The corporate income tax prepayment (DDPO) is a regular tax obligation that must be fulfilled by legal entities such as companies, institutions, associations, religious communities, and other organizations with taxable income.
It is an advance tax payment calculated based on the financial results of the previous year and paid monthly or quarterly. Because of its impact on a company’s cash flow, it’s crucial that taxpayers monitor the prepayment regularly and adjust it accurately and on time. An incorrect calculation or missed adjustment can lead to unnecessary financial strain.
How is the DDPO prepayment amount determined?
The prepayment amount is based on the tax return for the previous year, which must be submitted by the end of March. The tax base for DDPO is the difference between tax-recognized revenues and expenses, taking into account available tax reliefs, such as investment incentives. Based on this calculation, monthly or quarterly advance payments are determined for the current year.
Possibility of adjusting the prepayment during the year
If current-year operations significantly deviate from the previous year, it is possible to request an adjustment of the prepayment amount. It’s important to note that this adjustment can be made at any time during the year.
- The application is submitted electronically via the eDavki portal, using form DD-SprAkt.
- You must include a projection of current-year operations with justifications and data supporting the change in the tax base.
Most common reasons for adjustment include:
- Loss of a major customer
- Launch of new projects
- Other significant business developments affecting expected profit
The tax authority typically decides on the application within 15 days. If approved:
- In case of a reduction, the remaining unpaid installments are proportionally decreased.
- In case of an increase, the installments are adjusted upward accordingly.
For additional assistance and advice, you can contact our experts via the INQUIRY FORM.
