Tax on Account 2024 & Corporate Income Tax 2023
- 3 minute read
- Finance and Accounting, Legal and Corporate Law
Tax on account for 2024 and Corporate Income Tax for 2023 for Danish companies are up for payment just around the corner. So if you started a new business or company in 2024; if your business changed significantly from last year, or if you are unsure of whether you have your taxes on account under control, keep reading!
Wednesday, November 20, 2024 is the last deadline for payment of the 2nd installment of optional and ordinary tax on account for the income year 2024 as well as the payment of Corporate Income Tax for 2023
What is tax on account?
Taxes on account for Danish companies are paid in two ordinary equally large installments. These are calculated to be 50% of the company’s average corporation tax of the past three years. The Tax Assessment Notice for Corporation Tax for the year 2023 is expected to be sent out in October 2024.
The 1st and 2nd are considered ordinary installments, and a company may increase or decrease these installments through E-tax. This is relevant if you are expecting a lower income this year. It must be done no later than when the payment for the ordinary installment(s) is due – otherwise, you will have to contact the Danish Tax Agency, as the payment will otherwise be returned.
The two ordinary installments can be seen in E-tax for business from February onwards.
Companies can avoid surcharges on taxes by making a 3rd tax on account payment. But as a potential 3rd installment is optional, it needs extra attention and action from the Finance department of the company.
The deadlines for taxes on account 2024 and corporate income tax 2023 are:
1st ordinary installment:
March 20, 2024
2nd ordinary installment:
November 20, 2024
Corporate Income Tax for last year:
November 20, 2024
3rd optional/extra installment:
February 1, 2025
Rate of residual tax surcharges
The surcharges for 2024 are not yet known.
In December 2023, the Danish Tax Agency published the rate of residual tax surcharge for companies for the income year 2023, and the rate of the interest surcharge to be paid as an optional tax on account payment on February 1, 2024.
The residual tax surcharge for companies for the income year 2023 was 7.7% which was an increase of 2 percentage points compared to the previous years. This meant that if the tax on account paid in the 1st and 2nd installments did not cover the taxable income AND you did not pay the voluntary installment on February 1, you would be paying a surcharge of 7.7% when receiving your annual tax statement in November 2024. IF you pay the voluntary installment, you would instead be paying a surcharge of 1.5%, based on the numbers available at the time.
Note that the surcharge is not tax deductible and it is therefore not beneficial for you to pay too much in the voluntary installment. This is because the normal interest subsidy for excess tax does not apply to the voluntary payment in February.
Who should pay the voluntary payment of estimated tax?
In general, if your company is expecting to pay a residual company tax, you should consider paying a voluntary installment of tax on account. But it always depends on the surcharge and the applicable loan interest.
Should you need a loan to pay the voluntary installment, it will only be beneficial for you to pay the 3rd voluntary installment, if your loan interest is within certain levels. Should your loan interest for your tax payment be higher than this, you will be better off waiting for the 2nd installment.
Are you in doubt about whether it will be beneficial for you to pay the 3rd voluntary installment? Do not hesitate to reach out to our mighty admins for a talk!
Possibility of refunding excess estimated tax
Do you anticipate paying more than your annual income tax? Excess amounts can be refunded under specific conditions before the tax assessment is finalized. Requests for refunds must be submitted to the Tax Authority before the deadline for submitting the information return/tax return. So, it must be done no later than June 30, 2025, for the income year 2024.
At mighty admins, we can assist you with:
Review and calculation of your account taxes for the year to ensure limited surcharges and/or best use of the liquidity of your company.
Preparing an annual wheel of filing and payment deadlines with the local authorities.
Handling your Corporate Administration from A-Z, so you never have to think about important filing and payment deadlines.
