How refunds are used on unpaid taxes – companies and organisations
Refunds relating to corporate income taxes, to various self-assessed taxes and to value-added taxes may become available to corporate taxpayers. This guidance contains information about how taxpayers’ refundable balances are applied on their unpaid taxes.
The instructions below are for corporate taxpayers, such as limited liability companies, general and limited partnerships, joint administrations, foundations and public sector organisations.
Instructions for individual taxpayers, self-employed individuals and agricultural operators
Refunds from the Tax Administration are applied on taxes left unpaid
If any of the taxes of a corporate taxpayer are overdue, the Tax Administration will cover them with an amount of money that would otherwise be refunded. The due dates of the overdue taxes determine the order: the oldest unpaid tax will be settled first. The refundable balances are not used this way before there is a due date for a tax.
The Tax Administration can cover the corporate taxpayer’s unpaid taxes, or taxes that the corporate taxpayer is responsible for, because of being a shareholder in a partnership, etc.
If the corporate taxpayer is on a payment plan, the Tax Administration will not use the refundable balance on the taxes included in the plan until all other overdue taxes have been covered. In some circumstances, the Enforcement Agency may place a distraint on a refund if the corporate taxpayer is a debtor with debts undergoing recovery. If the Agency decides to do so, they will notify the corporate taxpayer.
You can use MyTax to find out how an amount that could have been refunded to you has been used. However, this information will also be communicated on your Summary of tax payment status.
How to see in MyTax if your tax refund has been used for paying taxes
Use of a refund on taxes on the due date
In general, when you send the Tax Administration a payment, there will be a delay of 1 or 2 days before it is recorded. As a result, although you make a payment on the exact due date of a tax, it is not entered into the Tax Administration’s records immediately, which means that an amount of money that would otherwise be refunded can be used on the tax.
In situations where a payment from you is already on record, the Tax Administration will apply it on the tax. The refundable amount will not be used. After this, the Tax Administration will transfer the refund into your bank account.
Sometimes, you might receive a refund of the above type in more than one instalments. If so, the reason is that there are more than one taxes to pay, and parts of the refundable balance are applied on them. Alternatively, the reason may be that the Tax Administration only used a certain part of the refundable balance.
A company has €2,000 to pay to the Tax Administration in prepayments, the due date being 23 June. The records also indicate that the company is also getting a 10,000-euro refund of value-added tax.
Although the company makes the prepayment on its due date, the Tax Administration will instead apply the upcoming VAT refund on the prepayment. The Tax Administration will transfer the 8,000-euro difference into the company’s bank account.
The next day, as the Tax Administration’s record shows the paid-in amount, the Tax Administration will match it with the prepayment. As a result, the remaining refund (€2,000) will be transferred into the bank account of the company.
Note: the company’s bank account statement will contain the words “income tax refund” (tuloveron palautus; återbäring av inkomstskatt) for the €2,000 sent back to the company because the Tax Administration had applied the upcoming VAT refund on the income-tax prepayment.
However, the original source of the refunded amount will be showing in MyTax.
Refunds of income tax are used as follows
The Tax Administration may use a corporate taxpayer’s refundable income-tax balance on unpaid taxes starting on the date when the process of tax assessment is complete, and ending on the 18th of the following calendar month. If the 18th is not a business day, the time limit will end the day before it, or on the previous day if that is a business day.
Every corporate taxpayer has its own end date for the process of tax assessment. However, the end date is never later than 10 months from the end of the final calendar month of the corporate taxpayer’s accounting period.
A corporate taxpayer’s tax assessment ends on 10 August. As a result of the completed assessment, the corporation is to receive a tax refund of €5,000.
The due date to pay €1,000 of VAT is 12 August. In addition, the corporate taxpayer also needs to pay a prepayment of €3,000 falling due on 23 August. As it happens, the corporate taxpayer does not pay either of these.
The Tax Administration is entitled to apply the money that would otherwise be refunded on any taxes with a due date on or before 18 September. The Tax Administration proceeds to apply the refundable amount on the VAT on 12 August, and further, on the prepayment on 23 August.
After this, €1,000 will still be left. The Tax Administration will transfer the €1,000 into the corporate taxpayer’s bank account.
If the reason for refund of the tax is a reassessment of income taxes
Another possibility for a corporate taxpayer to receive a refund is a situation where the Tax Administration has adjusted the amount of income tax downwards, i.e. decreased the corporate taxpayer’s prepayments or back taxes. Situations like this might arise when you have claimed adjustment of prepayments or back taxes at the stage when you already paid the prepayment/back taxes.
The Tax Administration will apply a refund on the corporate taxpayer’s unpaid taxes immediately after the decision on refunding is made. This means that the end date of the Tax Administration’s process of assessing the corporate taxpayer’s taxes has no effect on these refunds.
A corporate taxpayer has been imposed €24,000 in prepayments. These payments, broken down to 2,000-euro instalments, fall due every month. On 10 August, the corporate taxpayer requests a change to its prepayments in MyTax. By this time, it already paid the instalments from January to July, €14,000 in total.
The Tax Administration approves the request on 14 August. The annual requirement of prepayments decreases to €12,000. Only the instalments from January to June will remain valid, so the corporate taxpayer has now paid €2,000 in excess.
This way, it could receive €2,000 as a refund of prepayments. However, an amount of VAT is overdue. The Tax Administration will use the refundable amount on the VAT and penalty charges for late payment on 14 August.
After that, the Tax Administration will send any remaining amount of money back to the corporate taxpayer.
Refunds relating to VAT, to employer’s contributions or to other self-assessed taxes
Corporate taxpayers may be entitled to a refund of self-assessed taxes if VAT becomes negative or if after the corporate taxpayer paid a tax, the amount to be paid is decreased.
You may also receive a refund if you used the reference number for self-assessed taxes and paid in an amount higher than necessary. You can use MyTax to ask the Tax Administration to send back the excessive amount.
If the processing of a refundable amount of self-assessed taxes is ongoing, the Tax Administration will not use it or send it to the taxpayer until the processing is complete.
Read more about VAT refunds and refunds of other self-assessed taxes
Read more about how to receive an unused payment back
Non-filing prevents tax refunds
The Tax Administration is unable to send a refund to a corporate taxpayer if it has neglected its tax returns or sent incomplete tax returns. In this situation, if you are corporate taxpayer with a history of non-filing, the money that would otherwise be refunded will stay with the Tax Administration and continue to be used for covering your overdue taxes for a longer time than usual – until such time as when you have submitted all the tax returns.
The end date of the process of tax assessment for a company is 28 August. Normally, the company’s tax refunds, if any, could be used on unpaid taxes until 18 September. However, for this company, the records indicate that not all of the company’s VAT returns have been received.
As a result, no refund will be paid to the company. The Tax Administration may use the refunds to cover a prepayment that will fall due on 23 September unless the company itself proceeds to pay this prepayment on 23 September.