Can I defer the value-added tax as well if my company is facing financial difficulties?
April 24, 2024 | 40,00 EUR | answered by Günther Hering
Dear Mr./Mrs. Tax Advisor,
My name is Lina Schulz and I run a small business that is currently facing financial difficulties. Due to the current economic situation, I am struggling with a decline in sales and need to carefully reconsider my expenses. This raises the question for me whether it is possible to defer the value-added tax in order to improve my liquidity.
The current situation shows that my revenues have significantly decreased and I am having trouble covering my ongoing costs. The payment of the value-added tax is an additional burden on my company and I am concerned that I may face payment difficulties in the near future.
My worry is that I may not be able to meet my obligations to the tax office on time and that this could lead to further financial problems. Therefore, I am looking for a solution to defer the value-added tax in order to improve my liquidity.
Could you please explain to me if and under what conditions it is possible to defer the value-added tax? Are there specific requirements that my company must meet in order to benefit from a deferral? What steps do I need to take to apply for a deferral and how will this affect my tax obligations?
Thank you in advance for your help and support.
Best regards,
Lina Schulz
Dear Mrs. Schulz,
Thank you for your inquiry regarding the possibility of deferring value-added tax to improve your liquidity. Indeed, deferring value-added tax can be a sensible measure in certain cases to bridge financial gaps. However, there are certain requirements and steps that need to be taken into account.
First and foremost, it is important to know that deferring value-added tax is not automatically granted. The tax office evaluates each application individually and decides whether a deferral is justified. In general, a deferral can be requested if your company is demonstrably experiencing financial difficulties and the payment of value-added tax would jeopardize your existence.
To apply for a deferral of value-added tax, you usually need to submit an informal application to the relevant tax office. In this application, you should outline your financial situation and explain why a deferral is necessary. It may also be helpful to include relevant documents such as a current profit and loss statement or a liquidity plan to support your argument.
It is important to emphasize that deferring value-added tax is not a permanent solution to financial problems. Therefore, you should also consider alternative measures to improve your liquidity, such as optimizing your business processes, reducing costs, or seeking new sources of income.
If the tax office approves your application for deferral of value-added tax, this may have various implications for your tax obligations. Typically, the deferred value-added tax will be demanded at a later date and must be paid on time. It may also be that you receive stricter conditions from the tax office in the future to ensure that your financial situation has improved.
I hope this information is helpful to you and I am available to answer any questions you may have.
Kind regards,
Günther Hering
