How can I reduce my trade tax burden through investments?
May 4, 2024 | 30,00 EUR | answered by Eva Heuser
Dear tax advisor,
My name is Lukas Czakaj and I run a small business in the IT services sector. Over the past few years, my profits have been steadily increasing, leading to a significant rise in my trade tax burden. I am concerned that the high trade tax is putting strain on my financial situation and would like to know how I can reduce my trade tax burden through investments.
Currently, my trade tax burden is around 10% of my profits and I have heard that targeted investments can help lower this burden. I have already invested in new office equipment and IT infrastructure, but this has not had the desired effect. Therefore, I am wondering what types of investments are tax-deductible and how I can best integrate them into my business strategy to reduce my trade tax burden.
I am aware that as a business owner, I need to consider both tax and economic aspects, and would like to know what specific steps I can take to optimize my tax burden. Are there any funding programs or tax benefits that I may not be aware of? I am open to all suggestions and tips you can provide to help me reduce my trade tax burden through investments.
Thank you in advance for your support and advice.
Best regards,
Lukas Czakaj
Dear Mr. Czakaj,
Thank you for your inquiry regarding reducing your business tax burden through investments. As a tax advisor with extensive experience in business tax consulting, I am happy to provide you with some tips and advice on how to optimize your tax burden.
First and foremost, it is important to know that investments in your company are generally tax deductible. This means that the purchase of assets such as office equipment, IT infrastructure, machinery, or vehicles can usually be claimed as operating expenses, thereby reducing your profit and, consequently, your business tax burden.
However, there are some points to consider in order to maximize the tax effectiveness of your investments. Firstly, the purchases in your company should be business-related and serve a clear economic purpose. Additionally, the investments must be made and activated in the respective fiscal year in order to be tax effective.
Furthermore, there are specific funding programs and tax benefits that small businesses like yours can take advantage of. For example, there is the possibility of an investment allowance, which allows you to claim a portion of the purchase costs in advance for tax purposes. The declining balance method of depreciation or special depreciation for small and medium-sized enterprises can also help reduce your business tax burden.
In order to effectively reduce your business tax burden through investments, I recommend developing a long-term investment strategy in which you invest specifically in necessary business assets while also considering tax aspects. Additionally, it is advisable to regularly seek advice from a tax advisor to ensure that your investments are optimally utilized for tax purposes.
I hope this information is helpful to you and I am happy to assist with any further questions.
Best regards,
Eva Heuser
