- The tax administration has the right to revise the advance income tax installments when the initial calculation does not match the actual course of business, pursuant to Article 63 of Law No. 29/2023 “On Income Tax.”.
- The November–December 2018 case, described below, was carried out under the old Law No. 8438 of December 28, 1998, which has not been in force since Law No. 29/2023.
- Advance installments are calculated, as a general principle, based on the tax for the previous year divided by 12, and a review may be requested whenever the actual performance for the year changes significantly.
- The right to request a review of installments is not tied to a single year but remains perpetual under current law.
The tax administration periodically reviews the advance income tax installments when the automatic calculation, based on the previous year's tax, no longer accurately reflects a taxpayer's actual economic activity. This mechanism is not tied to a single year but operates as a routine part of the tax administration's work each year.
From our daily work, we often see that businesses treat an installment review notice as a special and worrying event, when in fact it is a routine process, which is precisely intended to help them avoid liquidity problems at year-end when the financial statements are closed.
Read also: Review of tax prepayment installments, when required and where filed..
How does the prepayment installment review work?
Computation basis: tax for the previous year
As a general principle, monthly or quarterly prepayment installments are calculated based on the tax declared in the previous year, divided into equal parts. This means that when activity in the current year deviates significantly from that of the base year, the automatically calculated installments no longer reflect reality.
When a review is required
The review is usually conducted based on the data the taxpayer has reported in their periodic VAT returns, but the tax administration also takes into account information from third parties when it has not been reported by the taxpayer.
The November–December 2018 case
How was the review carried out then?
In November 2018, the Tax Administration announced that it was reviewing the installments of advance income tax payments for the November–December period, based on Article 30 “Advance Payments” of Law No. 8438/1998 and the relevant guidance at the time. The objective was the same as today: to align the installments with actual performance and to avoid liquidity issues at year-end.
What has changed in the legal framework since then?
Law No. 8438 of December 28, 1998 “On Income Tax,” on which the 2018 revision was based, is no longer in force. It was replaced by Law No. 29/2023, which today regulates advance income tax payments under Article 63. The principle of the mechanism remained the same; only the legal basis and the numbering of the articles changed.
The main rules that apply today for calculating the installments are:
- For January, February, and March, the base is the tax from two years ago divided by 12.
- For the remaining nine months of the year, the basis is the tax from the previous year divided by 12.
- The standard payment dates are March 31, June 30, September 30, and December 31.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsHow do you request a review of the installments today?
Where to submit the request
The request for review is submitted to the regional tax directorate where you are registered, along with your installment calculation compared to that of the system. The step-by-step procedure, with calculated examples, is available on our website. prepayments.
Current rates and thresholds
Income tax rates and applicable thresholds change from time to time by law, so they are best verified on our website. of norms and thresholds before you calculate the installments yourself.
Why it Matters
Year-end liquidity risk
When the installments paid during the year fall far short of the actual year-end tax, the difference must be covered all at once when the financial statements are closed, creating sudden pressure on the business's liquidity.
How we handle this with our clients
We periodically monitor the ratio of paid installments to the client's actual performance over the year so that any request for a review, when needed, is made in a timely manner rather than as a delayed response to an administrative notice.
Frequently asked questions
Is the 2018 notice still valid?
The specific case of November–December 2018 has passed, and its legal basis, Law No. 8438/1998, is no longer in effect. The review mechanism still exists today, but under Law No. 29/2023.
Who can request an installment review?
Any income tax taxpayer who notices that the installments automatically calculated by the system do not match the actual course of their business activities during the year.
Where is the request for review submitted?
At the regional tax office where you are registered, according to the procedure described on our updated prepayments page.
What happens if I don't request a review when I'm supposed to?
Continue making payments in installments according to the old calculation, and the difference between that and the actual tax is covered in one lump sum at year-end, without being spread out over the year.
The original 2018 notice reflects only the case for that period. For the current full procedure, with calculated examples, see Our updated page on the installment review.
