Your income tax return is filed by The Bookie and months later (usual about three months later) you receive the final assessment of your income tax return. The amounts payable on that assessment all match what you read in The Bookie's declaration months before.
However, there is one extra amount on this assessment that you don't really understand: tax interest.
What is tax interest?
You pay tax interest to the Tax Authorities on a debt, for example the tax due on your income for a year. You pay interest when the Tax Authorities impose an assessment on you with an amount due. For sole proprietors, tax interest for all taxes is 7,5%.
How do you avoid (a lot of) tax interest?
1. Provisional assessment during the year
The most obvious way to avoid tax interest is a provisional assessment. You pay little to no tax interest if you pay a provisional assessment during the tax year.
You pay the tax by estimating your profit already during the year. In other words, you pay a year in advance, in monthly installments. The amount you paid with your preliminary assessment will be offset against the amount you have to eventually pay after the income tax return.
Depending on the estimate there will be a small amount to offset and the tax interest on it is also negligible.
2. Apply urgently: tax return by May 1
Would you rather pay income tax after the year has ended? Then there are options to avoid (too much) tax interest.
For instance because you cannot get your information together before then. Or because you can't or don't want to file your tax return yourself. If you outsource your bookkeeping to an accountant then a standard deferral is requested to avoid any penalties, but this does not avoid interest. We work with a queue, first come first serve. Depending on where you are in this queue it might take longer.
Because we want to assist you in these situations as well, there are always options for quick handling. For example, we can schedule extra overtime. This way we try to complete your requested work within a month. For this we charge 25% extra, on top of your annual subscription or hourly fee. We will then make sure we file your tax return before May 1st, this way you do not pay any interest.
3. (Provisional) assessment until moment of declaration
In this case you file a proviosional assessment based on the profit in The Bookie Webapp. You can do this yourself. This way you ensure you pay little to no interest and will probably get money back.
Then we can afterwards file a complete and correct income tax return with all the right information.