Are there any tax advantages if I move my company headquarters to a different city?
March 15, 2024 | 40,00 EUR | answered by Jens Meier
Dear tax consultant,
My name is Clara Czakaj and I am the managing director of a small GmbH. Currently, our company is located in a city where the trade tax is relatively high. Due to the current economic situation, I am considering whether there are any tax advantages for us if we were to relocate our headquarters to another city.
Our GmbH operates in the IT consulting sector and generates an annual profit of approximately 150,000 euros. We are currently paying a high trade tax in our current city, which has a negative impact on our overall tax burden.
I am concerned that the high trade tax could affect our liquidity and therefore limit our financial flexibility for investments and growth. Therefore, I would like to know from you whether there would be any tax advantages for us if we were to relocate our headquarters to another city.
Can you provide me with possible solutions and explain to me which tax aspects I need to consider when relocating our company? Are there certain cities or regions that are particularly tax-friendly for companies like ours?
Thank you in advance for your support and advice.
Best regards,
Clara Czakaj
Dear Mrs. Czakaj,
Thank you for your inquiry regarding trade tax and the consideration of relocating the registered office of your GmbH to another city in order to achieve tax benefits. As a tax advisor specializing in trade tax, I can provide you with some information and solutions on this topic.
First of all, it is important to understand that trade tax is a local tax levied by municipalities. Each city has its own trade tax rate, which determines the amount of trade tax to be paid. Therefore, if you were to move to a city with a lower trade tax rate, you could potentially pay less trade tax and reduce your overall tax burden.
In your case, as the managing director of a GmbH in the IT consulting sector with an annual profit of approximately 150,000 euros, trade tax can constitute a significant portion of your tax burden. Therefore, relocating to a city with a lower trade tax rate could indeed bring financial advantages to your company.
However, there are some tax aspects that you need to consider when relocating your registered office. Firstly, you should check if the new city you wish to move to is suitable for your business and if there are enough potential customers there. Additionally, you must properly notify the tax office of the relocation of the registered office and consider all tax consequences that may arise.
Indeed, there are certain cities or regions that are particularly attractive for businesses in terms of taxation. Often, rural areas or economically disadvantaged regions are equipped with lower trade tax rates to attract businesses and strengthen the local economy. Therefore, it may be worthwhile to consider such locations as well.
Overall, relocating the registered office to a city with a lower trade tax rate can bring tax benefits to your company and improve your liquidity. However, I recommend that you seek comprehensive advice before moving and carefully examine all tax aspects.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Jens Meier Tax Advisor
