Tax pre-payments for the self-employed and companies

Tax pre-payments for the self-employed and companies

The question of whether companies and the self-employed should pay tax in advance is something that arises every year. Read on for more information and advice.

Why are pre-payments a good idea?

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The tax authorities send you a letter early every year to offer you the opportunity to make pre-payments. In order to encourage companies and the self-employed to pay their taxes as the financial year progresses, the legislator imposes a tax surcharge if insufficient pre-payments have been made.

Tax surcharges

The tax surcharge is set at 2.25 times the base rate of interest rounded down to the lower unit.

The base rate for the 2017 assessment year was 0.50%, so the tax surcharge was 1.125% (0.50% x 2.25). Because the actual income from pre-payments turned out to be rather limited, the government decided that the base rate must never be less than 1% (starting from the 2018 assessment year).

If we multiply the base rate by 2.25, the result is a surcharge rate of 2.25% (2.25 x 1%). In other words, the legal amendment aims to encourage companies to pre-pay more and to do so at an earlier date. Sufficient pre-payments can neutralise the tax surcharge. The benefit to be gained depends on when the pre-payments are made.

Starting from the 2018 assessment year, no surcharge will apply if the calculated amount is less than 0.5% of the tax it is based on or 80 euros.

More information on the tax surcharge for the coming assessment year.

Tax break

When do you have to make your pre-payments for the 2019 assessment year and what are the benefits?

For financial years that coincide with calendar years, pre-payments will have the following benefits:

 

2019 assessment year

Base percentage to calculate the surcharge

1%

General surcharge (base percentage x 2.25)

2,25%

Pre-payment dates
Benefit linked to pre-payments
-          Pre-payment for the 1st quarter: no later than 10 April 2018
3%
-          Pre-payment for the 2nd quarter: no later than 10 July 2018
2,5%
-          Pre-payment for the 3rd quarter: no later than 10 October 2018
2%
-          Pre-payment for the 4th quarter: no later than 20 December 2018
1,5%

Where should deposits be made?

Your pre-payments should be made by depositing/transferring funds to the relevant account at the Tax Pre-Payment Department:

  • For companies: IBAN: BE20 6792 0023 3056 and BIC: PCHQ BEBB in the name of the ‘Tax Pre-Payment Department – Companies’;
  • For natural persons: IBAN: BE07 6792 0023 4066 and BIC: PCHQ BEBB in the name of the ‘Tax Pre-Payment Department – Natural persons’.

How much should you pay in advance?

It is always difficult to determine how much you should pay in advance, but here are a few useful pointers:

  • Determine and calculate the amount you want to pre-pay this year based on an estimate of your expected income. Last year's results might be a good place to start. Using that amount, you should be able to estimate your income for this year and calculate the taxes that you will have to pay.
  • Useful to know: if you pay too much in advance, the tax authorities will reimburse you for what you’ve overpaid. If you pay too little, all your efforts will have been in vain and you risk paying a tax surcharge.
  • If you are a start-up business, discuss this matter with your accountant.

Exemptions

If it's the first time you've set up a company as a full-time self-employed person, the good news is that you're exempt from making pre-payments for three years, during which time the tax authorities won't impose any tax surcharges.

If you've set up a new company that meets the definition of a small business under company law, you qualify for this same tax break.

KBC Tax Pre-Payment Plan

Even if you regularly make tax pre-payments, sometimes they can slip your mind. To avoid this happening, KBC has the KBC Tax Pre-Payment Plan for Business Purposes.

How exactly does it work? KBC pays the government on your behalf at the most beneficial time and you have the added advantage that the interest charged on the finance is fully tax-deductible. What's more, you spread your repayments to us according to your financial capabilities, enabling you to spread your tax bill over the entire year.

Another major advantage of this product is that you can continue to use your own funds to, for instance, carry out day-to-day payments or make investments, or you can simply leave the funds on your savings account. In other words, you still have full access to your money.

More information

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  • How much should I pay in advance?
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