The additional prepayment
The additional prepayment is a method of adding to the total balance of your paid-in withholding and prepayments when the tax year has already passed. For individual taxpayers, the tax year is the calendar year. If the advance total of money (that has been withheld from you by your payors or your employer, or paid directly by you to the Tax Administration as prepayments) is not enough to cover your actual tax liability for the year, you must make up for this and pay back tax. However, if you make an additional prepayment you can reduce your back taxes and the interest on them.
If necessary, you can submit a request to the Tax Administration for an additional prepayment and pay it up, even more than once, up to the date when we have completed your assessment for the year. You cannot pay additional prepayments during the tax year. Instead, you must request changes to your prepayments, or request a specific calculation for prepayments for the ongoing year.
To request an additional prepayment and pay it for the 2019 tax year has been possible since 7 December 2019. The first due date that can be scheduled for taxpayers to settle such a prepayment is 2 January 2020.
You must first request an additional prepayment, then pay it
Additional prepayments cannot be paid without submitting a request first. Make a request for an additional prepayment in MyTax. When the Tax Administration has processed your request, you receive a decision on the additional prepayment along with instructions for payment.
Companies and organisations:
Note: Do not make a payment with the old reference numbers for supplementary prepayments! If you use the old numbers, your payment will instead be applied on income taxes (prepayments and back taxes), in the order of their due dates, the earliest one first. If there are no income taxes overdue, your payment is used for other taxes that you have not paid by the due date. If you do not have any other taxes overdue – or any debts undergoing enforced recovery – your payment is refunded back to you, to the bank account you have informed us of.
Complete Form 5010e (line 17) to ask for the additional prepayment
Please wait until you receive the Tax Administration’s decision on your prepayment. The letter contains a bank transfer form
Follow the instructions on the bank transfer form to pay the amount. The due date is generally three weeks after the day when the Tax Administration’s decision is dated.
Note: Make sure you allow enough time for postal delivery. Because of the time required for postal service, and because of the processing time of your request, it may be that the date on the decision and the due date for payment are delayed past the end of January.
Call the service number +358 29 497 000 to make a request by phone.
When you use MyTax to ask for an additional prepayment to be calculated, the due date can be selected by you. It may be today’s date or any date no later than three weeks into the future. However, it is required that you select a date that is a banking day. Please note that some extra time may be required until your request is processed. As a result, the due date you had suggested may have passed, so your actual due date will be a later date. For this reason, you should not delay in sending a request for additional prepayment and pay it up after you receive the Tax Administration’s decision.
If you pay an additional prepayment
- before the due date, you still end up paying interest, which will accrue up to the due date
- after the due date, you must pay interest for late payment on top of that.
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 March is €1,000 and its due date is in May, but Fordson paid it on 20 April already. However, the Tax Administration cannot yet apply the paid-in amount to that VAT for March because it has not yet fallen due. This means that the payment has been put aside, waiting for the due date.
Fordson submits a request for an additional prepayment of €1,500. He selects 30 April as its due date. He pays it on 30 April, 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 30 April. The €1,000 that Fordson had paid on 20 April is applied on his additional prepayment – on 30 April – because the last day of a calendar month is generally the time when the Tax Administration applies available money to unpaid and overdue taxes. As a result, Fordson must send a payment again: He must pay his VAT for March and use the bank reference number for self-assessed taxes when paying.
As for the amount that Fordson had intended as an additional prepayment, the Tax Administration receives €1,500 from him one or two days afterwards. Now 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 30 April. 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 in one instalment, 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.
Is it better to make an additional prepayment or just pay one’s back taxes?
The answer depends on how much late-payment interest (with relief) is included in the result of the calculation. The factors affecting the size of the interest are the due dates for back taxes or the prepayment, and the amount itself. For individual taxpayers, late payment interest is charged from 1 February up to the due date of the prepayment/back tax. For business and corporate taxpayers, late payment interest is charged from the first day of the second month following the end of the tax year, up to the due date of the prepayment/back tax. Read more about late-payment interest with relief.
Individuals can make additional prepayments with no late-payment interest up to 31 January. Business and corporate taxpayers can make additional prepayments in the same way, without interest, during the month that follows the end date of their accounting year. If the due date is after these points in time, you will have to pay late-payment interest with relief in addition to the prepayment itself.
Late payment interest with relief is also added to any balance of back taxes. When your tax assessment for the tax year is completed, €20 is deducted from the interest on a back tax. (However, this deduction cannot exceed the total amount of interest.) However, if late-payment interest is added to an additional prepayment, no 20-euro deduction is applicable. For this reason, some extra expense may be caused for the taxpayer in the process of requesting and paying an additional payment. As a result, a taxpayer who would pay several small additional prepayments can end up paying a higher total amount than someone who simply pays up the entire balance of their back taxes.
Please note that if you are late in sending us the payment of a back tax or an additional prepayment (so that its specific due date has already passed), you must add late-payment interest to the sum total. Read more about interest rates and consequences of late payments.
The amounts withheld from Lasse’s wages in the course of the year have not been enough to cover his income-tax liability for 2019. Because of this, the Tax Administration imposed €10,000 back tax on Lasse. There are two instalments because the amount is more than €170. The first one falls due 3 August, the second one – 1 October. These dates are determined by the date when the Tax Administration completes the particular taxpayer’s tax assessment. In Lasse’s case, the end date of assessment is in June.
The Tax Administration’s calculation of interest (with relief) for late payment on Lasse’s back tax of €10,000 is based on 2% per annum, from February 1 to August 3, the due date of the first instalment. The calculation contains interest as follows: €10,000 × 185 days × 2% divided by 366 days = €101.09. Then the Tax Administration subtracts €20 from the total and splits up the rest of the interest between the two instalments. As a result, the size of one instalment is €5,040.55 with interest.
Nevertheless, Lasse wants to avoid having to pay any extra interest. On 8 April, Lasse requests an additional prepayment of €10,000 and sets the same date (8 April) as its due date. In response to Lasse’s request, the calculation that now contains late-payment interest with relief is as follows: €10,000 × 68 days × 2% divided by 366 days = €37.16.
Lasse proceeds to pay the additional prepayment plus late-payment interest in MyTax as soon as he can. The amount he pays is €10,037.16. The result of Lasse’s actions is that the interest was reduced by €43.93 if compared with the interest that the back taxes had collected.
However, the outcome would have been even better if Lasse had taken action already in January: he could have requested an additional prepayment of €10,000 before end of January. Then he would only have to pay the €10,000 and no interest would have been added.
The Tax Administration imposed €10,000 of back taxes on Matti. Matti has the same end date for tax assessment as Lasse in Example 2 above, so the due dates for his back taxes are 3 August and 1 October, as well. The total of late payment interest on Matti’s back taxes is €81.09.
Because he wants to avoid paying interest at least to some extent, Matti submits a request for an additional prepayment of €1,000, setting the due date to May 20. In response to Matti’s request, the Tax Administration sends a calculation that contains interest as follows: €1,000 × 110 days × 2% divided by 366 days = €6.01. Matti pays the additional prepayment plus late-payment interest, i.e. €1,006.01, on the same day.
However, the original deficit of income taxes stood at €10,000. It is now reduced by one thousand euros only and still amounts to €9,000. The Tax Administration updates its calculation to arrive at the late-payment interest with relief: €9,000 × 185 days × 2% divided by 366 days = €90.98. This amount is further adjusted by subtracting €20 => €70.98. Total interest (with relief) for late payment in Matti’s case amounts to €6.01 + €70.98 = €76.99.
Jonas received his tax decision papers for the 2019 taxable year. The Tax Administration imposes €1,000 in back taxes on Jonas, to be paid on 1 September and 2 November. The calculation contains interest as follows: €1,000 × 214 days × 2% divided by 366 days = €11.69. In this case, the threshold of €20 for late-payment interest is not reached. As a result, Jonas does not have to pay it. Looking at the payment schedule for Jonas’s back taxes, we find that they fall due first on 1 September – €500, and on 1 November – another €500.
However, Jonas decides to submit a request for an additional prepayment of 1,000 euros on 26 March. In response to his request, the Tax Administration sends a calculation that now contains late-payment interest with relief is as follows: €1,000 × 55 days × 2% divided by 366 days = €3.01 that makes the amount to pay reach €1,003.01. Due to the request he sent for the additional prepayment, not only is the absolute amount slightly higher but Jonas is also under the obligation to pay the entire amount considerably earlier.
If Jonas had taken action early, he could have paid up his back taxes ahead of time. He could have used the reference number for income taxes immediately after receiving his tax decision and sent the Tax Administration an amount of €1,000. In this case, the amount would have been applied on the first and second installment of his back taxes – unless Jonas had any other taxes or prepayments falling due at the time when he sends the money. The back taxes must be showing in MyTax at the time when you send a payment.