Whether you are working in the trade, service sector or retail sector: entrepreneurs and landlords need capital to invest in the future of operations. However, the sometimes considerable tax burden makes these more difficult. Legal models for tax deferral, i.e. for postponing the payment actually due today, are a proven way out. Although the tax deferral does not remove the payment burden, it allows taxpayers to invest (still) available capital profitably first.
Example: A sole proprietor generates EUR 200,000 profit. He manages to tax EUR 100,000 of this only in the year after next. As a result, he saves around EUR 40,000 in income tax in the year of earnings. This money can now be invested by the entrepreneur until the payment is due, for example in a daily or fixed-term deposit account or in (government) bonds. He still has to pay back EUR 40,000 in income tax in two years, but in the meantime he was able to achieve EUR 6,000 in returns – a basically good deal.
Concept of tax deferral: How is it defined?
A tax deferral is the deferment of the maturity into the future. A taxpayer or a taxpayer must therefore make the payment – which is in principle already due today – only at a later date. The deferral can be effected in two different ways:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.