Interest on late payments

If you pay your taxes late, you must also pay late-payment interest. The Tax Administration uses your payment first on the interest and then on the overdue tax.

You must pay late-payment interest on all taxes paid after the due date and on all penalty fees imposed on your taxes, such as the punitive tax increase or late-filing penalties.

No late-payment interest is calculated on surtax or late-payment interest, because they are interest penalties, not penalty fees.

You can calculate and pay the late-payment interest in MyTax. Alternatively, you can calculate the interest with the interest calculator. The late-payment interest has no minimum. Pay the exact amount in euros and cents.

Interest is calculated from the day after the due date up to the day of payment (these days included). Interest days are the actual days of the month and the year.

The rate for the late-payment interest is set annually. In 2021 and 2022, the rate is 7%.

Add the interest to the original amount of tax and pay the total amount using the payment information provided for the tax. The Tax Administration will use your payment first on the late-payment interest and then on the overdue tax.

Penalty fees include the punitive tax increase, late-filing penalty and negligence penalty. The purpose of these fees is to encourage taxpayers to file accurate information at the right time.

The late-payment interest, in turn, is a penalty for paying taxes late.

Read more about penalty fees:

Late-payment interest when tax is imposed

You must also pay late-payment interest if additional taxes are imposed on you. The tax decision you receive contains a calculation of the amount of tax, late-payment interest and any penalty fees. The Tax Administration has calculated the late-payment interest up to the due date stated on the decision.Pay the tax, late-payment interest and any penalty fees using the payment information provided for the tax.

Note: if you pay the tax after the due date stated on the tax decision, you must also pay late-payment interest for that period.

If the tax amounts that have been withheld from you or that you have paid as prepayments during the tax year are not enough to cover your actual tax liability for the year, you must pay back taxes. However, you can add to the sum of your prepayments by asking the Tax Administration to calculate an additional prepayment for you. In this way, you can reduce your back taxes and related interest.

You can add to your prepayments without having to pay interest for 1 month after the tax year has ended. Starting from the second month after the end of the tax year, late-payment interest with relief will be calculated on the additional prepayment up to the due date of the additional prepayment. Read more about how to request and pay an additional prepayment.

Starting from the second month after the end of the tax year, late-payment interest with relief will also be calculated on back taxes. This interest is calculated up to the due date of the first instalment of the back taxes.

When your tax assessment for the tax year is completed, €20 will be deducted from the late-payment interest with relief calculated on your back taxes. However, the deduction cannot exceed the total amount of interest. This means that if you only have a small amount of back taxes to pay, you do not have to pay any late-payment interest. The €20 deduction is not made from the late-payment interest with relief imposed on an additional prepayment or on taxes resulting from reassessment.

Please note that if you pay your back taxes or additional prepayment late, you will also have to pay late-payment interest.

How to calculate late-payment interest with relief

You can see the exact amount of the late-payment interest with relief in MyTax and on the tax decision. Interest days are the actual days of the month and the year.

The rate for the late-payment interest with relief is the reference rate according to the Interest Act plus 2 percentage points. However, it cannot be less than 0.5%. For 2021 and 2022, the rate is 2%.

How to pay the late-payment interest with relief

Add the late-payment interest with relief to the additional prepayment or back tax. Then pay the total amount using the same payment information.

If you have not complied with your reporting obligation concerning income taxation – for example, if you have not reported your rental income and additional back taxes are therefore imposed on you – the Tax Administration will also impose late-payment interest on those taxes in the reassessment decision.

The interest is calculated from the day following the first due date of your back taxes up to the due date of the tax imposed because of the reassessment. The interest is collected up to the due date, even if you pay the tax before the due date.

If the taxpayer has not neglected their reporting obligation but, for example, the Tax Administration has made an error when saving data and the error needs to be corrected, the interest to be added to the tax is not late-payment interest but late-payment interest with relief. Late-payment interest with relief is not calculated for the period when late-payment interest is calculated on the tax. The late-payment interest with relief is also collected up to the due date, even if you pay the tax before the due date.

Note: if you pay the tax after the due date stated on the tax decision, you must also pay late-payment interest for that period.

If an adjustment is made causing your tax to become higher, there will be a late-payment interest. This may occur if the Tax Administration adjusts your self-assessment and you must pay more tax, or you make a correction that increases your tax yourself, including VAT, excise duties, employer's contributions and other self-assessed taxes. The calculation of the interest always relates to the tax period concerned by the adjusted, higher tax. The interest period starts the day after the general due date for that period, and ends on the day when you pay the tax.

If the VAT is adjusted because too much negative VAT (VAT that qualifies for a refund) was originally refunded to you, the excessive amount is subject to late-payment interest starting from the day following the refund date and up to the day when you pay the amounts due – which is the tax and the interest.

The processing of negative balances of VAT will change from January 2022. The changes have an impact on negative VAT balances that are corrected, and then become smaller, at a time when the Tax Administration has already applied the negative VAT on an unpaid tax or on an unpaid debt that the taxpayer has owed.

Making corrections to a reported balance of negative VAT, when the end date of the tax period has been 31 December 2021 or an earlier date:

If the negative VAT has been used on your other tax liabilities (employer's contributions, for example) and the amount of negative VAT diminishes because of a correction or adjustment, the amount used on the employer's contributions will also decrease. The consequence from the above is that you must pay late-payment interest.

For example, if an original negative balance of VAT had been applied on your employ¬er's contributions, the corrected/adjusted negative VAT causes that the Tax Administration must collect late-payment interest on the portion of your employer's contributions that remains unpaid due to the change made to the amount.

The start date of accrual of the late-payment interest is the date when the Tax Administra-tion applied the refunded negative VAT on employer’s contributions. Interest will continue to accrue up to the day when you pay the portion of the employer's contributions that remains unpaid. This means that late-payment interest is imposed on the tax on which the amount of refund – that was unfounded – had been used.

Making corrections to a reported balance of negative VAT when the tax period’s start date is 1 January 2022 or later:

There will be changes in 2022 to negative-VAT refunding. The changes affect VAT balances for tax periods that begin 1 January or later. The new rules only have an impact on VAT reporting of a negative balance that diminishes the originally reported negative VAT; in other words, the sum total of the VAT payable becomes higher as the negative value becomes lower. If the Tax Administration had applied the company’s original refund, which had been reported incorrectly and therefore is unfounded, as coverage for an owed amount – such as an excise duty on alcohol – the Tax Administration would reclaim the amount from you. The reclaim is carried out instead of collecting the excise duty again.

Read more about how the Tax Administration sends out refunds (example 3 under “Immediately after processing”).

Self-assessed tax can be refunded in certain situations based on a separate request. For example, if such a request had caused a too high refund to be sent to you – on the excise duty on liquid fuels, for example – the excessive refund will collect late-payment interest; starting from the day after the refund date and up to the day when you pay the amount due.

If you have neglected your reporting obligation concerning real estate taxation – for example, if you have not reported the details of all real estate units and additional real estate taxes are therefore imposed on you – the Tax Administration also imposes late-payment interest on those taxes in the reassessment decision.

Late-payment interest is calculated starting from the day following the first due date of real estate tax and up to the due date of the tax imposed because of the reassessment. The interest is collected up to the due date, even if you pay the tax before the due date.

Note: if you pay the tax after the due date stated on the tax decision, you must also pay late-payment interest for that period.

The Tax Administration imposes late-payment interest on car tax if

  • you file a car tax return after the due date and the tax assessment is therefore delayed
  • you do not file a car tax return on a vehicle although the vehicle has been entered in the traffic register or brought to use in Finland
  • no car tax has been imposed, too little tax has been imposed or too much tax has been refunded because you have filed incomplete, misleading or erroneous information in a tax return or other document.

In the above situations, you must pay late-payment interest even for a period preceding the date of tax decision. Note: if you pay the tax after the due date stated on the tax decision, you must also pay late-payment interest for that period.

The interest period is not always the same. It is different for:

  • period-specific or vehicle-specific car taxation, and
  • excessive car tax refunds paid on the basis of refund requests.

What is the interest period in period-specific car taxation?

If late-payment interest is imposed in period-specific car taxation, the interest is calculated starting from the day following the prescribed due date and up to the due date of the tax imposed. Typical situations include the following:

  • the due date is postponed because the taxpayer files the tax return late
  • tax is imposed afterwards as tax decisions are reviewed. 

What are the interest periods in vehicle-specific car taxation?

If late-payment interest is imposed in vehicle-specific taxation, the interest is usually calculated starting from the 25th day of the third calendar month following the date when the tax liability arose and up to the due date of the tax imposed.

The tax liability arises when the vehicle is registered, the vehicle is brought to taxable use in Finland, or a tax return is filed on the vehicle.

Example 1: The vehicle is brought to taxable use and tax liablity arises on 15 June 2021. The Tax Administration carries out tax assessment based on the tax return filed. An error is later detected in the return. The Tax Administration adjusts the tax to the taxpayer’s detriment. The due date for the tax imposed because of the reassessment is 5 November 2021. Late-payment interest is imposed for the period 25 September–5 November 2021.

If car tax is imposed in vehicle-specific taxation on the grounds that the vehicle has been taken into use without filing a car tax return (authority-initiated tax assessment), late-payment interest is calculated starting from the day following the date when the tax liability arose and up to the due date of the tax imposed. In these cases, interest is thus calculated starting from the day following the date when the vehicle was brought to use, and no interest-free payment period is available for the tax.

Example 2: The vehicle is brought to taxable use and tax liablity arises on 16 January 2021. The taxpayer does not file a tax return. The Tax Administration carries out tax assessment on its own initiative and issues a decision on 3 January 2022. The due date for the car tax imposed is 24 January 2022. Late-payment interest is imposed for the period 17 January 2021–24 January 2022.

If I receive too much refund based on my refund request, what is the interest period?

If you receive too much refund, the portion of car tax that was refunded without a valid reason must be paid back.

If an excessive amount of car tax (e.g. export refund) is refunded based on an incomplete or inaccurate request, late-payment interest is calculated from the day following the date when the excessive refund was used on taxes or debited from the Tax Administration’s account. Interest will accrue up to the due date of the tax imposed.

The purpose of an interest penalty is to encourage taxpayers to file accurate and complete information when they request a car tax refund.

The Tax Administration imposes excise duties if the taxpayer has not followed the rules related to excise taxation. Typical situations include the following:

  • Non-compliance related to import, reception or movement of goods.
  • Goods that a private individual has brought with them to Finland are considered to be intended for other than personal use.
  • The procedure according to the act on excise duties (Valmisteverotuslaki 182/2010) has not been followed in the transfer of goods purchased by a private individual for their personal use in another Member State.

When excise duty is imposed in the above situations, late-payment interest is calculated starting from the day when liability to pay excise duty arose and up to the day when the duty was paid.

The liablity to pay excise duty arises as soon as goods are received or imported or if the applicable rules are not followed during the transfer. No interest-free payment period is available for the tax.

Example 3: A passanger arrives from Tallinn to Helsinki on 15 June 2021 and brings 1,000 litres of alcoholic beverages with them. Customs reports the imports to the Tax Administration. The Tax Administration holds that the alcoholic beverages are not for the passanger’s personal use but for commercial purposes. The Tax Administration issues a decision on 1 July 2021, imposing excise duty on alcohol and alcoholic beverages and excise duty on beverage containers on the taxpayer. The due date stated on the decision is 12 August 2021, but late-payment interest starts to accrue on the day following the date of import, i.e. on 16 June 2021.