How do I calculate the trade tax for my company?
April 20, 2024 | 45,00 EUR | answered by Isabel Möller
Dear tax consultant,
I run a medium-sized company in the automotive industry and am faced with the challenge of correctly calculating the trade tax for my company. So far, I have not delved deeply into this topic and therefore rely on your expert support.
Regarding the current situation: My company generates an annual profit of about 500,000 euros. We are based in Germany and have our headquarters in a medium-sized city. I do not have a precise overview of the amount of trade tax and how it is calculated. This concerns me, as I do not want my company to unnecessarily pay high taxes.
My question to you as an experienced tax consultant is: How do I correctly calculate the trade tax for my company? Which factors play a role in this and are there ways to optimize the tax burden? I would greatly appreciate it if you could explain to me in understandable and practical steps how I can correctly determine the trade tax for my company.
Thank you in advance for your help and support.
Sincerely,
Sofia Fritsche
Dear Mrs. Fritsche,
Thank you for your inquiry regarding the calculation of trade tax for your medium-sized company in the automotive industry. I would be happy to assist you and show you the necessary steps for correctly determining the trade tax.
Trade tax is a tax levied on companies and paid to the municipality where the company is headquartered. The calculation of trade tax is based on the trade income, which is derived from the company's profit. The trade income is first adjusted for certain add-backs and deductions to determine the trade income for tax purposes.
To calculate trade tax, the trade income is multiplied by the trade tax multiplier of the respective municipality. The trade tax multiplier varies depending on the municipality and can range between 200 and 900 percent. Therefore, there may be different tax burdens depending on the municipality.
To correctly calculate the trade tax for your company, I recommend following these steps:
1. Determine the trade income of your company: The trade income consists of the company's profit minus certain add-backs and deductions.
2. Check the trade tax multiplier of your municipality: You can find this on the website of your municipality or inquire about it from the relevant tax authority.
3. Multiply the trade income by the trade tax multiplier: This will give you the amount of trade tax that your company must pay.
To optimize the tax burden, you can consider various tax planning options, such as shifting profits to subsidiaries, forming reserves, or utilizing tax exemptions. However, it is important to consult with an experienced tax advisor to avoid tax risks and to make use of the best optimization options for your company.
I hope this information is helpful and that you can correctly calculate the trade tax for your company. If you have any further questions, please feel free to contact me.
Sincerely,
Isabel Möller
