What impact does the trade tax have on the liquidity of my company?
March 15, 2022 | 40,00 EUR | answered by Eva Heuser
Dear Mr./Ms. Tax Advisor,
I am Gertrud Fuchs and I run a medium-sized company in the electronics manufacturing industry. In recent years, we have been able to consistently increase our revenue and have also generated profits. However, I am now concerned about the trade tax, as I am not sure about its implications on the liquidity of my company.
Currently, we have a healthy working capital and can easily cover our operating costs. However, I am unsure about how the trade tax will impact our liquidity. I am wondering if we have enough reserves to handle the tax burden without getting into financial difficulties.
I would like to know from you what specific effects the trade tax could have on our liquidity and if there are any possible strategies to minimize this burden. Are there, for example, any legal structuring options or tax optimizations that we should consider?
It would be very helpful for me if you could provide an assessment of how we can best prepare for the trade tax and what measures we should take to ensure our long-term liquidity.
Thank you in advance for your support and advice.
Best regards,
Gertrud Fuchs
Dear Mrs. Fuchs,
Thank you for your inquiry regarding the impact of trade tax on the liquidity of your medium-sized electronics manufacturing company. As a tax advisor with extensive experience in the field of trade tax, I am happy to advise you on this topic.
Trade tax is a tax levied on the profits of companies. It is a municipal tax, the amount of which depends on the trade income. The trade income is determined from the company's annual surplus or deficit and can be influenced by various legally defined deduction items.
Trade tax can indeed have a significant impact on the liquidity of your company, as it represents an additional tax burden that must be paid from operational profit. Therefore, it is important to address this issue early on and take measures to optimize the tax burden.
There are various legal structuring options and tax optimizations that you can consider to minimize the burden of trade tax. These include, for example, the use of allowances, the utilization of loss carryforwards, the optimal structuring of contracts, and the selection of the right legal form for your company.
To secure your liquidity in the long term, I recommend conducting regular liquidity planning and forming reserves to settle the tax burden. It is also advisable to reconsider your company's strategy regarding trade tax and make adjustments if necessary to reduce your tax burden.
I am available in my online consultation hours to analyze your individual situation more closely and present you with tailored solutions for dealing with trade tax. Please do not hesitate to contact me to schedule a consultation appointment.
Thank you for your trust and inquiry. I look forward to supporting you in all tax matters.
Best regards,
Eva Heuser, Tax Advisor
