Deferral of tax payment

What it means

Deferral of tax payment is a decision by which the tax office moves the due date of tax already declared or assessed to a later date. The tax neither disappears nor shrinks: only the moment when the money has to sit in the tax office account changes.

Do not confuse it with an extension for filing the return, which moves the filing deadline, or with permission to pay in instalments, which splits the amount up. There is no legal entitlement to it either.

A deferral is granted for reasons on the taxpayer’s side, typically where paying at once would put the business at risk, and the office examines whether the tax will actually be paid afterwards. It is not a loan: if the cash flow does not show where the money will come from, the request is refused.

How it works in practice

The request goes to the tax administrator before the due date or right after it, with reasons and usually with security. Interest runs for the deferred period: lower than the penalty interest on late payment, but never nil.

The permission holds while the taxpayer keeps to the conditions set. Break them and the deferral falls away, the whole amount is due at once, and the arrears are collected the ordinary way, including tax enforcement against accounts or receivables.

We attach a forecast of income over the deferral period, a list of payments expected from customers and a proposal for security. Concrete figures and dates persuade more than a general account of a bad market or late payers.

What to watch out for

The most expensive answer to a cash shortage is silence. Simply not paying costs the higher penalty interest, invites enforcement and damages the tax reliability index, while asking in time costs less and leaves an agreement in hand.

Filing the request does not move the due date. If the office refuses it, late payment interest runs from the original due date and the months spent waiting for a decision are charged at the full rate, so a fallback source of money is sought alongside the request.