Taxation
Flat Rate for Input Tax in Annual Statement
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- Parent Category: Business Legalities
Flat Rate for Input Tax in Annual Statement
Any and all business persons that add VAT to their invoice know that they can deduct the VAT billed to them by other businesses – the so-called ”input tax“. But what if your turnover was high and your investments were low? You can use a little-known flat rate – pursuant to §23 UStG i.c.w. §§69, 70 UStDV. However, this relief applies only for businesses required to keep tax records and not balance sheets. If your turnover was less than € 61,356 in the previous year, you are eligible.
Labor Costs
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- Parent Category: Business Legalities
Labor Costs
People employed in Germany have to contribute to four principal social insurance schemes. The contribution is generally paid half by the employer and half by the employee. This also includes trainees and members of the armed forces and civil service. As a relief for the employer, the employee is to pay 0.9% of all social security costs by himself. The exact contributions are:
Taxation of Businesses
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- Parent Category: Business Legalities
Taxation of Businesses
Since tax law is subject to fluctuations it is difficult to write down the state of the law. Following provisions will only give you a rudimentary primer on what you need for understanding. For more, detailed and up to date information consult your attorney or tax advisor.
This presentation is reaching out to SME not required to keep books. Since keeping books is a very formal and a sophisticated matter in general, and bigger companies will have their bookkeeping personnel anyway, no need for any such information is assumed here.
BTW: Did you know? Tax Return - its origin:
Until 1694, English sovereigns financed their expenditure simply by issuing credit tokens (IOUs) to taxpayers at a discount. In other words a tax-payer could "prepay" his taxes, for instance by giving the sovereign 8 pounds sterling in goods and services in exchange for a 10 pound token from the Exchequer (Treasury), which could be returned in payment of taxes.
Interestingly, the phrase "tax return" derives from the payment of tax by returning the credit token to the King's Exchequer, and the phrase "rate of return" literally described the time over which the taxpayer could achieve his discount and profit by returning his tokens/credits to the Exchequer. So in the above example, if the taxpayer paid 10 pounds tax in one year, he would make a 2 pound profit on an 8 pound investment and a 25% rate of return. If he paid 5 pounds in tax a year then the rate of return would be 12.5% and so on. It will be observed that no compound interest was involved. But that's history; it is not so easy today anymore.
Deductions
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- Parent Category: Business Legalities
Operational Deductions
Tax law in Germany strictly distinguishes between operational expenses, "Betriebsausgaben", and special expenses, "Sonderausgaben". Some of these special or personal expenses are deductible in full and some only partially. For simplification reasons, the distinctions of the special expenses will not be extensively discussed here. Your tax attorney or tax adviser will professionally deal with this. The difference between both kinds of deduction is that only income-related expenses can create a negative result for taxation. Sonderausgaben do not create negative income. A typical example will be if you are laid off. You have no income but expenses for job applications. These application costs can give you negative income. Supposing you are doing your taxes yourself, then just claim all special deductions in full and let the tax office do the subtracting. This is a lean but mean approach – but legal.
Formalities
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- Parent Category: Business Legalities
Formalities in Taxation for the Business Person
You will find the basic formalities for all taxes described further below.
