2.) How much trade tax is due.

2.) How much trade tax is due.

Business tax is a closed book for many. We've compiled what tradespeople need to know about the great unknown in this article.

1.) Who has to pay business tax?

Corporations, partnerships and even sole proprietors must pay business tax. The business tax percentage is not the same for these three groups. Sole proprietors and partnerships have the possibility to pay a
Allowance to claim. In practice, the tax allowance is deducted from the trade income. The difference is taxed accordingly. Freelancers, practitioners of liberal professions and businesses in forestry and agriculture do not have to pay business tax.

At the time of trade tax liability, the following applies: as soon as commercial income is generated, the business is liable for trade tax. The exemption amount mentioned at the beginning, which for partnerships and sole proprietorships is set at 24.500 euros, however, is the magical threshold Border. In other legal forms, the tax-free amount is significantly lower. Whoever makes profits above this amount has to pay trade tax on the sum that exceeds it. Conversely, this means that small businesses usually do not have to pay trade tax because they make less profit.

2.) How much business tax is due?

The amount of the trade tax depends on very different, individual factors. The legal basis for levying the trade tax is laid down in the trade tax act of the same name. Those who collect it are the municipalities in which the business is located. How high the Collection rate for trade tax is not the same everywhere.

An overview of which municipalities have which assessment rates can be found under trade tax.De in the chapter "Trade tax assessment rate". It is easy to explain where these rates are decided: every year there are budget discussions in municipalities. If the money is not enough to fulfill the compulsory tasks or to implement important investments, the tax screw is turned in order to generate more revenue by raising the assessment rates. Go to the trade tax calculator here.

3.) How does the trade tax reach the tax office??

As a rule, the trade tax takes this route: the entrepreneur gives a corresponding Trade tax return with the tax office. In this office, the measurement amount is determined and reported to the municipality. Since the municipality levies the assessment rate, it also issues the trade tax assessment notice.

If the tax office sets a trade tax, it must be paid in advance on a quarterly basis (similar to income or corporate tax). In most cases, only sufficient liquidity must be available for the tax office to be able to collect the trade tax on its own.

4.) How to reduce the business tax?

Naturally, tradesmen have an increased interest in paying tax on as little of their profit as possible. For this reason, the question of how to reduce trade tax is increasingly being raised.

Some options are as follows:

Since the trade tax also depends on the Tax rate Since the business tax rate is determined by the municipality, it certainly makes sense for founders to take a look at the municipality's assessment rates before registering their business. Basically, the following applies: In the vicinity of large cities and where trade is not "necessary", the tax rates usually climb to dizzying heights. In rural areas Municipalities with low assessment rates try to create incentives to locate businesses in. If you are able to operate your business at a location-independent rate, you should research the assessment rates in advance.

If you are still in the process of setting up a business and registering it, you should take a look at the Type of company/legal form think carefully – with a view to the exemption amount explained under point 1.

Another trick to lowering trade tax demands is spending in leasing contracts. Since leasing rates for cars and machines are considered operating expenses, they have a reducing effect on profit.

Those whose profits are well above the tax-free amount can also enter into a Splitting the business Consider. However, this is only possible if the division is also comprehensible in terms of content. After the division, the same services may not be offered in both companies.

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