How does the determination of profits for corporation tax work?
November 25, 2022 | 50,00 EUR | answered by Benjamin Hohenadel
Dear Tax Consultant,
I have a small business and I am having difficulties in correctly determining the profits for corporate tax purposes. I am unsure of how to properly calculate the profit of my company in order to determine the corporate tax correctly.
So far, I have carried out profit determination for income tax purposes according to § 4 para. 3 EStG, but I am not sure if this method is also applicable for corporate tax. I want to make sure that I consider all relevant operating expenses and income in order to not pay unnecessarily high corporate tax.
I have also heard that there are different ways to determine the profit for corporate tax, such as the income-surplus calculation or accounting according to commercial law. I am unsure of which method is best suited for my company and how to correctly determine the profit.
Could you please explain to me how profit determination for corporate tax works and what steps I need to consider? Are there any specific regulations or special considerations that I, as a business owner, should take into account? I would appreciate your help and support in determining the profit for corporate tax.
Sincerely,
Ralf Fuchs
Dear Mr. Fuchs,
Thank you for your question regarding profit determination for corporate tax. I understand your uncertainties and would be happy to help you understand and implement the correct procedure.
First and foremost, it is important to know that profit determination for corporate tax fundamentally differs from profit determination for income tax according to § 4 para. 3 EStG. There are specific regulations and requirements that must be followed for corporate tax.
There are generally two different methods that can be used for profit determination for corporate tax: the income-surplus calculation according to § 4 para. 3 EStG or the accounting according to commercial law. The method that is best suited for your company depends on various factors such as the size and complexity of your business.
In the income-surplus calculation, all operating income and expenses are compared to determine the profit. This method is especially suitable for smaller and more manageable companies, as it is less complex than accounting according to commercial law.
Accounting according to commercial law, on the other hand, requires the preparation of a balance sheet and a profit and loss statement according to the regulations of the Commercial Code. This method is especially suitable for larger companies and corporations, as it provides a detailed insight into the financial situation of the company.
To correctly determine the profit for corporate tax, you should carefully document and manage all relevant operating income and expenses. It is important to consider all tax-relevant items in order to avoid paying too much corporate tax unnecessarily.
Additionally, there are various tax regulations and peculiarities that you should consider as a business owner when determining profit for corporate tax, such as the deductibility of certain operating expenses or the consideration of tax depreciations.
I hope that this information is helpful to you and supports you in correctly carrying out profit determination for corporate tax. If you have any further questions or require individual consultation, I am happy to assist.
Sincerely,
Benjamin Hohenadel
