Trade tax liability
December 4, 2013 | 50,00 EUR | answered by Dipl.-Kfm. Frank-Olaf Illiges
I am a student in the final semester (Psychology) and I am expected to graduate in spring 2014. I finance my studies with a permanent position at a psychological institute (employed subject to social security contributions). Additionally, I work freelance at an acting school and teach there (I studied and completed a degree in directing in my initial studies).
Both activities are correctly reported on my tax return.
Now, I have the opportunity to shoot a commercial. It goes without saying that I will also report the resulting income and expenses on my tax return (if the film is realized).
Here are my 3 questions:
1. I assume that I do not need to register a business for my freelance work (as I have not done so yet).
2. Do I need to register a business and pay business tax if I shoot a commercial? The film would be in the range of 20,000 - 25,000 euros.
3. So far, I have not had any issues with VAT. Will this change if the commercial is realized?
Dear inquirer,
Thank you for your inquiry, which I will gladly answer taking into consideration your input and the rules of this platform.
Please note that my response is based on the facts presented, and that adding, omitting, changing information or the ambiguity of the information can change the tax result.
As a freelancer, you earn income from self-employment according to § 18 of the Income Tax Act (EStG). For this activity, you do not need to register a business.
Filmmakers are usually considered traders, unless they are purely engaged in artistic or photojournalistic activities. Since you are producing a promotional film, you generally need to register this activity as a business with the competent regulatory office. However, the trade tax is only due when the trade profit exceeds the tax-free amount of 24,500.00 EUR in one year (§ 11 para. 1 no. 1 Trade Tax Act (GewStG)). Furthermore, the trade tax is largely credited against your income tax (§ 35 EStG).
The creation of a promotional film is a taxable other service. Value-added tax is not levied if you can claim the small business regulation according to § 19 of the Value Added Tax Act. This applies if your realistically estimated total turnover for the calendar year 2014 is below 17,500.00 EUR. Otherwise, your turnover for the calendar year 2014 is subject to value-added tax.
Sincerely,
Dipl.-Kfm. Frank-Olaf Illiges
Tax consultant
Am Wieksbach 55
33378 Rheda-Wiedenbrück
Phone: 05242/4055666
Fax: 05242/4055677
e-mail: office@illiges-steuerberatung.de
Website: www.illiges-steuerberatung.de
