Credit for the tax payment: How to finance demands from the tax office
7 Jul 2025
5
Minutes
Katrin Straub
CEO at nextsure
Is the tax assessment resulting in a large additional payment and presenting you with financial challenges? This is a stressful situation for many self-employed individuals and employees, but there are effective solutions. A targeted loan can not only ensure timely payment but is often cheaper than the interest and penalties from the tax office.
The topic in brief and concise terms
A loan to settle tax debts is often cheaper than the late payment penalties and deferral interest charged by the tax office.
Act quickly, as the payment deadline for a tax back payment is usually only one month, after which high fees may apply.
A deferral with the tax office is an option, but it is subject to strict conditions and is at the discretion of the authorities.
Understanding the Causes and Consequences of High Tax Payments
A high tax settlement can arise from many reasons, such as additional income, an unfavourable choice of tax classes for married couples, or received substitute wage benefits like short-time work allowance of over 410 euros. For self-employed individuals, it often results from a financial year that was more successful than expected. The consequences of late payment are severe. The tax office charges late fees of one percent per commenced month of delay on the rounded tax debt. With a tax debt of 5,300 euros, this can quickly lead to noticeable additional costs. Unpaid tax debts can also negatively affect creditworthiness and complicate future financing. In the worst case, the authorities initiate enforcement measures such as account garnishment to recover the claim. To avoid these costly and unpleasant consequences, quick action is crucial.
The installment loan as a strategic solution against tax debts
An instalment loan is often the quickest and most economically sensible solution to settle a tax payment. The interest rates for a consumer loan are frequently lower than the six percent annual interest from deferral by the financial authority or the twelve percent for late payment surcharges. A loan ensures immediate liquidity, allowing you to settle the debt on time and avoid all additional fees. Moreover, a loan with a free purpose offers maximum flexibility. The clear monthly instalments of a loan enable better financial planning than an uncertain deferral agreement. Applying for a loan is now possible online in a few steps thanks to digital processes. This gives you a significant time advantage over lengthy negotiations with the tax authority.
Alternatives to Bank Loans: Deferral and Instalment Payments with the Tax Office
Before taking out a loan, you should check the options directly with the tax office. You can apply for deferral or instalment payments if immediate payment would cause 'considerable hardship'. This is the case if your economic existence would be at risk. However, the hurdles are high, and the tax office strictly examines whether you could obtain the funds in another way, such as through a bank loan. The decision is always at the discretion of the officer; there is no legal entitlement. Additionally, interest of 0.5 percent per month is charged for an approved deferral. The following points should be considered in an application:
The application must be written and well-reasoned.
You must prove your financial hardship.
The deferral must not endanger the tax claim.
For certain types of taxes, such as income tax and VAT, deferral is generally not granted.
A loan often offers more security and better conditions than the uncertain promise from the tax office. A targeted debt restructuring loan can also be an option to consolidate expensive liabilities. Negotiation with the authority is therefore an option, but rarely the most advantageous.
Step by step to the right loan for your tax payment
Taking out a loan to settle tax debts is a clear, structured process. With good preparation, you can quickly find a suitable financing solution. A careful creation of a household budget is the first step to determine your financial leeway. Digital loan comparisons enable you to quickly check offers with interest rates ranging from 0.69 percent to 19.99 percent. Here's how to proceed:
Determine the loan requirement: Identify the exact amount of tax repayment plus any buffer for unforeseen expenses.
Compare offers: Use online comparison portals to check interest rates, terms, and conditions of different banks.
Submit an application: Fill out the loan application digitally and submit the required documents such as proof of income and the tax assessment notice.
Receive the payout: After a successful review, the loan amount is often transferred to your account within 24 to 48 hours.
This structured approach helps you maintain control over the situation and make an informed decision. A quick loan for unforeseen bills can be an appropriate solution here.
Expert Tips: Proactively Avoid Future Tax Payments
After settling the current demand, you should take steps to avoid future surprises. Forward-thinking financial planning is key. With fluctuating income, proactively adjust your tax prepayments to prevent a large discrepancy at the end of the year. A conversation with the tax office or a tax advisor can provide clarity. Our expert tip: Set up a monthly standing order of ten to fifteen percent of your income to a separate instant access savings account. This simple measure creates a financial cushion specifically for tax payments. This way, you'll ensure that your next tax assessment does not trigger a financial crisis. If unexpected expenses do occur, increasing an existing loan might be worth considering.
Conclusion: Maintaining financial sovereignty
An unexpected tax payment is a serious financial burden, but with the right strategy, it can be managed. A loan to cover an unexpected tax bill is often the best way to avoid costly late fees and protect your credit rating. While deferring payment with the tax office is an alternative, it is associated with high hurdles and uncertain outcomes. By taking proactive measures such as adjusting prepayments and creating reserves, you can prevent future demands. This ensures your financial stability in the long term. Request an individual risk analysis now: Have your insurance situation checked for free and receive specific optimisation suggestions.
More useful links
Das Bundesfinanzministerium provides a comprehensive overview of the subject of taxes in Germany.
Das Bundesfinanzministerium explains the term “Finanzämter” and their responsibilities in its glossary.
Das Bundesfinanzministerium defines in its glossary who is considered a taxpayer.
Das Bundesfinanzministerium explains the term “Stundung” in tax law in its glossary.
FAQ
Is a loan for back taxes always the best solution?
A loan is often a very good solution to avoid high late payment penalties (twelve percent per year). The interest on an installment loan is usually significantly lower. However, it is advisable to first inquire about the possibility of an interest-free, short-term installment payment directly with the tax office, even though this is rarely granted.
What documents do I need for a loan application?
For a loan application, you will typically need your ID card, recent income proof (such as payslips or financial statements for self-employed individuals), and the tax assessment notice showing any additional payments. Some banks also require account statements from the past few months.
Does a loan for tax debts affect my Schufa?
The credit inquiry itself is usually Schufa-neutral. A properly repaid loan can even have a positive effect on your score. Much more harmful for Schufa is an unpaid tax debt that leads to enforcement measures.
How can I avoid future tax payments?
Adjust your tax prepayments according to your current income. Additionally, set aside money monthly, ideally ten to fifteen percent of your earnings, in a separate account. Regularly reviewing your finances with a tax advisor also helps.
What is the difference between deferral and installment payment at the tax office?
A deferral postpones the entire payment to a later date. An installment payment divides the debt into several smaller amounts. Both must be applied for and require an 'undue hardship,' with the decision at the discretion of the tax office.
How quickly will I receive the money from a loan?
With online loans, the assessment and disbursement often occur very quickly. After submitting all documents digitally and receiving a positive assessment, the loan amount can often be in your account within 24 to 48 hours, allowing you to meet the tax office deadline.
