Can I avoid trade tax as a self-employed person?
March 11, 2022 | 40,00 EUR | answered by Isabel Möller
Dear Tax Advisor,
My name is Bernhard Endres and I recently founded my own company. As a self-employed individual, I naturally want to manage my taxes as efficiently as possible. Therefore, I am currently concerned about whether it is possible to avoid paying trade tax as a self-employed individual.
Currently, I am still in the early stages of building my business and am not generating high profits yet. However, I am worried that trade tax could pose an additional burden for me. I would like to know if there are legal ways to avoid or at least minimize trade tax.
I have heard that there are some strategies available to reduce the burden of trade tax. For example, by establishing a holding company or converting my business into a partnership. However, I am unsure if these measures are suitable for my company and if they are advisable in the long run.
So my specific question to you is: Are there legal ways for me as a self-employed individual to avoid or minimize trade tax? What steps should I consider to optimize my tax situation?
Thank you in advance for your support and I look forward to your expertise.
Sincerely,
Bernhard Endres
Dear Mr. Endres,
Thank you for your inquiry regarding trade tax as a self-employed individual. It is understandable that as the founder of a company, you are keen to minimize your tax burden as efficiently as possible. Trade tax is a tax levied on companies on their profits and can indeed be an additional burden, especially in the initial phase when high profits are not yet being generated.
First and foremost, it is important to know that it is not possible to completely avoid trade tax as a self-employed individual. It is a legally mandated tax that must be paid by companies engaged in commercial activities. However, there are legal ways to minimize the trade tax burden.
One way to reduce the trade tax burden is to establish a holding company. A holding company is a company that holds stakes in other companies and generates profits from these investments. These profits are usually exempt from trade tax. By establishing a holding company and having your own company as a subsidiary of this holding company, you could potentially reduce the trade tax burden.
Another option is to convert your company into a partnership, such as a GbR or OHG. Partnerships are usually exempt from trade tax as long as they do not generate commercial income. By converting your company into a partnership, you could also minimize the trade tax burden.
However, it is important to note that establishing a holding company or converting into a partnership can have tax implications and may affect other tax aspects such as income tax or sales tax. Therefore, I strongly recommend consulting a tax advisor before taking such measures to find the best individual solution for your tax situation.
Overall, it is indeed possible to minimize the trade tax burden as a self-employed individual, but these measures should be carefully considered and implemented with professional support to avoid tax risks.
I hope that this information has been helpful to you and I am happy to answer any further questions you may have.
Best regards,
Isabel Möller
Tax advisor
