How do I handle deferred taxes in the balance sheet?
February 19, 2024 | 40,00 EUR | answered by Christiane Fuchs
Dear tax advisor,
I am Lucas Fischer and operate a medium-sized company in the construction industry. In my balance sheet, there are always latent taxes that I have not fully understood so far. I wonder how best to deal with these in order to make my balance sheet accurate and transparent.
The current situation is as follows: In my balance sheet, there are latent taxes resulting from temporary differences between tax and commercial profits. I am unsure how to precisely calculate and record these positions. Additionally, I am concerned that I may be making mistakes that could lead to tax payments or other consequences.
Therefore, my question to you is: How should I best handle latent taxes in my balance sheet? What calculation methods are recommended and how can I ensure that my balance sheet is accurate and transparent? Are there any specific regulations or guidelines that I should follow?
I would greatly appreciate it if you could provide me with comprehensive information and possible solutions so that I can correctly and professionally prepare my financial statements in the future.
Thank you in advance for your help.
Best regards,
Lucas Fischer
Dear Mr. Fischer,
Thank you for your inquiry regarding deferred taxes in your balance sheet. Deferred taxes are indeed a complex topic and it is important to account for them correctly in order to avoid potential errors. I will provide you with detailed information and solutions so that you can professionally manage your accounting.
Deferred taxes arise from temporary differences between tax and commercial profits. These differences can arise, for example, due to different depreciation methods or valuation regulations. The calculation of deferred taxes is done using the concept of the accounting differences method. Temporary differences are determined and multiplied by the respective tax rate to calculate the amount of deferred taxes.
There are various calculation methods for deferred taxes, such as the temporary differences method or the method of tax profit realization. The best method for your company depends on various factors and should be assessed on a case-by-case basis. It is advisable to seek advice from an experienced tax advisor to avoid potential errors.
To ensure that your balance sheet is correct and transparent, you should comply with legal regulations and guidelines. In Germany, the regulations of the Commercial Code (HGB) and the Tax Code (AO) must be followed. Additionally, you should adhere to the principles of proper accounting (GoB) and tax law regulations.
It is recommended to regularly review your accounting and make adjustments as needed to respond to changes in legislation or within the company. Proper documentation of accounting decisions is also important to be able to answer any inquiries from the tax office or other stakeholders.
I hope this information is helpful to you and that you will be able to conduct correct and transparent accounting in the future. If you have any further questions, please feel free to contact me.
Best regards,
Christiane Fuchs
