Tax is paid the following year
Tax is always calculated in the year following the accounting year. This is because the tax authorities give you time to complete your accounts and then submit your tax return (including the amount of tax due).
⚠️ The tax authorities will then send you an 'invoice' for the tax due. It is only then that you owe the tax. This document is called the Avertissement Extrait de Rôle (AER).
Why pay tax early?
The tax authorities encourage you to pay your tax during the year so that it can be collected earlier. How do they do this? By penalising you with a surcharge if you don't.
💡 Let's look at the positive side: paying tax in advance allows you to smooth out your cash flow and avoid unpleasant surprises.
Calculating tax increases
These tax increases are calculated on the basis of the absence of advance payment.
No advance payment
The tax increase is calculated as follows:
Surcharge for self-employed persons | Company surcharge | |
Calculation basis | Tax x 106 | Tax |
Gross-up rate | 6,75% | 6,75% |
Limit | Only 90% of the surcharge is considered | - |
Minimum amount | Min. €100 top-up, otherwise no top-up | - |
👉🏻 Example of a self-employed person with €10,000 tax on his income for the year.
The calculation basis is 106% of the tax, i.e. €10,600. The increase is therefore 6.75%, i.e. €716. This amount is limited to 90%, i.e. €644.
With an advance payment
When you make an advance tax payment, you save money. The earlier you pay, the more you save:
Quarter | Deadline | Reduction |
1 | 10th April | 9% |
2 | 10th July | 7,5% |
3 | 10th October | 6% |
4 | 20th December | 4,5% |
👉🏻 Same example, but the self-employed person makes advance payments.
The amount of the surcharge (€644 in our example) will be reduced. If the €10,000 tax is paid :
All in the 1st quarter: 9% x €10,000 = €900. The surcharge of €644 is reduced in full.
All in the 3rd quarter: 6% x €10,000 = €600. The surcharge of €644 is reduced to €44.
💡 If you pay the full amount of tax for the year during the 1ᵉʳ or 2ᵉ quarter, you will not suffer any increase. This is because the reduction covers the increase in full.
Early payment in practice
👉🏻 Is this compulsory? An advance payment for your personal income tax is not compulsory. It is a voluntary payment that you make to the tax authorities before the normal due date for your tax return.
👉🏻 What if I pay too much advance tax? The excess will be refunded or carried forward to the following year.
👉🏻 How do I make an advance payment? Your BILLY accountant will calculate the amounts to be paid for you. You'll find all the details in your application, including the bank account and the communication to use. Be sure to use the communication provided to avoid the payment being returned to you.
⚠️ A few working days may still elapse between your transfer and the time it is received in the administration's account, so it is the latter date that counts.
How can BILLY help me with this?
BILLY will help you at two points:
In February and March: to calculate your tax forecast for the year. You will then be alerted each quarter in the application so that you can make the necessary advance tax payments.
In November and December: we update the estimates at the start of the year to offer you a final payment before 20 December. This is simply an update of the calculation at the beginning of the year, based on actual figures.
Need short-term help? Contact your accountant or send a message in the live-chat below right 😊
See you soon!