Reduction of advance payments 2022, interest on claims 2021 and refund of EU input taxes
The deadline for applying for the reduction of advance tax payments in 2022 ends on 30 September 2022. Interest will be paid on income tax arrears or credits for the assessment year 2021 as of 1 October 2022. The deadline for applying for EU advance tax refunds is 30 September 2022.
In view of the impending deadline for applying for the reduction of advance payments of income and corporation tax in 2022, it is advisable to make an earnings projection and estimate the tax expense for the assessment year 2022.
Reduction applications for advance income and corporation tax payments 2022
If the advance payments prescribed by the tax office exceed the projected tax liability for income or corporation tax for the year 2022, a reduction of the current advance payments for income and corporation tax 2022 can be applied for until 30 September 2022. The application for a reduction must be justified to the tax office and the amount of the expected income for the business year 2022 must be disclosed.
In the case of groups of companies pursuant to section 9 KStG, the application must be submitted by the group parent for the entire tax group.
Entitlement interest for back payments of income tax or corporation tax 2021
In contrast to the assessment years 2019 and 2020, for which no interest on claims was provided due to COVID-related simplification measures, the period for interest on claims relating to income and corporation tax not yet assessed for the assessment year 2021 will begin again on 1 October 2022.
If the assessment in 2021 results in an additional payment or a credit of income or corporation tax, interest will be paid on this from 1 October 2022 until the date of issue of the assessment notice (maximum period 48 months). In view of a base interest rate of currently 0.63 %, the claim interest rate for both arrears and credit interest amounts to 2.63 %. Interest on claims is not assessed up to the de minimis limit of EUR 50.00.
Interest on arrears is not deductible for income tax purposes, while interest on credits is not taxable.
Interest on arrears can be avoided by making advance payments up to the amount of the anticipated tax liability to the competent tax office. The transfer must be made stating the tax number and the dedication note “E 01-12/2021” for income tax or “K 01-12/2021” for corporation tax.
In the case of groups of companies pursuant to section 9 KStG, the aforementioned advance payment is to be made by the group parent.
Refund of EU input taxes
Applications for the refund of input tax from EU member states in 2021 can be submitted via FinanzOnline until 30 September 2022. The refund period comprises at least three consecutive months and is limited to one calendar year.
The amount to be refunded must be at least EUR 400 or at least EUR 50 if the refund period is the calendar year or the last period of a calendar year.
Country-specific regulations provide for the exclusion of certain input taxes from the refund. For example, in some EU member states, catering, hotel and car costs are excluded from input tax deduction and are therefore not refundable.