How to defer income tax for 2020
Due to the current economic situation, you are considering postponing the payment of your personal income tax, as your tax return is payable. See what options you have…
Option 1: payment in instalments. The result of your personal income tax return is a deposit, and you do not have enough money to pay the full amount now. In this case, the easiest way is to take advantage of the instalments offered by the Inland Revenue in the tax return itself, whereby you can pay 60% of the tax up to 30 June 2021 and the remaining 40% up to 5 November 2021:
– You will not have to pay interest or surcharges, nor will you have to provide guarantees (whatever the amount deferred).
– This deferral is only possible if you file your tax return within the legal deadline (up to 30 June).
Option 2: “normal” deferral. You can also defer your personal income tax liability (or part of it), as for other taxes. However:
– In this case the deferral will no longer be free of charge, but you will have to pay a late payment interest of 3.75% per annum. In general, you can request a deferral of up to 12 monthly instalments.
– If the amount to be deferred exceeds EUR 30,000 (on its own or together with other deferred tax debts), you must provide security. Attention! If you provide a bank guarantee, the interest rate will be only 3%, and you can request a deferral of up to 36 monthly instalments.
– Attention! This alternative is incompatible with payment by instalments. Thus, for example, it is not possible to take advantage of the 40% instalments and, at the same time, defer the initial payment of 60%.
Option 3: ERTE. If you or any of the members of your family unit – in the case of joint taxation – were included in a Temporary Redundancy Proceedings (ERTE) in 2020, this year, exceptionally, you can pay your income tax in six monthly instalments, due on the 20th of each month, with the first instalment due on 20 July. And without paying interest! Note. To do so:
– The combined amount of other non-guaranteed deferred tax debts and pending deferment requests, together with the IRPF quota to be deferred, must not exceed 30,000 euros.
– You must file your tax return by 30 June. Attention! However, this type of deferral is incompatible with the two aforementioned options.
Exceptionally, in the IRPF of 2020, workers who were included in an ERTE last year can split the payment of their IRPF in six monthly instalments.
