Voluntary payment of tax on account(Taxwatch (Tax news in english))
18-11-2009 10:48
Af
Hans-Henrik Nilausen
Friday November 20, 2009 is deadline for payments of voluntary taxes on account for 2009 for companies.
Whether it is a good idea to make voluntary payments on account depends on the company’s borrowing rate or placement rate of interest. If this is smaller than the interest rate charged by SKAT, voluntary payment of tax may be a good idea.
If residual tax for 2009 is expected, voluntary payments may be a good idea, if the company can borrow to an interest rate below 7.2 % before tax or –if the company has surplus liquidity – has deposits that yield lees than 7.2 % interest before tax. This is because the company in connection with a voluntary payment avoids a non-deductible surplus of 6.1 %. SKAT however makes a deduction in the voluntary payment of 0.7 %. Before tax the residual tax surplus corresponds to an interest rate of 7.2 %.
If a company - conscious or unconscious – makes too large voluntary payments, this will result in overpaid tax, which will be refunded 12 months later. SKAT refunds the overpaid tax together with a tax exempt interest surplus of 2.6 %. Because of the reduction in voluntary payments the interest surplus corresponds to an interest of 2.5 % before tax. Therefore, it will not be advantageous for many companies to pay more than what is necessary to cover the residual tax.
Questions concerning the above can be addressed to Hans-Henrik Nilausen, hhn@bdo.dk
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