Which taxes always have priority

Advance payments for income tax and corporation tax

Table of Contents

1 overview
2 Applicable Regulations
3 Creation, determination, due date
4 height
5 Crediting of advance payments
6 Special features of procedural law
7 Bibliography
8 Related Lexicon Articles

1. Overview

Advance payments are to be made on the → corporation tax as well as on the → income tax during the year, since the income tax and the corporation tax as assessment taxes only arise at the end of the respective calendar year. In turn, it usually takes some time before the income tax or corporation tax is determined and due, so that the collection of advance payments is intended to ensure the financing of the state until the (final) payment of the determined taxes.

2. Applicable Regulations

The corporation tax law refers in section 31 (1) sentence 1 KStG for the implementation of taxation to the provisions of the income tax law. With regard to the advance payments, in particular Section 37 of the Income Tax Act addressed. Only to the extent that the corporate income tax law contains its own provisions, these have priority. In the present case, this concerns, on the one hand, the corporation tax prepayments for a different → financial year (Section 31 (2) KStG) and the accrual of corporate income tax for advance payments (Section 30 No. 2 KStG).

3. Creation, determination, due date

The tax prepayments arise With Beginning of the calendar quarter, in which the advance payments are to be made (section 37 (1) sentence 2 EStG or section 30 no. 2 KStG). The payment and therefore due date of the advance payments result from Section 31 Paragraph 1 Sentence 1 KStG in conjunction with Section 37 Paragraph 1 Sentence 1 EStG, according to which the taxpayer. the advance payments on March 10th, June 10th, September 10th and 10.12. to be paid has (→ deadlines and dates). Thus, the advance payments for income or corporation tax arise at the beginning of each calendar quarter (1.1., 1.4., 1.7., 1.10.), But are only due on the 10th of the last month of a calendar quarter. If the corporation tax liability is established in the course of a calendar year, the advance payments arise with the establishment of the tax liability.

Example 1:

The newly founded A-GmbH enters into unlimited corporation tax liability on February 10, 2001.

Solution 1:

The corporation tax in relation to any advance payments to be made acc. To § 30 No. 2 clause 2 KStG on 02/10/01. However, this regulation only applies to prepayments for the calendar quarter in which the tax liability is established for the first time (in this case the first calendar quarter). The creation of advance payments for the following calendar quarters is based on the general rules.

In the case of the opening of insolvency proceedings, the point in time at which the respective advance payment is made at the beginning of the calendar quarter determines whether there is a mass liability or an insolvency claim. An advance payment obligation will not be divided proportionally from the opening time. An unpaid ESt / KSt advance payment for the quarter in which the insolvency proceedings are opened therefore constitutes an insolvency claim in full (see FG Munich judgment of 7 May 2014, 9 K 2072/13, EFG 2014, 1488) .

If the → financial year of a corporation deviates from the calendar year, the corporation tax prepayments in accordance with Section 31 (2) KStG are to be paid during the financial year that ends in the VZ.

The corporate tax prepayments are made through Advance payment notice (Section 31 (1) sentence 1 KStG in conjunction with Section 37 (3) sentence 1 EStG). The due dates and the respective amount of the advance payment result from the advance payment notification. Externally, this advance payment notice can be linked to the (previous) annual tax assessment. However, it is always one independentTax assessment. Advance payments are only set if the advance payments amount to at least € 400 (€ 200 up to and including VZ 2008) in the calendar year and at least € 100 (€ 50 up to and including VZ 2008) for an advance payment date (Section 37 (5) sentence 1 EStG) .

Note:

The determination of income tax prepayments is also permitted if the taxpayer. only earns income from non-self-employed work that is subject to the tax deduction (BFH judgment of December 20, 2004, VI ​​R 182/97, BStBl II 2005, 358). If advance income tax payments are made for spouses assessed together for income tax, it can be assumed, in the absence of any recognizable other declaration of intent - even in the case of one spouse's insolvency known to the FA - that payment will be made for the account of both spouses (FG Schleswig-Holstein judgment of February 21, 2008, 1 K 75/07, EFG 2008, 914). The BFH confirmed this in its judgment of September 30, 2008 (VII R 18/08, BStBl II 2009, 38). The advance payments must therefore initially be offset against the fixed taxes of both spouses, the remaining remainder is to be paid out to the spouses according to head parts (BFH judgment of March 22, 2011, VII R 42/10, BStBl II 2011, 607).

4. Height

The advance payments are intended to anticipate the income tax or corporation tax, which the taxpayer. will probably owe for the current DC (cf. Section 37 (1) sentence 1 EStG). The amount of the advance payments is therefore generally based on the income tax or corporation tax, which is calculated after offsetting the tax deductions (e.g. → capital gains tax, advance payments) at the lastDisposition (Section 31 (1) sentence 1 KStG in conjunction with Section 37 (3) sentence 2 EStG). The advance payments are to be made in four equal installments (BFH judgment of November 22, 2011, VIII R 11/09, BStBl II 2012, 329). In addition, there are the advance payments on the → solidarity surcharge determined according to the income or corporation tax prepayments (Section 3 (1) No. 2 SolZG).

This procedure assumes that the income tax or corporation tax of the current year corresponds to the income tax or corporation tax of the previous year. Since this is mostly not the case, however, Section 37 (3) sentence 3 EStG provides that the tax office ex officio until the end of the 15th calendar month following the VZ Adjustment of advance payments can make. Thereafter, both an increase and a decrease in the advance payments can occur if a higher or lower tax assessment is likely to result for the DC.

Example 2:

B-GmbH has a fiscal year that is the same as the calendar year. In March 03 it was established (also verifiable for the tax office) that the corporation tax prepayments for VZ 01 were set too low.

Solution 2:

The tax office can adjust the advance payments for VZ 01 ex officio to the corporation tax that is expected to arise for VZ 01 until the end of March 03.

Example 3:

C-GmbH has a business year that differs from the calendar year (e.g. 1.5. To 30.4. Of the following year).

Solution 3:

The corporation tax prepayments for VZ 01, which is based on the business year from 1.5.00 to 30.4.01, can be adjusted up to 31.3.03.

The Stpfl. can a Reduction in advance payments apply if he proves a lower annual tax.

Note:

If a reduction of the fixed advance payments is requested during a current financial year, there is disagreement as to which advance payments are to be adjusted. According to one opinion, prepayments already made should also be retrospectively reduced, according to another opinion, only future prepayments should be adjusted, unless the prepayments already made exceed the expected annual tax liability.

At a subsequent increase of the advance payments, the tax office has the latest Adjust the advance payment for the VZ (Section 37, Paragraph 4, Clause 1 of the Income Tax Act). According to Section 37 (5) sentence 2 of the Income Tax Act (EStG), however, the prerequisite for this is that the increase amount is at least € 5,000 (€ 2,500 up to and including VZ 2008). In addition, the tax office bears the burden of determining that the annual tax is expected to increase. The Stpfl. is not obliged to report such circumstances himself, on request the Stpfl. however, to provide information to the tax office. The increase amount is due one month after notification of the advance payment notification (Section 37 (4) sentence 2 EStG).

When determining the amount of the advance payment, in deviation from the last assessment, an estimate based on a forecast may be required. Indications that a not inconsiderable amount of income occurred only once in the last VZ (e.g. from the sale of shares) justify an investigation and hearing obligation of the tax office according to § 88, § 91 AO. The taxpayer can take action against an erroneous advance payment notification by means of a correction request as well as an objection. For the reimbursement of consulting costs incurred as a result of the tax authorities' breach of duty to investigate, a claim for damages according to § 839 BGB can be considered (OLG Celle judgment of 23.8.2012, 16 U 8/12).

Note:

The Second Act to Implement Tax Measures to Cope with the Corona Crisis (Second Corona Tax Aid Act) of June 29, 2020, Federal Law Gazette I 2020, 1512, on the one hand, makes adjustments to advance payments for VZ 2019 (regulated in Section 110 EStG) and on the other the deduction of the preliminary loss carryforward for 2020 (regulated in § 111 EStG) implemented. The aim is to take into account the increase in the maximum amount limits for loss carry-back in the prepayment process or in the assessment for 2019. Pursuant to Section 110 of the Income Tax Act, the total amount of income used to calculate the advance payments for the VZ 2019 is reduced by a flat rate of 30% upon request. This does not apply to income from non-self-employed work. The prerequisite for the reduction is that the advance payments for 2020 have been reduced to zero. A higher reduction is possible through proof. Overall, it is limited to € 5 million or € 10 million in the case of jointly assessed spouses. According to § 111 EStG, a flat-rate amount of 30% of the total amount of the income of the VZ 2019 will be deducted as a loss carry-back from 2020 (so-called provisional loss carry-back for 2020) when applying for the tax assessment for the VZ 2019. This does not apply to income from employment. The prerequisite for the reduction is that the advance payments for 2020 have been reduced to zero. A higher reduction is possible through proof. Overall, it is limited to € 5 million or € 10 million in the case of jointly assessed spouses. If the reduction in advance payments for VZ 2019 leads to an additional payment in the tax assessment for VZ 2019 due to an expected loss carry-back for 2020, this can be deferred upon request. In this case, deferral interest will not be charged. An income tax return must be submitted for the VZ 2020 if the reduction is claimed. With the assessment for 2020, the tax assessment for the VZ 2019 has to be changed.

Due to the economic damage caused by the coronavirus, in its letter of March 19, 2020 (IV A 3-S 0336/19/10007: 002, BStBl I 2020, 262), the victims should be accommodated through tax measures to avoid undue hardship. The taxpayers who can be proven to be directly and not insignificantly affected should therefore be able to submit applications for adjustment of the advance payments for income and corporation tax by December 31, 2020, stating their circumstances. These applications should not be rejected because the taxpayers cannot provide detailed proof of the damage incurred in terms of value. Requests to adjust the advance payments that only affect periods after December 31, 2020 must be specifically justified.

5. Crediting of advance payments

The advance payments made are based on the annual tax set Credit decision counted. If prepayments have been made that are too high, the taxpayer will be charged. the excess amount will be reimbursed. In the opposite case, the outstanding income or corporation tax must be paid within one month of the notification of the tax assessment.

If no annual tax is set, an income tax advance payment notice is settled when the statute of limitations for the tax claim occurs “in another way” within the meaning of Section 124 (2) AO, with the result that advance payments made in accordance with Section 37 (2) AO must be reimbursed (FG Rheinland -Pfalz judgment of 8 February 2012, 2 K 2259/10, EFG 2012, 1113; revision at the BFH under Az. VII R 11/12: In the revision procedure, the parties to the proceedings agreed that the main part of the legal dispute was settled - Judgment is irrelevant.). In such a case, the expiry of the assessment period is not inhibited.

Note:

The tax authorities generally reject the offsetting of corporation tax prepayments with the disbursement amounts of the corporation tax credits last determined on December 31, 2006 (see OFD Münster of April 20, 2007, DB 2007, 1001). A payment deferral can only be considered if the rate is due "shortly", i.e. within one month.

6. Special features of procedural law

The → tax assessment with which the advance payments are set is always one below the Reservation of review standing tax assessment (Section 164 (1) sentence 2 AO; → tax assessment subject to review). The advance payment notice can therefore be canceled or changed at any time in accordance with Section 164 (2) AO.

7. Bibliography

Dötsch, KSt, §§ 30, 31 KStG new version (loose leaf); Gosch, Corporate Income Tax Act, 2nd A. 2009; Horst, Advance Payments in Tax Law - an overview of various types of tax, Steuer & Studium 2007, 124; Knief, Unternehmenssteuerreform: The determination of the tax prepayments with the BWA 2008, DStR 2008, 520; Luft, Even distribution of income tax prepayments even with fluctuations in profits during the year, SteuK 2012, 80; Eisolt, Income tax advance payments in the insolvency of natural persons, ZInsO 2014, 334; Elden, Determination of Income Tax Advances Upon Receipt of Alimony, NZFam 2014, 1159; Holzner, entitled to reimbursement according to § 37 Paragraph 2 Clause 1 AO, Tax Code 2016, 371; Riegel / Amler, Determination of Evasion Interest on Advance Payments ?, BB 2016, 2972; Holzner / Dürr, The Income Tax and its Forms of Collection - Systematic Overview of the Functionality of the Individual Forms of Collection, NWB Supplement 2017 to No. 13, 24; Bolik / Gauß, Covid-19 tax enforcement that protects liquidity, Part I: Tax deferrals, Part II: Postponement of enforcement, Part III: Reduction of advance payments, DB 2020, 910.

8. Related Lexicon Articles

→ Tax assessment subject to review

 

Note to editors: