How do I calculate the trade tax for my company?
October 24, 2022 | 40,00 EUR | answered by Eva Heuser
Dear tax advisor,
My name is Marco Reuter and I am the owner of a small business. In recent years, our revenue has been steadily growing, so I am now thinking about the calculation of trade tax. I have always had a tax advisor who took care of all tax matters, but now I would like to understand how trade tax is calculated for my business.
Currently, I have generated a profit before taxes of 100,000 euros and my trade income is 80,000 euros. My concern is that I do not know exactly how trade tax is calculated on this trade income and what exemptions or limits may affect the amount of tax.
Could you please explain to me how trade tax is calculated for my business and if there are ways to minimize the tax burden? Are there specific applications or exemptions that I can take advantage of to reduce trade tax? I would like to better understand how trade tax affects my business and how I can be optimally prepared for it.
Thank you in advance for your help and support on this matter.
Sincerely,
Marco Reuter
Dear Mr. Reuter,
Thank you for your question regarding the calculation of trade tax for your company. I am pleased that you are actively engaging with this topic and want to learn more about the tax matters of your business.
Trade tax is a municipal tax levied on companies operating a trade or business in Germany. It is calculated on the trade profit, which is the profit before taxes minus certain additions and deductions. The trade profit is not identical to the profit before taxes as it takes into account tax adjustments.
In your case, you have achieved a profit before taxes of 100,000 euros and a trade profit of 80,000 euros. The trade tax is calculated based on the trade profit. The trade tax rate is determined by the respective municipality and can vary depending on the location of your company. This rate is then applied to the trade profit to determine the amount of trade tax.
There are exemptions and thresholds that can affect the amount of trade tax. For example, there is an exemption of 24,500 euros that is taken into account when calculating the trade profit. Additionally, there is also the possibility to offset losses from previous years against profits to minimize the tax burden.
To reduce the trade tax burden, you can take various measures. These include using investment deduction amounts, creating reserves, or strategically designing profit and loss statements. It is important that you seek advice from an experienced tax advisor to develop suitable strategies for your company.
I hope this information has been helpful and given you a better understanding of the calculation of trade tax. If you have further questions or require individual advice, I am at your disposal.
Best regards,
Eva Heuser
Tax Advisor
