Want to plan your taxes more intelligently? Consider advance payments (and borrow if necessary)
September 2025 - It happens every year: self-employed people and companies who forget to pay taxes in advance are presented with a hefty tax increase. The good news is that this can be easily avoided. And even if you don't have the money available at the moment, there is a tax-smart solution: the advance payment loan.
What are advance payments and why are they important?
Advance payments are voluntary advances on your final tax bill. They are not mandatory, but those who skip them risk a tax increase. For the 2025 income year, this increase is 6.75%. That is slightly lower than the 9% in 2024, but still not an amount to be taken lightly.
You can avoid this increase by paying in advance on time. Does your company have a financial year that coincides with the calendar year? Then these four important dates apply:
10 April: 9% benefit
10 July: 7.5%
10 October: 6%
22 December: 4.5%
The earlier you pay, the greater the benefit.
A concrete example: avoid 1,350 euros in additional tax
Suppose your company expects a tax bill of 20,000 euros for the 2025 financial year. Without advance payment, you risk an increase of 1,350 euros (20,000 x 6.75%).
If you pay 75% (i.e. 15,000 euros) before 10 April, you will enjoy the full 9% benefit and avoid the surcharge entirely.
If you miss that first date, you will have to pay 18,000 euros with the second advance payment to achieve the same result.
But what if you don't have that amount immediately?
No problem. For that situation, there is the advance payment loan. This allows you to finance your advance payment through your bank and spread the costs over twelve months. This way, you retain your liquidity for other business purposes: stock, investments or unexpected costs.
Advance payment loans are often cheaper than your overdraft facility: the interest rate is usually around 3.5%. What's more, the bank takes care of everything for you, including timely payment to the tax authorities. So you don't have to follow up on anything yourself.
What does that really mean?
Back to our example: you don't pay an additional 1,350 euros, but borrow 18,000 euros at 3.5% interest. That costs you 630 euros in interest. Because that interest is a deductible business expense, your company recovers 25% of it through corporation tax: 157.50 euros. Your net cost is therefore only 472.50€. Much cheaper than 1,350€.
Still worthwhile halfway through the year
Are you already well into your financial year? Then it's not too late to take advantage of the next advance payment. Many entrepreneurs even start making monthly repayments in January. This allows them to take advantage of the highest tax benefit (9%) and the lowest interest rate on the loan.
An advance payment loan is usually quickly arranged at your bank. Most financial institutions offer ready-made solutions for this.
