Permission to pay in instalments

What it means

Permission to pay in instalments is a decision splitting a tax due or an arrear into payments on a set schedule. It differs from a deferral of tax payment, which moves the whole amount to a later date, in that the company starts paying straight away.

There is no entitlement to instalments. The tax administrator weighs each request on its facts, may require the debt to be secured, and charges interest for the instalment period under the Tax Code. Nothing is written off; only the timing of the payment changes.

The tax office’s permission covers only the taxes that office administers. Arrears on contributions are handled by the Social Insurance Agency and by each health insurer under their own procedures and conditions, so a company owing several institutions applies for instalments separately at each one.

How it works in practice

The request goes in electronically through the Financial Administration portal to the tax office that administers the tax. With it goes whatever the decision can rest on: the state of receivables and payables, the results of the business, and why a single payment would endanger its operation.

It is worth asking before the arrear grows and tax enforcement starts. The duty to pay does not pause while the request is pending, so current advances and new returns are still paid, or the debt grows faster than the instalments reduce it.

We build the proposed schedule from a cash flow plan for the coming months, not from what the company would like to pay. The office is more likely to grant a request where the instalments match expected income and it is clear the company can also meet its current taxes and levies alongside them.

What to watch out for

One missed instalment is not a week’s slippage. Breaking the conditions of the decision makes the rest of the debt payable at once and sends the office back to enforcement, while the interest already accrued over the instalment period stays on the company’s books.

Companies apply for instalments by reflex without comparing what they will cost. Interest for the instalment period is added to the debt, and where a working capital loan is available on better terms, paying the tax at once from the loan can come out cheaper and frees the company from the conditions of the decision.