Avoid a tax surcharge
The Belgian tax authorities encourage the payment of tax on corporate income within the year in which it is earned. You then avoid statutory tax surcharges by paying in advance.
Improve your liquidity
Your capital is kept available and your liquidity is improved, leaving you with funds free for other investments.
Both interest and charges can be deducted from your corporation tax bill.
Why are pre-payments a good idea?
The tax authorities send you a letter every year in spring to offer you the opportunity to make pre-payments. In order to encourage companies to pay their taxes as the tax year progresses, the legislator imposes a tax increase if insufficient pre-payments have been made.
The tax surcharge is set at 2.25 times the base rate of interest rounded down to the lower unit.
For assessment year 2021 (income year 2020), the base rate is 3% for companies and, therefore, the surcharge is 6.75% (3% x 2.25).
Example: a company is liable for tax of 50 000 euros but makes no pre-payments. Simple arithmetic then tells you that a hefty tax surcharge awaits you in a sum of 3 375 euros (2.25 x 3% = 6.75 % x 50 000 euros).
For unincorporated sole traders, a basic interest rate of 2.25% applies. Only 90% of the surcharge is taken account of last year.
The pre-payments can be made at the latest on four preset dates each year, for the financial year that starts on 1 January:
- 10 April
- 10 July
- 10 October
- 20 December
Because the benefits of pre-payment are greater the earlier in the year they are made, the best thing is to pay the entire amount of the pre-payment before 10 April.
- Avoiding any tax surcharge
- No administrative issues
- Tax optimisation
- Spreading the tax burden
- The interest on this finance is fully tax-deductible
Does it all sound too good to be true? Contact your KBC relationship manager now to set up a KBC Tax Pre-Payment Plan for your business.