What to do if you can't pay your taxes

It can happen to any entrepreneur: your outstanding tax assessment arrives on the mat, but there is not enough in your account to pay it. Whether it is due to disappointing income, unexpected expenses or simply poor planning, not being able to pay can cause a lot of stress. In this blog article we discuss the steps you can take if you are (temporarily) unable to pay your taxes.

 

Be proactive and contact us immediately

The most important advice: don't wait. As soon as you notice that you cannot pay the tax (in full), it is wise to contact the Tax Authorities immediately. The sooner you indicate that there is a payment problem, the greater the chance of a solution.

• Explain your situation: Be honest and transparent about your financial situation.
• Ask for the possibilities: Consider payment arrangements or deferral of payment.
• Avoid unnecessary fines: By acting quickly, you show that you are willing to cooperate and you prevent (further) increases and collection measures.

 

Analyze your financial situation

Before you can make arrangements for paying your tax assessment, it is good to have a clear picture of your overall financial situation.

1. Make an overview of your income and expenses: This way you can see where you can save money or where money is 'leaking'.
2. Check outstanding invoices: Do you have debtors who pay late? Perhaps you can pursue this first, so that you can quickly bring in extra liquidity.
3. Make an inventory of all your debts: Don't just think about the tax authorities, but also about any other creditors or loans.

 

Request a payment plan

If it turns out that you cannot pay the tax at once, a payment arrangement often the best option:

• Installment payments: Spread the amount due over several months.
• Interest and costs: Please note that the Tax Authorities may charge collection interest.
• Terms & conditions: The Tax Authorities may ask for certain guarantees or additional information, such as forecasts or substantiation of your financial situation.

Make sure you keep your agreements. If you do not pay the agreed terms, the arrangement can be terminated and you run the risk of collection measures such as seizure.

 

View other tax arrangements

In addition to a payment arrangement, there are sometimes other options to reduce or postpone your tax burden:

• Small Business Scheme (KOR): For entrepreneurs with low turnover, the KOR can offer a solution. You then do not have to pay VAT (in part).
• Postponement in case of payment problems: Under certain circumstances – for example, special circumstances in your private life or sudden drops in turnover – you can request a deferral.
• Loss compensation: If you incur a loss, in some cases you can offset this against profits from previous or subsequent years (for sole proprietors or private limited companies).

 

Review your accounting and budget

Not being able to pay often indicates a structural (cash flow) problem. It is therefore smart to critically examine your business operations:

1. Improve your accounts receivable management: Ensure that customers pay on time. Consider discounts for early payment or implement stricter reminder and collection policies.
2. Negotiate with suppliers: You may be able to agree on longer payment terms or lower prices, especially if you are in dire straits.
3. Check your pricing and costs: Are your prices sufficient to cover your costs? Are there any cost items you can cut?

This way you can prevent yourself from encountering the same problems again in the future.

 

Consider professional help

If your tax debt is part of broader financial problems in your business, it may be valuable to professional debt assistance or to seek advice:

• Financial advisor: Can help you draw up a realistic cash flow plan and scrutinize your accounting.
• Business advisor: Provides strategic tips to adapt your business model.
• Debt counselor: Specialized in resolving complex debt situations, even with multiple creditors.
• Accountant or bookkeeper: Can ensure correct declarations and tax optimization.

Professionals often have contacts and experience with the Tax Authorities. They know the procedures and know which arguments are important to make a good arrangement.

Do you recognize yourself in (part of) this situation and do you no longer want to walk around with worries? We are ready to help you. Do not wait until the problems increase and take control of your financial future today. Click on the button 'Apply for debt assistance now' and take the first important step towards peace and security for you and your company.