Calculating Period-Based Withholding

As with tiered withholding, period-based withholding calculations are not based on one transaction but rather on all transactions that have occurred during a certain period of time (a month, a week, a year, and so on). However, these calculations occur at payment time and must be calculated for each individual transaction.

Example: Calculating Period-Based Withholding

Consider the example from section Using Tiered-Based Withholding. Assume you've paid 55,000 EUR to a supplier this month and withheld 3,600 EUR. Now you receive a second transaction in the amount of 50,000 EUR. Here is how the withholding on the second payment would be calculated:

  1. 50,000 EUR + 55,000 EUR (balance from first transaction) = 105,000 EUR.

  2. 105,000 EUR − 100,000 EUR (from basis amount) = 5000 EUR.

  3. 5000 EUR × 9% = 450 EUR.

  4. 450 EUR + 7200 EUR (additional amount at the 9% bracket) = 7,650 EUR.

  5. 7650 EUR − 3,600 EUR (amount already withheld) = 4,050 EUR.

In this case, the withholding on the second transaction of 50,000 EUR would amount to 4,050 EUR. The same methodology would then apply to all subsequent payments to this supplier.