Late-payment interest with relief is imposed on back taxes and additional prepayments

The Tax Administration can impose late-payment interest with relief on back taxes and additional prepayments.

You can avoid having to pay late-payment interest with relief by making sure that the tax withheld or prepayments made during the tax year are high enough or by supplementing your prepayments with an additional prepayment within one month from the end of the tax year. 

When late-payment interest with relief is imposed on back taxes, €20 is subtracted from the interest. However, the maximum amount to be subtracted equals the sum of the interest. When late-payment interest with relief is imposed on an additional prepayment, no subtraction is made. In 2024, the late-payment interest with relief is 6%.

How to avoid late-payment interest with relief

Individual taxpayers, self-employed individuals, partners of general or limited partnerships and agricultural operators can make additional prepayments without late-payment interest with relief during the month of January.

Example: A self-employed individual notices that they have not made enough prepayments in 2023. On 15 January 2024, they request an additional prepayment with the due date of 25 January 2024. The self-employed person pays the tax by the due date, so they do not have to pay any back taxes or late-payment interest with relief.

Corporate entities can make additional prepayments without the late-payment interest with relief for a period of one month after the end of the tax year.

Example: The accounting period of a limited liability company is 1 April 2023–31 March 2024. On 26 April 2023, the company requests an additional prepayment with the due date on the same day. It makes the additional prepayment on 26 April 2023. The additional prepayment does not accrue late-payment interest with relief because the company has made the prepayment within one month from the end of the tax year. 

What is the period for late-payment interest with relief?

Late-payment interest with relief starts accruing on the first day of the second month following the end of the tax year. It is calculated according to the actual number of days of the month and year.

The interest stops accruing on the

• due date for back taxes
• due date for an additional prepayment if you are making an additional prepayment instead of paying back taxes.

You can make the additional prepayment before the due date but that does not affect the amount of the late-payment interest with relief.

Example: The accounting period of a limited liability company is 1 April 2023–31 March 2024. On 23 April 2024, the company requests an additional prepayment with the due date of 13 May 2024. It makes the additional prepayment on 13 May. The additional prepayment accrues late-payment interest with relief between 1 and 13 May 2024.

If the corporate taxpayer has more than one accounting period ending during the calendar year, late-payment interest with relief is calculated as from the beginning of the second month following the end of the last accounting period.

How to calculate late-payment interest with relief

Late-payment interest with relief calculated on an additional prepayment:

(Interest days * interest rate * principal) / (number of days in the year * 100) = amount of late-payment interest with relief

Late-payment interest with relief calculated on back taxes:

(Interest days * interest rate * principal) / (number of days in the year * 100) = amount of interest. When a maximum of €20 but no more than an amount equalling the amount of interest is subtracted from the interest, the result is the late-payment interest with relief.

If you pay an additional prepayment after the due date

If you make an additional prepayment after the due date, late-payment interest is added to the amount. The interest period begins on the day after the due date and ends on the date when you pay. In 2024, the late-payment interest is 11%.  Read more about interest and consequences of late payment.

Example: The due date of your additional prepayment is 16 March but you do not make the payment until 19 March. Late-payment interest with relief is calculated on the additional prepayment for 1 February–16 March and ordinary late-payment interest for 17–19 March. When you pay the additional prepayment in MyTax, the late-payment interest is already included in the final amount.