What impact does the trade tax have on my value added tax?
February 10, 2024 | 50,00 EUR | answered by Simon Schaaf
Dear Mr. Ziegler,
I have been running a small business for several years and have mainly focused on sales tax so far. However, I have recently heard that business tax also plays an important role and can have an impact on my sales tax.
Currently, I regularly pay sales tax on my services provided, that much is clear to me. But how exactly is business tax calculated and does it affect my sales tax payments? I am concerned that I may be paying too much or too little in taxes and could potentially run into problems with the tax office.
Could you please explain to me in detail how business tax affects my sales tax and whether I may need to adjust my tax payments? Are there any specific measures I can take to optimize my tax burden and avoid potential issues?
Thank you in advance for your help and support.
Kind regards,
Wilhelm Ziegler
Dear Mr. Ziegler,
Thank you for your question regarding trade tax and its impact on your sales tax payments. It is good that you are thinking about this, as trade tax is indeed an important aspect that should be considered in the tax planning of a company.
Trade tax is levied on the trade income of a business. The trade income is determined from the company's profit and adjusted for certain additions and deductions. The amount of trade tax depends on the trade tax base amount, which is determined by the tax office. There is a trade tax exemption amount below which no trade tax is due.
Trade tax is a local tax, meaning it is levied by municipalities and goes to them. Trade tax is therefore an additional tax burden in addition to income tax and sales tax. It does not have a direct impact on sales tax itself, as it is levied on the profit of the company.
However, trade tax can indirectly affect your sales tax payments. If you earn high profits and consequently have to pay a high trade tax, this can also affect your sales tax payments. The higher the profit, the higher the sales tax levied on that profit.
It is therefore important to keep an eye on your trade tax payments and, if necessary, adjust your sales tax payments accordingly. It may be wise to conduct tax planning together with a tax advisor to make possible tax optimizations and avoid issues with the tax office.
There are various measures you can take to optimize your tax burden. These include, for example, using tax exemptions and benefits, optimal design of your bookkeeping and tax documentation, as well as considering tax depreciation and provisions.
I recommend that you contact an experienced tax advisor to analyze your tax situation and make possible tax optimizations. This way, you can ensure that you make your tax payments correctly and on time and avoid potential issues with the tax office.
I hope this information is helpful to you and I am available for any further questions you may have.
Best regards,
Simon Schaaf
