Prepayments of income tax

The basis for the calculation of income tax is taxable income, but this can be finally determined only in retrospect. The anticipated income tax, however, must be paid during the current year as income tax prepayments. These prepayments must be made by the following dates:

• 15 February
• 15 May
• 15 August
• 15 November

You will be reminded of the relevant income tax prepayment sums through a notification issued approximately one month before they are due. If you would prefer not to be bothered with the due dates and making payments on time, it is also possible to pay your income tax prepayments conveniently by means of a SEPA direct debit.

In a trader’s first financial year, an estimate of profits is used as the basis of calculation for income tax prepayments.

In subsequent years, the tax office determines the income tax prepayments for the current and following years when it issues the income tax assessment (the prepayments for this year, however, will generally be amended only if the income tax assessment is issued by 30 September).

The taxpayer may lodge an appeal against the prepayment notice. Furthermore, a reduction in prepayments can be applied up to 30 September if it is anticipated that the income tax liability will be lower in the current year. This application must be appropriately supported.

On the income tax assessment, the prepayments – like wage tax – are credited to the income tax calculated against the tax tariff. If the income tax prepayments prove to be too low, interest will be charged on corrective payments from 1 October of the following year (arrears interest). This can be avoided by remitting a payment corresponding to the value of the expected corrective payment. There is, however, an exemption limit of 50 Euro. Conversely, if the prepayments have been too high, credit balances will attract interest payable to the taxpayer from 1 October of the following year.

Legal bases

• section 45 of the Einkommensteuergesetz (EStG)
• sections 205 and 205a of the Bundesabgabenordnung (BAO)
• sections 243 to 292 of the Bundesabgabenordnung (BAO)