Meaning of Permanent Extension Part III
Calculate special advance payment
Before you apply for a permanent extension, it is important to calculate what the amount of the special advance payment will be. So you can also be sure that you can easily afford the one-time prepayment.
As a first step, you have to determine the sum of the advance VAT return amounts for the past year. You divide this amount by 11 to find out what the one-time special advance payment is.
The point of the special advance payment is that the tax office secures itself to a certain extent. The advance payment also ensures that companies can not obtain any interest advantages from the subsequent payment of sales tax.
If you were only partially active in the previous year, the amount will be calculated accordingly. If you started your own business around the beginning of October, you have paid sales tax for October, November and December. Let’s assume that was a total of 12,000 euros.
|This results in the calculation:|
|12,000 x 12/3 (months) = 48,000 x 1/11 = around 4,363 euros|
|You would have to pay this amount as a special advance payment.|
Register special advance payment
If you want to apply for a permanent extension, you must meet the requirements. This also applies to the registration of special advance payments . You have to consider the following:
- As a quarterly payer, a single application is sufficient for you . You don’t have to ask it again for the following years. You do NOT have to make a special advance payment .
- If you are a monthly payer, you will only receive the permanent extension on the condition that you make a special advance payment .
This means that you, as the applicant, are obliged to calculate and register your special advance payment yourself . Of course, you also have to pay the special advance payment. The registration of the special advance payment takes place with the application for the permanent extension.
Book special advance payment
No payment without booking, this also applies to the special advance payment. The posting record then consists of the “Bank” account frame and the “Special advance payment” or “VAT advance payments 1/11” account frame.
Example of a permanent extension
The following example should show you what a permanent term extension can look like . In this example it was assumed that you are a monthly payer . You have been using the permanent extension for a number of years.
|Pre-registrations in 2019||Amount||Paid on|
|Special advance payment 2019||8,970||02/11|
|October 2019||23,980||December 8th|
A deadline extension for the permanent extension of the deadline has already been set for 2020. You also determined and paid the necessary amount for the special advance payment of € 9,915 .
Permanent extension in the case of a start-up
If you have just started a business in the current calendar year or would like to apply for a permanent extension immediately after founding your company, the advance VAT payment must be estimated . The special advance payment should then be made in the amount that the sales tax advance payment for a month was estimated on average.
According to Howsmb, the estimate must be justified, so you can, for example, use your budgeted calculations from your financial plan as a basis for argumentation and calculation in order to determine which payment you have to make.
Revoke the permanent extension
In principle, it is possible to revoke a permanent extension . But you should think twice about whether you really want to do this, because there are only very few rationally understandable reasons for doing so. The revocation does not lead to any reimbursement of any tax payments already made.
There are no specific formal requirements for the revocation, so you can simply send a short letter to the tax office in which you should absolutely state your company name and tax number.
Revoke the extension of the permanent term – sample letter
If you want to revoke a permanent extension, the letter can look something like this:
Dear Sirs and Madames,
I would like to revoke the permanent extension for company X, Musterstrasse X, XXXXX Musterort, known to you under the tax number XXX, and I may ask you to confirm this revocation briefly in writing.
Thank you and best regards,
Mustermann of the sample company
Forget about the permanent extension – you have to pay attention to that
The application for a permanent extension must be submitted to the responsible tax office no later than the 10th of the month in which you missed the submission. After this date, you can no longer apply for it . Rather, you will be threatened with a late payment penalty if you do not submit your VAT registration immediately. Forgetting does not protect against punishment and this punishment can then be the late payment penalties.
The permanent extension is very helpful to gain some time for the bookkeeping . The application is easy and quick, especially if you are a quarterly payer. It is therefore generally advisable to use the option of permanent extension in any case. Just don’t miss any deadlines and keep an eye on the calendar. However, if you are unsure, you should ask your tax advisor and ask for help.