Tax is paid the following year
Tax is always calculated in the year following the accounting year. Indeed, the tax authorities give you time to close your accounts and then submit your tax return (with the amount of tax due).
⚠️ The tax authorities will then send you the tax "bill" to pay. It is only at that point that you actually owe the tax. This document is called the Warning Extract from the Tax Roll (AER).
Why pay tax in advance?
The tax authorities encourage you to pay your tax during the year so that it is collected earlier. How? By applying a surcharge if you don't.
💡 Looking on the bright side: advance tax payments allow you to smooth out your cash flow and avoid unpleasant surprises.
Calculating tax surcharges
These tax surcharges are calculated based on the absence of advance payment.
💡 For the first 3 years of activity: no tax surcharge applies if you do not make advance payments.
Without advance payment
The tax surcharge is calculated as follows:
| Surcharge for the self-employed | Surcharge for companies |
Calculation base | Tax x 106% | Tax |
Surcharge rate | 6.75% | 6.75% |
Cap | Only 90% of the surcharge is taken into account | - |
Minimum amount | Min. €100 surcharge, otherwise no surcharge applies | - |
👉🏻 Example of a self-employed person with €10,000 in tax on their income for the year.
The calculation base is 106% of the tax, i.e. €10,600. The surcharge is therefore 6.75%, which amounts to €716. This amount is capped at 90%, giving €644.
With advance payment
When you make an advance tax payment, you make savings. The earlier you pay, the more you save:
Quarter | Deadline | Reduction |
1 | 10 April | 9% |
2 | 10 July | 7.5% |
3 | 10 October | 6% |
4 | 20 December | 4.5% |
👉🏻 Same example, but the self-employed person makes advance payments.
The surcharge amount (€644 in our example) will be reduced. If the €10,000 in tax is paid:
All in the 1st quarter: 9% x €10,000 = €900. The €644 surcharge is fully cancelled.
All in the 3rd quarter: 6% x €10,000 = €600. The €644 surcharge is reduced to €44.
💡 If you pay the full year's tax during the 1st or 2nd quarter, no surcharge applies. The reduction is sufficient to fully offset the surcharge.
Advance payments in practice
👉🏻 Is it mandatory? An advance payment for your personal income tax (PIT) is not mandatory. It is a voluntary payment you make to the tax authorities before the normal deadline for your tax return.
👉🏻 What if I pay too much in advance? 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 pay for you. You will find all the details in your application, including the bank account number and the payment reference to use. Make sure to use the provided reference to avoid having your payment returned.
⚠️ A few business days may pass between your bank transfer and the moment it is received in the tax authority's account — it is this latter date that counts.
How does BILLY help me with this?
BILLY supports you at two key moments:
In February and March: to calculate your estimated tax for the year. You will then receive a quarterly alert in the application to remind you to make the relevant advance tax payments.
In November and December: we update the estimates made at the start of the year to suggest a final payment before 20 December. This is simply an update of the initial calculation, based on your actual figures.
Need help right away? Contact your accountant or send a message via the live chat at the bottom right 😊
Talk soon!