The change of profit method can be made for both business and tax reasons. Often this step becomes necessary when companies exceed certain sales or profit thresholds and are legally obliged to account for them. The desire for tax optimization can also be a trigger, as the different methods offer different approaches to the valuation of claims, liabilities or write-offs.
1. Profit determination method: income-surplus calculation according to § 4 (3) EStG
The Revenue Excess Account (EÜR) is a simplified method for determining profits, which is mainly used by freelancers and smaller companies. It is based on the inflow-outflow principle: revenue is recorded in the year in which it actually flowed in and expenditure in the year in which it flowed.
The advantages of EÜR are, for example, the following:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.