The additional prepayment – the opportunity to supplement the paid-in total amount
If it turns out that you have not paid enough during your corporate fiscal year, we recommend that you ask the Tax Administration to calculate an additional prepayment. This way, you can avoid having to pay back taxes and interest.
The additional prepayment is a method of supplementing your paid-in prepayments when the fiscal year has already passed. If necessary, you can submit a request to the Tax Administration for another additional prepayment, even more than once, up to the date when we have completed your assessment for the year. You cannot pay additional prepayments during the ongoing year. Instead, you must submit a request for changes to prepayments.
Additional prepayments cannot be paid without submitting a request for it first. You can use MyTax to ask for changed prepayments or for an additional prepayment. When the Tax Administration has processed your request, you receive a decision on the additional prepayment or prepayment changes. The documentation contains instructions for payment.
Note: Do not make a payment with the old payment information for supplementary prepayments! If you pay with the old information after 1 November, your payment will be used for income taxes (prepayments and back taxes), in the order of their due dates, the earliest one first. If you do not have any income taxes overdue, your payment will be used for other taxes that you have not paid by the due date. If there are no such taxes, we send your payment back, to the bank account you have informed us of.
When you ask for an additional prepayment in MyTax, you can select the due date. It may be the same day or any date no later than three weeks into the future. However, it is required that you select a date which is a banking day.
If you pay an additional prepayment
- before the due date, you still end up paying relieved interest for late payment, which will accrue up to the due date
- after the due date, you must pay interest for late payment
If you select the end date of a calendar month as the due date, the Tax Administration will apply refunds and payments to the additional prepayment that have so far not been applied to other taxes. You should take account of this when making your payment.
Fordson is a VAT taxpayer who always strives to settle his VAT payments well before they fall due. The VAT for April is €1,000 and its due date is in June, but Fordson paid it up on 20 May already. However, the Tax Administration cannot yet apply the paid-in amount to his April VAT because it has not yet fallen due. Fordson submits a request for an additional prepayment of €1,500. He selects 31 May as its due date. He pays it on 31 May, too. Due to the usual delay time in bank transfers, Fordson’s payment (intended for the additional prepayment) does not reach the Tax Administration on 31 May. The €1,000 that Fordson had paid on 20 May is applied on his additional prepayment because the last day of a calendar month is usually the time when the Tax Administration applies available money to unpaid and overdue taxes. This means that Fordson must re-pay his VAT for April, using the reference number for self-assessed taxes.
One or two days later, the Tax Administration receives the €1,500 that he had intended for the additional prepayment. The Tax Administration uses €500 of it to cover the rest of the additional prepayment. It also applies some money to a late-payment interest with relief, calculated for the period from 1 February to 31 May. The remainder is applied either to any income tax that may be imposed on Fordson and has not yet fallen due – or alternatively, it will be refunded to Fordson.
Taxpayers are always required to pay their additional prepayments in one single instalment. If you do not pay the entire amount, the remainder will collect interest for late payment. You can ask for additional prepayments as many times as you need: you can prepare a new request if you notice that your previously requested additional prepayment is not enough.
Late-payment interest with relief, making payments past due date
During one month after the tax year has ended, you have the opportunity to supplement your paid-in prepayments without having to pay late-payment interest.
- In other words, the month of January is when additional prepayments can be made this way by individuals, self-employed operators of a trade or business, self-employed professionals, partners of general partnerships, partners of limited partnerships, and individuals with agricultural operations including farm and forestry.
- Corporate taxpayers can make additional prepayments in the same way during the month that follows the end date of their corporate fiscal year.
Steven notices that the total of his paid-in prepayments for 2018 will not be enough. On 15 January 2019, he uses MyTax to ask for an additional prepayment to be calculated for him. He selects 26 January as its due date. He sends the money to the Tax Administration after a couple of days, using his bank reference number for income taxes. In these circumstances, no interest for late payment is collected, and no back taxes will have to be paid afterwards.
The accounting period is 1 January 2018–31 December 2018. The company wishes to make an additional prepayment, submitting an application for it on 26 January 2019 and setting that day as the due date. The company sends the money to the Tax Administration on 28 January, using their bank reference number for income taxes. In these circumstances, the prepayment does not accrue any interest for late payment because the company paid it up within one month after its tax year had ended. However, because of the selected due date, the payment is treated as late, so the system requires that the company pay interest for late payment for the period 27–28 January 2019.
How to calculate the late-payment interest with relief
For 2019, the rate for late-payment interest with relief is 2.0%. This equals the Reference Rate of the Bank of Finland plus 2 percentage points. The rate is reviewed every year.
What is the period for late-payment interest with relief?
The interest starts being collected on the first day of the second month following the end of the tax year. It is calculated according to the actual number of days in the month and the year.
The end date for collection of late-payment interest with relief is
- The due date when the taxpayer’s back tax must be paid
- The due date of the additional prepayment, if you are paying the additional prepayment in order to avoid paying back taxes
You can pay the amount before the due date but doing so will not diminish the interest for late payment.
The company has an April-to-March fiscal year (=accounting period). On 25 April 2019, it submits an application for an additional prepayment, selecting 9 May 2019 as the due date, and paying up the amount on that day, too i.e. 9 May. The reference number for corporate income tax was used for the bank transfer. Late payment interest with relief will be calculated for the additional prepayment for the period 1–9 May 2019.
Table: Late-payment interest with relief
|Length of the tax year||Additional prepayment can be made without having to pay interest for late payment||Late-payment interest with relief must be added in the following circumstances|
|Individual taxpayer||1 Jan–31 Dec||During January||After the tax year has ended, starting on 1 February|
|Corporate taxpayer with 1 Jan–31 Dec as its fiscal year||1 Jan–31 Dec||During January||After the tax year has ended, starting on 1 February|
|Corporate entity with a non-calendar year||Same as the fiscal year||Within one month after the end date of corporate fiscal year||From the first day of the second month following the end of the tax year|
If you pay late, this is what you should do
If you pay an additional prepayment after its due date, a late-payment interest will be added to it. The interest period begins on the day after the due date, and continues up to the date when you pay the amount. For 2019, the rate is 7.0%. Read more about interest rates and consequences of late payments.
William asked for an additional prepayment to be calculated for him, and the due date that he selected was 16 March. However, he did not pay it until 19 March. Late-payment interest with relief is calculated for the additional prepayment as of 1 February, up to 16 March, and after that, for the 17 to 19 March period, the type of interest changes into the usual interest for late payment. If William uses MyTax on 19 March to make his additional prepayment, he will see the exact amount of interest in MyTax.