Since January 1, 2024, significant changes have been made to the tax interest rates that may affect your business. The rate for corporate tax has increased to 10%, while for other taxes, such as income tax, the tax interest rate is now 7.5%. To avoid unexpected tax interest, our advice is to request a provisional assessment in a timely manner. In this article, you’ll learn how and when to best do this.

What is Tax Interest?

Tax interest is charged when the Tax Authorities cannot finalize your assessment on time. This can happen if you file your return late or if the return is lower than the final assessment. You pay interest on the amount you need to pay. Usually, you don’t receive interest on a tax refund unless the Tax Authorities take an unreasonably long time to issue your assessment.

Increase in Tax Interest Rates

As of January 1, 2024, the tax interest rates have been adjusted:

  • Corporate Tax (VPB): Increased to 10% (was 8%).
  • Other Taxes (such as income tax): Increased to 7.5% (was 6%).

These new rates apply to both payable and receivable tax interest. For allowances, the interest rate remains unchanged at 4%.

Avoiding Tax Interest by Requesting a Provisional Assessment

If you expect to owe income or corporate tax for the year 2023, you can avoid tax interest by filing your return on time or requesting a provisional assessment.

Tip: Ensure that you accurately estimate the tax due. If you overestimate, the Tax Authorities do not reimburse tax interest on the excess amount paid.

Are you a Luca Book client? We can file the provisional assessment for you at a fixed rate. Schedule an appointment to discuss this.

How and When to File IB and VPB Returns?

To avoid tax interest, it is important to file your returns on time:

  • Income Tax (IB): File your return or provisional assessment before May 1, 2024. The Tax Authorities may not charge interest on the amount calculated in the return or provisional assessment.
  • Corporate Tax (VPB): File your return before June 1, 2024, or request a provisional assessment before May 1, 2024. Similarly, the Tax Authorities may not charge interest if you meet these deadlines.

Note: Ensure that you adjust the provisional assessment carefully when circumstances change. Providing deliberately incorrect information can result in fines.
Tip: If you take a defensible position in your return that is later corrected by the Tax Authorities, you will be liable for tax interest. Tax interest is calculated based on the time elapsed and the extent of the deviation from the return.

Need Advice?

Are you considering taking a defensible position or have other tax-related questions? Make sure to get proper advice from one of our tax advisors. We are ready to assist you with comprehensive advice and support to optimize your tax position.
Contact us today for a personal consultation. Together, we will ensure that your business avoids unexpected financial surprises.