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The prepayment register is one of the Tax Administration’s registers. A company or self-employed person can submit an application for registration. The purpose of having a prepayment registration is to prove that your company deals with its taxes on its own.
Attention begins.
Even if you are on the prepayment register, you have to ask the Tax Administration for a decision on prepayments. You must do this yourself, and you must pay the installments during the current year.
The prepayments are your business’s forthcoming income taxes. The idea is to pay installments as your business earns profits during the year.
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Your company can show it carries full responsibility for paying its own taxes. In this case, your customer – another company, a household, or other – can pay your invoice as it is, so the customer will have no need to withhold tax on the money they pay you. If no registration is in force, it means that any customer of yours would need to withhold some tax for the Tax Administration upon every payment.
If your customer is a household or an estate of a deceased person, they can claim a credit for household expenses if the work justifies it.
If no prepayment registration is in force, your customer must withhold tax on the payment (which you had invoiced) before sending it to your company for the delivered work or service.
The customer would need to calculate the withholding by first subtracting the value-added tax on the invoice, and then applying the withholding rate. Sizes of withholding rates:
Read more about the payment of withholding: The obligations of an employer – help pages.
The seller’s prepayment registration has no significance if:
If you are a customer and you get an invoice and both work and goods are being invoiced and the seller company is not on the register, you must withhold tax on the amount consisting of work.
If you are a company or a person operating a trade, business, agriculture, or another activity with the objective to gain or produce income, you can submit an application. Your operation does not have to be started yet – it is enough if it is likely to start.
However, there is no mandatory rule that would require anyone or any company to have the registration. However, when you have just started up, it might be difficult to make any sales or receive orders if your company is not on the prepayment register.
The Tax Administration will enter the company into the register either from the date when the application was received or from a later date that you had indicated in the application documents. You will receive the registration decision in MyTax. Registration information will also appear on the Business Information System website immediately after registration.
The Tax Administration must decline a registration sometimes – for example, if the activity is clearly a hobby, or if the applicant has a history of negligence relating to taxes or to the duty to keep books.
You can register for prepayment in MyTax at the same time as you start your operation. Alternatively, you can also register later when you have been issued a Business ID.
How to request a Business ID and ask for entry into the Tax Administration’s registers in MyTax
If you submit a start-up notification via the Business Information System, you can additionally submit a notification of changes to apply for prepayment registration.
As you submit a start-up notification via the Business Information System, you can submit an application for prepayment registration at the same time.
If you already have a Business ID, you can use MyTax for submitting the application. Alternatively, you can submit a notification of changes via the Business Information System to register.
How to ask for entry into the Tax Administration’s registers in MyTax
Companies or self-employed individuals can ask for removal from the prepayment register in MyTax. Among the most common reasons for de-registration on a company’s initiative is that its planned operation of business never started or was discontinued. De-registration on the Tax Administration’s initiative is possible, as well.
After an application for de-registration is processed, the Tax Administration will issue a decision on removal from the register. Information concerning ceased registration will also appear on the Business Information System website.
Alternatively, you can request removal from the register via the Business Information System.
Removing a company or self-employed person from the prepayment register on the Tax Administration’s initiative might happen in the following situations:
Companies can be removed if:
You will always receive information on a removal being pending, and you can provide a written explanation. If you can show you have a business operation ongoing, no removal is made. You can register again if there is a delay and the operation of your business will begin later.
Removal from the register as a consequence of negligence, including:
You will be notified on a pending removal beforehand, and you can remedy any negligence.
Further reasons for a company to be removed are related to the person leading the company:
Setting up a new company to avoid de-registration on the Tax Administration’s initiative is not feasible.
If you had been removed from the prepayment register, you can apply again.
If negligence had been the ground, you can register again only when:
The Tax Administration will give you the registration either from the date when the application was received, or from a later date that you had indicated in the application.
If you are the customer making a payment for work or services, check the seller’s registration before sending the payment. If the seller is on the prepayment register, you can pay the seller’s invoice. There is no need for tax withholding. If the seller is not on the register, you must withhold tax.
The existence of any party’s prepayment registration is public information. You can check registrations by:
To check registrations, companies can also use the services of private, paid service providers.
Read more about the options available in the Business Information System.
It is advisable to check the registration before you send a payment. If your operation of a trade or business involves making payments to one single company on a regular basis, we recommend that you make the check at least four times a year (like March, June, September and December).