration informs the applicant by letter also in that case.

If a tax period is made longer, its start date is always the first day of the next calendar year.

It has not been possible until the beginning of 2017 to ask for the extended tax periods under the new rules. If the application is submitted 1 January – 31 March 2017, the start date of the extended period will be 1 January 2017. If it is submitted after March 2017, the extended period will start on 1 January 2018.  

Example 1: Your tax period is the calendar month. In October 2017, you ask for the quarterly tax period. The change to your new, extended tax period is effective as of January 2018.

If the tax period is made shorter, it begins the first day of the shorter tax period that comes after the date when you submitted your application.

Example 2: Your tax period is the quarter.  In May, you file an application to get the monthly tax period.  The change to your new tax period is effective as of June.  In these circumstances, you must file a return for the tax period just before the change date (spanning the time between April 1 and May 31) by the general due date for July.  The employer’s contributions for June must be filed and paid by 12 July. The VAT for June must be filed and paid by 12 August.

If the taxpayer's tax period has been the year, and they change it to the quarter, this will become effective as of the start of the calendar quarter that follows the date when the application was submitted.

Example 3: Your tax period is the calendar year.  In May, you ask for the quarterly tax period. The change to your new tax period is effective as of July.  For the January-June period, the self-assessed tax return must be filed and the taxes paid by 12 August.  The VAT and the employer's contributions for July - September must be filed and the taxes paid by 12 November.

Businesses with the extended tax period must inform the Tax Administration of a growth in turnover

If your sales are likely to go over the threshold (€30,000 / €100,000) during the current or next calendar year, you must immediately report it in MyTax, with a Notification of changes form (Y4 - Y6) or with the Request form for change of tax period of self assessed taxes (4071e). The Tax Administration will then inform you of the date when your new tax period comes into force.

Your tax period can be changed to a shorter period during the ongoing tax period, as well. In this case, you must file a return for the months belonging to the old tax period and pay your taxes for them sooner than you would with the old tax period’s usual due date. You must file the return and pay the taxes by the general due date of the month following the first calendar month of your new tax period.

Example 1: Your tax period is the quarter. In April, you file a notification on your own initiative to the Tax Administration stating that you no longer meet the requirements for the extended tax period.  The Tax Administration changes the tax period to the shorter, one-month period as from May.  For the January-March period, the company's self-assessed tax return must be filed and the taxes paid by 12 May. For the April tax period, tax return must be filed and the taxes paid by 12 of June. For the May tax period, the return must be filed and the taxes paid by 12 July.

If growth in turnover takes place but the business taxpayer does not inform the authorities of it, the Tax Administration may impose a forced transfer to the shorter tax period. This process is possible if it has become obvious that the business is no longer entitled to the extended period.  The Tax Administration sends a letter to the business taxpayer notifying them of the transfer.  

Extended tax periods for primary producers and creators of works of art

The calendar year is the VAT tax period for primary producers and creators of works of art, regardless of the size of their turnover.  This only applies to individual primary producers, or estates or consortia operating a primary production, and creators of works of art (within the meaning of § 79 c, VAT Act) who do not operate another trade or business liable to VAT.  However, primary producers or creators of works of art have the option to ask for the shorter tax periods, either the calendar quarter or the calendar month.

Newly established businesses may use the Start-Up Notification (Forms Y1 - Y3) or the Request form for change of reporting and payment periods (Form 4071e). Businesses that are already on the Tax Administration's registers can use MyTax, the 2017 Notifications on changes form (Y4 – Y6) or the Request form for change of tax period of self assessed taxes (Form 4071e).

Primary producers and creators of works of art are entitled to have the calendar-yearly tax period for filing and paying VAT.  However, they may, on application, have the calendar quarter as their tax period for payroll withholding, payments of the employer's health insurance contribution and taxes-at-source if their turnover does not go over the 100,000 euros and if no overdue taxes or missing tax returns are on record.

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