Advance Payments For Corporate Income Tax Purposes

We are in the last quarter of 2024 and, for many companies, that also means the last quarter of their financial year. So the last chance to make advance payments related to financial year 2024 (no later than Friday 20 December 2024). Which benefit do companies get from the advance payments? And what if too few advance payments were made?

Advance Payments To Avoid A Tax Increase

A company is supposed to pay corporate tax spontaneously in advance during the relevant financial year itself. Do you fail to do so? Then you will face the ‘increase in corporate tax due to insufficient advance payments’. The rate for this additional tax liability is 9% for tax year 2025.

For companies, this increase applies from the first euro underpaid in advance. It is important to note that this increase is a real increase in tax, and therefore not tax deductible.

Plan The Advance Payments Well!

For companies whose financial year coincides with the calendar year, these are the payment deadlines with the corresponding tax benefits:

Either way, the message is to start prepaying early. If your profits turn out to be higher than estimated, your ‘early’ advance payments will give you some margin.

If you did not yet make advance payments in the first three quarters, you would have to pay 150% of the estimated tax when making the advance payment in the fourth quarter to still neutralise the increase (as the 6% advantage for the advance payments in quarter 4 is lower than the overall increase of 9%).

Note that advance payments can neutralise at most the ‘tax increase due to insufficient advance payments’, but companies do not retain a benefit from an excess of advance payments.

For companies with non-calendar financial years, payments must be made on the 10th day of the fourth, seventh and 10th months, and on the 20th day of the last month of the financial year. If one of these days falls on a weekend, the deadline is extended to the next working day. Companies with a financial year of less than 12 months lose one or more prepayment periods. For companies with a financial year longer than 12 months, only the last four periods apply.
 

How To Make The Advance Payments?

In case of insufficient cash, bank financing for advance payments can be considered. Unlike the ‘increase due to insufficient prepayments’, the interest cost of this financing will be tax deductible and in practice will often be lower than the tax increase.

The advance payments must be made to account number BE61 6792 0022 9117 (BIC: PCHQ BEBB) of the ‘Collection Centre – advance payments Service’, located at Koning Albert II-laan 33, 1030 Brussels. The amount must be paid into the account of the ‘advance payment service’ at the latest by the previously mentioned dates. Payments made after these dates will be taken into account for the following quarter.

What IfThere Is A Surplus Of Advance Payments?

Should it turn out that an overpayment was previously made in advance, there are several options for recovering this surplus:

• Do nothing: surplus is only refunded after the relevant assessment is settled, without entitlement to any interest;
• Reclaim the surplus of advance payments (the tax authorities may deduct outstanding debts from the amount reclaimed);
• Carry forward advance payments to 2025.

For the last two options, it is important to make this decision before the end of the third month after the end of the financial year, (i.e. before the end of March 2025). This can be done via MyMinfin or by e-mail.

If you have any questions regarding this topic, don’t hesitate to contact our RSM Belgium | Tax team ([email protected]).