Anyone expecting lower profits this year may be paying too much in advance income or corporate tax. This can still be corrected by the end of September — after that, it’s too late for this year.
How advance payments are calculated
The tax office doesn’t base advance payments on your current earnings situation, but rolls forward the tax liability from the last legally assessed year: this amount is increased by a flat 4%. If the underlying assessment notice is already two years old, a further 5 percentage points are added, with a corresponding increase for each additional year. For newly established businesses, the first advance payment notice is based on the details provided in the opening questionnaire (Eröffnungsfragebogen). Advance payments fall due in quarterly instalments on 15 February, 15 May, 16 August and 15 November.
Requesting an adjustment
Since this calculation is always based on past figures, the amount prescribed can differ from your actual current situation. Until 30 September, you can apply to the tax office for an adjustment for the current year — in practice usually a reduction, but an increase is also possible if you’d like payments to more closely reflect your actually expected tax liability.
The basis for a reduction request is a well-founded, as accurate as possible estimate of annual income (e.g. an interim balance sheet, a comparison of turnover). If the application is submitted via FinanzOnline, the new notice is often issued within just a few days. We’re happy to handle the application on your behalf.
SVS contributions can be adjusted too
Self-employed individuals can use the same approach to have their ongoing contributions to social insurance for the self-employed (SVS) adjusted — and here there’s even time until the end of the year. However, to have the new contribution amount reflected in the year’s final instalment (due 30 November), it’s advisable to submit the application this autumn.
The quickest way to do this is via the SVS Go portal, though it can also be done by email or via the online form “Adjustment of the provisional contribution basis” (Anpassung der vorläufigen Beitragsgrundlage).
Tip: Not sure whether your current advance payments still match how things are actually developing? We’re happy to take a look together with you in good time before 30 September, and submit the application on your behalf if needed.