Borrow or save money from the Tax Authorities

If you have to pay additional taxes after a year, you borrow money from the government and this borrowing is sometimes cheaper than if you take out a loan elsewhere. You can borrow money cheaply from the Tax Authorities with the low tax interest. The interest on loans is often high, but not with the Tax Authorities. You can borrow cheaply from the tax authorities. In 2020 and 2021 you will hardly pay any tax interest and borrowing money from this government institution will remain advantageous. And if you pay your provisional assessment in one go, you will receive a discount that is higher than the interest on a savings account.

Tax authorities and tax assessment

Anyone who earns money from work or assets in our country will soon receive a message from the tax authorities that they must file an income tax return. And once you have filed a tax return, you will be notified of how much extra you have to pay or how much you will get back from the taxes paid.

Save with the Tax Authorities

Saving with the Tax Authorities has been profitable for a long time. At the end of 2007 you received more than 5% interest on your money. Taking into account the capital gains tax on capital that you avoided because the money was parked with the tax authorities, your total savings interest was well above 6%. But the interest on savings has fallen sharply in our country.

Borrow money from the Tax Authorities

Saving is no longer always worthwhile and neither is saving with the Tax Authorities. That’s why it’s worth changing our strategy a bit. Instead of paying the tax authorities as quickly as possible so that you get part back with interest later, it is more worthwhile to postpone the payments and thus borrow money from the tax authorities at a low percentage. This interest rate is lower than what you have to pay when taking out a personal loan or revolving credit. There are many ways to borrow money cheaply and smartly, but the Tax Authorities have now added them. By comparison: anyone who is overdrawn at a bank easily pays 14% interest. Being overdrawn with the Tax Authorities costs 4%, more than three times cheaper.

You are in the red with the Tax Authorities

Being overdrawn with the tax authorities is relatively cheap if you ensure that you adhere to the payment terms and reminders from the Tax Authorities. Otherwise you will receive a fine and it will still cost you more. The motto is not to pay taxes faster than necessary. Therefore, do not request a provisional assessment from the Tax Authorities yourself, but wait patiently for their tax assessment. Don’t pay taxes in advance if you don’t have to. If you receive a provisional assessment, then at the current interest rate it is cheaper to pay the assessment in installments than in one go.

Tax authorities tax interest 2019, 2020 and 2021

If you still owe tax to the tax authorities, you must pay tax interest. This tax interest has been stable for a long time, and in 2020 will be equal to 4% until June 2020, then 0.01% (income tax):

Tax authorities levy interest:

year

quarter 1

quarter 2

quarter 3

quarter 4

2021 (tax interest)

0.01%

0.01%

0.01%

0.01%%

2020 (tax interest)

4%

4%

0.01%

0.01%%

2019 (tax interest)

4%

4%

4%

4%

Pay provisional assessment in advance

In the case of a provisional income tax assessment, you can pay in one go with a tax discount. You can view this tax credit as interest on the amount you have advanced. This interest is often a lot higher than the interest on a regular savings account at the bank. For an amount of 30,000 euros, the discount can increase to 500 euros, which is 1.7% interest.

Final tax interest tax

And of course the strategy changes again to the possibility of saving with the Tax Authorities, as soon as the interest rate rises significantly.