Advance income tax payments: when and how much to pay

Advance income tax payments are regular payments through which a taxpayer gradually settles their future tax liability over the course of the year. Setting them up correctly helps you avoid a single large outlay at the end of the year as well as unnecessary penalties for late payment. For entrepreneurs, advance payments are a routine part of financial planning that is worth keeping under control. In this article we explain who pays them, how they are calculated and what to do if your situation changes during the year.

What advance tax payments are

They are partial tax payments made regularly during the tax period to the account of the Financial Administration (Finančná správa) before the final amount of tax is known. After the end of the year, once the tax return has been filed, the advance payments made are set against the resulting tax and only any difference is settled.

Who pays advance payments

The obligation to make advance income tax payments arises when the taxpayer’s last known tax liability exceeds a threshold set by law. Check both this threshold and the payment frequency for the period concerned, as they may be adjusted.

• What matters is the amount of the last known tax liability
• It applies to both individuals and legal entities
• If the tax is lower, there is no obligation to make advance payments

How often they are paid

Depending on the amount of the last known tax liability, advance payments are made either monthly or quarterly. As a general rule, a higher tax means a shorter interval, i.e. monthly payments, while a lower tax means quarterly payments. Check the specific thresholds that determine the monthly and quarterly regimes for the current year.

How the amount is calculated

The amount of each advance payment is based on the last known tax liability stated in the most recently filed tax return. A proportionate part of it is calculated depending on whether you pay monthly or quarterly. Once a new tax return is filed, the basis for calculating the advance payments is updated, so review their amount every year. Until you file the new tax return, advance payments are usually still made at the previous amount. Only after filing is any difference settled so that the payments match the new tax liability.

Deadlines and penalties

Advance payments are due by deadlines set in advance over the course of the tax period. Late payment or non-payment exposes you to late-payment interest, which needlessly increases your costs. That is why you should keep a close eye on your payments, ideally using a standing order or calendar reminders.

• Keep track of the due dates throughout the year
• Set up reminders or standing payments
• Update the amount of your advance payments after filing your tax return

When advance payments can be adjusted

If your business situation changes significantly during the year, for example if your income drops sharply, you can, under certain conditions, ask the tax administrator to allow you to make advance payments differently from what the law would otherwise require. This option helps you maintain a healthy cash flow and avoid burdening the company with higher payments than its actual results justify. Similarly, if you expect significantly higher income, it may be sensible to plan for a higher tax during the year and set money aside for it. Think of advance payments as a tool for spreading the tax burden, not as a pointless administrative obstacle.

Related articles: Minimum corporate income tax: who it applies to, Annual tax reconciliation for employees explained, How to take money out of an s.r.o. with as little tax as possible.

Frequently asked questions

What determines whether I have to make advance tax payments?

What matters is the amount of the last known tax liability. If it exceeds the threshold set by law, you are obliged to make advance payments. Check the threshold for the period concerned.

What happens if I do not pay an advance payment on time?

Late payment gives rise to late-payment interest. That is why you should keep track of the due dates and secure your payments with reminders or a standing order to avoid penalties.