Can I claim the trade tax as a business expense?
October 21, 2022 | 40,00 EUR | answered by Simon Schaaf
Dear tax advisor,
I have been running a small business in the hospitality industry for a few years now and recently realized that trade tax accounts for a significant portion of my operating costs. Now I am wondering if it is possible to deduct trade tax as a business expense and thereby reduce my tax burden.
So far, I have always recorded trade tax as a non-deductible business expense, as I was unsure if it is actually tax-deductible. However, due to the current economic situation and rising operating costs, I am increasingly concerned about the profitability of my business.
Therefore, I would like to know if it is possible to deduct trade tax as a business expense and thus minimize my tax burden. If not, are there alternative ways to reduce the impact of trade tax on my finances?
I would be very grateful for your support and expertise in this matter.
Best regards,
Franceska Völker
Dear Mrs. Völker,
Thank you for your inquiry regarding trade tax and its tax treatment as a business expense. Trade tax is a tax levied on companies based on their profit and can therefore be a significant burden on your operating costs. It is understandable that you are concerned about how to minimize the impact of trade tax on your finances.
In principle, trade tax is not tax-deductible as a business expense. This means that you cannot deduct trade tax as a cost in your profit determination to reduce your tax burden. Trade tax is levied directly on the profit of your company and is therefore a separate tax item that cannot be claimed as a business expense.
However, there are alternative ways to reduce the impact of trade tax on your finances. One option is to treat your trade tax as a business expense and consider it in your profit determination. Even though trade tax itself is not deductible, you can show it as a cost item in your accounting and thus reduce your profit.
Another option is to take tax optimization measures to reduce your tax burden. This includes, for example, using tax depreciation options, taking advantage of tax benefits, or optimizing your business structures to achieve tax advantages.
It is important that you seek advice from an experienced tax advisor on this matter to find the best solution for your individual situation. I am happy to assist you with further questions and provide detailed advice.
Best regards,
Simon Schaaf
