Late penalty charges on self-assessed tax returns
Changes effective from the beginning of 2017 have been made to the filing and paying self-assessed taxes. Similarly, new rules apply to the penalty charges for late filing and payment. Previously, their calculation resembled an interest calculation. Under the new rules, the charges are more schematic.
If you are late in filing your Tax Return for Self-Assessed Taxes (formerly the Periodic Tax Return) for a pre-2017 tax period, the penalty charge is calculated by adding 15% per annum on each tax filed late. The minimum amount is €5 and the maximum is €15,000 for each tax. The summary (that replaces the Tax Account statement) will show the decision to impose the penalty, the reasons for it and the due date for payment.
You file a return in January 2017 in order to report the withholding for the 10/2016 period. The late filing penalty is calculated according to the old rules. If you file another return later, introducing a correction decreasing the original amount to be withheld, the correction to the late penalty will also be calculated by old rules.
Your tax period is the calendar month. You are late in filing the VAT return for October 2016 (€10,000) and in reporting No wage payments for November 2016. The report should have arrived to the Tax Administration on 12 December 2016 but it arrives on 29 January 2017, filed electronically. The VAT filed late (€10,000) is subject to a late-filing penalty of €197.26 for the delay from 13 December 2016 to 29 January 2017, calculated by the following formula:
15 × €10,000 × 48 days = €197.26
100 × 365 days
Note: Corrections to Periodic tax returns and VAT EU Recapitulative statements were not received by the Tax Administration's e-filing system from 23 to 31 December. No late penalty charges are collected for the time of the service interruption.
If information on No wage payments is filed late, a charge of €5 is imposed.
Note: If the return had been filed on paper, the calculation of late-filing fee would have started 9 December 2016 and ended 29 January 2017 because the filing deadline would have been 8 December 2016 for a Periodic tax return filed on paper.
Late-filing penalty charges are imposed for tax periods and for each tax that has been filed late. Employer's contributions (payroll withholding, tax at source withheld on wages, and the health insurance contribution) are treated as one tax.
Late-filing penalty charges are imposed also in other situations: e.g. if you have had no VAT-taxable operations or wage payments, but you file the tax return late. The summary (that replaces the Tax Account statement) will show the decision to impose the penalty, the reasons for it and the due date for payment.
Setting the late penalty charge amount
Late penalty charges consist of two parts: one part is based on the number of days, and the other part is dependent on the size of the tax owed.
1 – 45 days late
The first tax return filed for the tax period is subject to a day-based charge amounting to three euros per day, max. €135.00.
More than 45 days late
If the first tax return for the tax period is filed late by more than 45 days, the day-based part equals €135.00 in total. Two percent of the tax to be paid and filed late is added to it. However, the maximum charge is €15,000 for each tax.
Filing a replacement return (a correction return) is a procedure for correcting the errors in a previously filed return. No late penalty is imposed on such a return if it is filed before 45 days have elapsed after the filing deadline of the original return. However, late filing by more than 45 days additionally causes two percent to be imposed of the tax that is filed late; the maximum amount is €15,000 for each tax.
A taxpayer is 35 days late when filing a tax return for €5,000 tax to be paid. The late-payment charge for 35 days is €105 (35 days × €3 = €105).
A taxpayer is 50 days late when filing a tax return for €5,000 tax to be paid. The day-based part of the charge is €135 for 45 days, and 2% of the tax that is filed late i.e. €100 is added to it. The amount is €235.
A taxpayer is 50 days late when filing a tax return for €5,000 VAT to be refunded. The charge for the late filing is €135. No late-payment penalty based on the tax amount is imposed in this case because the return does not contain any tax to be paid.
On 18 March, i.e. six days after due date, a taxpayer files a VAT return for January for €5,000 VAT to be paid. A penalty is imposed for six days amounting to €18 in total.
On 30 March, the taxpayer files a replacement return in order to make a correction to the previous return. The replacement indicates that the amount of tax to be paid is €7,000. No penalty is imposed in this case because the replacement arrived to the Tax Administration before 45 days had elapsed after the original due date.
On 30 April, the taxpayer files yet another replacement return. It indicates that the amount is €8,000. This is compared with €7,000, the previously filed amount of tax to pay. A penalty is imposed: two percent of €1,000 which equals €20.
A taxpayer files a return on 18 March for withholding in February; the sum to be withheld is €5,000. A penalty is imposed for six days amounting to €18 in total.
On 30 April, the taxpayer files a replacement return. It indicates that €4,000 should be withheld instead. No penalty is imposed in this case because the tax is reduced.
On 8 January 2018, a taxpayer files a return with “No wage payments” selected for November 2017. The return arrives 27 days late. Late-filing penalty is €3 per day for a total of €81.
Employer’s contributions are one tax type. However, the late-filing penalty is imposed for
- employer’s withholding
- health insurance contributions
- tax at source.
Therefore, each of these three tax types accrues late-filing penalty at a rate of €1 per day for a total of €27 per tax type.
If, for example, the taxpayer has filed late returns on withholding or health insurance contributions, late-filing penalty is imposed in proportion to these two tax types.
Amounts for the tax period are estimated if no tax return for self-assessed taxes is filed on time
If the taxpayer has not filed their tax return on self-assessed taxes by its due date, the Tax Administration sends them a reminder. It also contains an estimate for the amount of the tax to be paid.
If the taxpayer still does not file the return, the Tax Administration debits the estimated amounts as the taxes for the period. A punitive tax increase is imposed because the taxpayer failed to comply with the requirement to file the return.
The taxpayer can make a correction to the estimated amounts by filing a replacement return. If it is filed after the Tax Administration has imposed the tax by estimation, the Tax Administration may remove the estimated amount and the punitive tax increase. In this case, the submitted replacement is treated as a tax return filed late, so a penalty charge is imposed. The charge is also in these circumstances calculated separately for each tax. If the tax filed late amounts to 0 or is negative, the charge is €135. There is no need to submit a separate appeal request.
The summary will display the facts on the imposed and removed tax, and on the decision on the penalty charge. The charges fall due on the second general due date that comes after the date when the Tax Administration had entered them on the summary.
A taxpayer failed to file a tax return for self-assessed taxes e.g. did not file a VAT return. Tax to be paid is €10,000 by estimation. The taxpayer is late when filing a tax return for €6,000 tax to be paid. If the Tax Administration regards the return as sufficiently reliable, it reverses the estimation and the decision on a tax increase. The filed return is treated as a return filed late. A late-payment charge is imposed due to the €6,000 tax filed late. The summary, sent to the taxpayer every month, will display this information.