How can I optimize my value-added tax burden?
May 4, 2024 | 40,00 EUR | answered by Emma Wagner
Dear tax advisor,
My name is Irmgard Wittkopf and I run a small business in the field of business consulting. Over the past few years, my revenue has been steadily growing, which of course makes me very happy. However, this also means that my VAT burden is increasing, which concerns me. I am wondering if there are ways to optimize this VAT burden and therefore reduce my tax liability.
Currently, I regularly pay VAT on my income without taking specific measures to minimize my tax burden. I am confident that there are strategic opportunities to optimize my VAT, but I lack the necessary expertise and experience to implement them.
I have heard about input tax deduction entitlement, small business regulations, and tax exemptions, but I am unsure which of these measures is best suited for my company. That is why I am reaching out to you for professional advice and support.
Could you please provide specific suggestions on how I can optimize my VAT burden? What steps should I take to reduce my tax liability and efficiently manage my VAT? I look forward to your expertise and thank you in advance for your help.
Sincerely,
Irmgard Wittkopf
Dear Mrs. Wittkopf,
Thank you for your inquiry and your trust in my expertise as a tax advisor for the topic of value-added tax. It is understandable that you are thinking about how to optimize your VAT burden, especially since your company has been steadily growing in recent years. There are indeed various ways to reduce your tax burden and handle your VAT efficiently.
First and foremost, it is important that you familiarize yourself with the various regulations and options in the area of value-added tax. As you mentioned, there is the input tax deduction entitlement, the small business regulation, and various tax exemptions. These measures may be differently suitable depending on the type and size of your company.
The input tax deduction entitlement allows you to deduct the VAT you pay for business expenses from the VAT you must pay on your income. This can help reduce your tax burden. It is important that you carefully keep all receipts and invoices and check whether you can deduct the input tax.
The small business regulation is an option for companies with an annual turnover of less than 22,000 euros (as of 2021). If you qualify as a small business owner, you are exempt from VAT and do not have to show VAT on your invoices. This can be an attractive option for small businesses to reduce the bureaucratic requirements related to VAT.
Furthermore, there are various tax exemptions that may apply depending on the nature of your services or products. It is worth checking whether you qualify for these tax exemptions and how you can optimally use them for your business.
I recommend taking a close look at your current revenues, expenses, and tax obligations to determine which measures are best suited to your company. I am happy to support you in developing and implementing an individual strategy to optimize your VAT burden.
Please do not hesitate to contact me to schedule a consultation. I look forward to being able to assist you and to finding the best possible solution for your company together.
Best regards,
Emma Wagner
