Are there exceptions to the trade tax obligation for start-ups?
November 11, 2022 | 50,00 EUR | answered by Simon Schaaf
Dear tax consulting team,
I am Christiane Hentschel and I recently founded a start-up in the digital marketing industry. As the founder, I am currently investing a lot of time, energy, and money into building my company successfully. However, I am concerned about the financial burden of the trade tax that could be imposed on my start-up.
My start-up is still in its early stages and is currently not generating any profit. Therefore, I am wondering if there are possibly exceptions to the trade tax obligation for start-ups that are still in the founding phase and are not generating any or only minimal profits.
I want to avoid the trade tax financially burdening my start-up and potentially endangering the existence of my company. Are there any special regulations or exceptions that could relieve start-ups in this situation? What are the possibilities to minimize the impact of trade tax on my start-up?
I would be very grateful if you could assist me with your expertise and experience on this matter. I look forward to your response and thank you in advance for your support.
Sincerely,
Christiane Hentschel
Dear Mrs. Hentschel,
Thank you for your inquiry regarding trade tax and its impact on your start-up in the founding phase. As a tax advisor specializing in trade tax, I understand that financial burdens from taxes can be a major challenge for young companies. Therefore, I would like to provide you with some information and tips to assist you on this topic.
Firstly, it is important to know that trade tax is a municipal tax levied on companies based on their profits. Companies that generate profits are generally subject to trade tax. However, there are exceptions and regulations that may apply to start-ups in the founding phase.
One way to minimize the impact of trade tax on your start-up is through the so-called trade tax exemption regulation. This regulation allows companies to deduct an exemption amount of 24,500 euros when determining the trade income. This means that companies do not have to pay trade tax up to this amount. For start-ups in the initial phase, this exemption regulation can provide relief.
Furthermore, there is the option to claim a loss carryforward. If your start-up has not yet generated any or only small profits in the first few years, you can offset losses from these years with future profits, thereby reducing the tax burden. This can be a sensible strategy, especially in the initial phase of your company, to reduce the financial burden of trade tax.
It is also advisable to consult a tax advisor early on to develop a tax optimization strategy for your start-up. A professional tax advisor can help you maximize all tax options and regulations to minimize the trade tax burden and financially relieve your company.
I hope this information will assist you with your concerns. If you have any further questions or require personalized advice, I am available to assist you. I wish you success in the further development of your start-up and am ready to support you at any time with my expertise and experience.
Best regards,
Simon Schaaf
Tax Advisor
