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Temporary Tax for Companies and Self-employed Individuals

Every company and Self-employed (who has taxable profit) can estimate and pay the tax of the current financial year in two equal installments.

The due dates for temporary tax payment are as follows:

  • for the first payment is on the 31 of July
  • for the second payment is on the 31 of December

The estimated chargeable income can be revised at any time before 31 December (upwards or downwards). If the estimation is upwards, interest is payable on the difference between the revised amount payable for each instalment due and the amount initially declared and paid. The interest is calculated for each complete month as from 1st September.

If the estimated chargeable income under temporary self-assessment is less than 75% of the actual income, there is 10% additional tax on the outstanding balance.

The difference between the final tax computation and the temporary tax paid is payable by 1 August of the following year.

Example 1:

In July 2019 ABC Ltd has submitted its temporary tax return estimating a temporary income of €200.000 for the financial year 2019 and paid a temporary tax at 12,5%.
The final chartable income based on audited financial statements is €250.000.

Solution:

31/12/2019
 
Final Chargeable income250.000 
Less: Temporary tax paid(200.000) 
          50.000 
10% Additional tax
(€200k/€250k=80%)
       –No additional tax is paid since the estimated income declared is not less than 75% of the final tax
Tax Payable        50.000The tax is due on 1/8/2020

Example 2:

In July 2019 ABC Ltd has submitted its temporary tax return estimating a temporary income of €200.000 for the financial year 2019 and paid a temporary tax at 12,5%.
The final chartable income based on audited financial statements is €300.000.

Solution:

 31/12/2019 
  
Final Chargeable income300.000 
Less: Temporary tax paid(200.000) 
       100.000 
10% Additional tax

(€200k/€300k=67%)

10.000Additional tax is paid since the estimated income declared is less than 75% of the final tax
Tax Payable 110.000The tax is due on 1/8/2020

KKP tax team is always at your disposal for any queries you may have.