How does the size of the company affect corporate tax?
December 6, 2022 | 40,00 EUR | answered by Benjamin Hohenadel
Dear Tax Advisor,
My name is Adele Bergmann and I am the managing director of a medium-sized company in the automotive industry. In recent years, our company has been steadily growing and we also plan to continue expanding. This raises the question for me of how the size of our company affects corporate tax.
Currently, we employ about 100 employees and generate an annual turnover of around 10 million euros. Our profits are stable, but I am concerned that as our company grows, the corporate tax burden could increase. I wonder if there are any tax advantages or disadvantages depending on the size of our company.
I would be very grateful if you could provide me with information on how the size of the company affects corporate tax and if there are possible strategies to optimize the tax burden. Are there any specific legal structuring options to reduce the corporate tax burden, especially considering the size of our company?
Thank you in advance for your help, and I look forward to your support on this important topic.
Best regards,
Adele Bergmann
Dear Mrs. Bergmann,
Thank you for your inquiry regarding corporation tax in relation to the size of your company. As the managing director of a medium-sized company in the automotive industry, it is understandable that you are concerned about the tax implications of your growth.
In Germany, corporation tax is based on the profit that a company generates. There is a fixed tax rate of currently 15% on the taxable profit. As the size and profitability of your company increase, the corporation tax burden could also rise. However, there are various tax benefits and planning opportunities to optimize the tax burden.
One way to reduce the corporation tax burden is to make strategic use of tax depreciation options, such as the investment allowance or tax incentives for research and development. Loss offsetting can also help reduce profits and therefore decrease the tax burden.
Furthermore, as the managing director, you can consider various legal structuring options to optimize the corporation tax burden. This includes restructuring the company, establishing subsidiaries, or utilizing tax special regulations. It is advisable to seek professional tax advice to develop the best strategy for your company.
Overall, it is important for you to address the issue of corporation tax early on and examine possible tax planning opportunities to optimize your company's tax burden. I am happy to assist you with any further questions and provide individual advice.
Sincerely,
Benjamin Hohenadel
Tax Advisor
