How do I deduct operating expenses for corporate income tax?
January 23, 2022 | 50,00 EUR | answered by Benjamin Hohenadel
Dear tax advisor,
My name is Isabel Karpinski and I am the managing director of a medium-sized company in the food industry. Last year, we made many investments and now we would like to deduct the operating expenses from the corporation tax. Unfortunately, I am not sure how exactly I can do this best and which expenses are deductible at all.
Our company incurred high costs in the past fiscal year for the development of new products, the modernization of production facilities, and for marketing measures. In addition, we invested in the further training of our employees and the rent for our premises is also significant. All these expenses have significantly reduced the profits of our company, but I am unsure how to take them into account in the corporation tax return.
My concern is that I may not declare operating expenses correctly and as a result, I may have to pay too much taxes. Therefore, it is very important for me to know which expenses are deductible for corporation tax and how to correctly declare them in the tax return to avoid making mistakes.
Could you please explain to me how I can deduct operating expenses for corporation tax and what information I need to provide to avoid problems with the tax office? Are there specific requirements that must be met for operating expenses to be tax deductible? I would greatly appreciate your help and advice on this matter.
Thank you in advance.
Best regards,
Isabel Karpinski
Dear Mrs. Karpinski,
Thank you for your inquiry regarding the deductibility of operating expenses for corporate tax purposes. As the managing director of a medium-sized company in the food industry, it is important to accurately report operating expenses in order to avoid any issues with the tax authorities.
In general, operating expenses can be deducted for corporate tax purposes as long as they are business-related and can be proven to have been incurred. Deductible operating expenses include costs for the development of new products, modernization of production facilities, marketing activities, employee training, and rental costs for business premises. All of these expenses are aimed at generating income and are therefore tax deductible.
To correctly report operating expenses for corporate tax purposes, it is important to retain all relevant receipts and documents. These may include invoices, contracts, bank statements, and receipts, which serve as proof of the incurred expenses and should be able to be presented to the tax authorities if necessary.
When reporting operating expenses in the tax return, make sure to detail them in the corresponding schedule (corporate tax return). It is important to allocate individual expenses to their respective categories and provide the total amount of operating expenses. Additionally, ensure that the operating expenses are properly documented and substantiated.
There are no specific requirements that must be met for operating expenses to be tax deductible. However, the expenses should be business-related and demonstrably incurred. Furthermore, the operating expenses should be within the scope of the company's business activities and not of a personal nature.
Overall, it is advisable to seek support from an experienced tax advisor to ensure that all operating expenses are correctly reported and no mistakes are made in the tax return. A tax advisor can provide personalized advice and help you maximize potential tax benefits.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Benjamin Hohenadel
Tax Advisor
