Payment of EPP to self-employed persons and entrepreneurs

Self-employed persons, tradesmen and farmers and foresters usually receive the EPP by reducing the advance income tax payment for the III quarter of 2022.

Self-employed persons, tradesmen, and farmers and foresters receive the EPP through a reduction of the advance income tax payment. To this end, the advance payment for the third quarter of 2022 due on September 12, 2022 will be reduced by 300 euros for each eligible person (i.e., by 600 euros in the case of a joint assessment of spouses where both have business income), provided that the advance payment also covers income from self-employment or from a business or agricultural and forestry operation.

If the tax office is aware that income as an employee from active employment is being earned at the same time, no reduction is made because the EPP is then paid by the employer. If no advance payments have previously been assessed due to the insignificance of the qualifying income or a remaining loss carryforward from the business income, no adjustment of the advance payments is made either. In these cases, payment is made as part of the tax assessment for 2022.

For taxpayers whose advance payment on September 12, 2022 is less than 300 euros, the advance payment is reduced to 0 euros. However, there will be no refund of the remaining amount when the prepayment is adjusted. There is also no reduction in the advance payment for December 12, 2022. Only in the context of the tax assessment for 2022 will these taxpayers then receive any remaining balance.

When the advance payment is reduced, the EPP is initially paid out gross, i.e. without pro rata tax deduction. However, because the EPP is taxable, an additional payment or reduced tax refund is then due in the 2022 tax assessment because the advance payments were initially reduced too much and the tax due on the EPP according to the individual tax rate must be paid again.

Each federal state decides for itself whether to issue a new advance payment notice for the reduction. Most federal states will probably adjust the advance payments by means of a general ruling in order to save paper and postage costs. If payments are or have already been made to the tax office for the III quarter on the basis of the old advance payment notice, the overpaid amount will be automatically refunded to the account, provided there are no further tax arrears.

The tax authorities also point out that the EPP taken into account in the income tax prepayment procedure is of a provisional nature. Eligibility will only be reviewed during the income tax assessment. If there is no entitlement, e.g. because no more income has been generated from the qualifying types of income in the 2022 assessment period, the EPP will be reclaimed by the tax office.