[cycomanic]

> That's literally insane. So you're basically giving your government a loan a year in advance? Why? Why not pay your income tax when you know - you get your income, like the rest of Europe does?

I think you're misunderstanding. The tax rate they are paying is estimated based on the previous year income (we'll actually it's a combination of present income and previous years) because the tax office can't know your exact income (and deductions) until the end of the year. So when you do your tax return at the end of the year you either get a refund or need to pay some more. I'm pretty sure that's how it works in most of Europe (at least in most of the countries I'm aware of). So there is no loan to the government, they still pay the tax as a rate on when the income comes in.

[gambiting]

OP said:

"Indeed, that's how my own labour income is already taxed. I first pay income tax for 2021 based on my income in 2020"

It sounds like they pre-pay tax for 2021 based on what they paid in 2020. If that's not how it works then I retract my statement.

[bzbarsky]

That is a thing you can do in the US. It is not a thing you have to do, by any means.