Tax planning for companies: Successful tax strategies
Companies face the challenge of managing their tax burden efficiently while at the same time meeting legal requirements. However, companies can optimise their tax burden and thus improve their financial situation through effective tax structuring. Whether for GmbHs, GmbH & Co. KGs or sole proprietorships – there are a wide range of options for addressing tax issues in a targeted manner and finding the best solutions. Well thought-out tax planning offers financial advantages and strategic flexibility.
Tax planning offers an opportunity to optimise the use of financial resources and thus increase competitiveness. Entrepreneurs and the self-employed benefit from strategies that are tailored to their specific situation and needs. The support of experienced tax advisors plays a key role in exploiting all tax options and minimising legal uncertainties.
Would you like to know how you can optimise your taxes in a legally compliant manner? Request a free initial consultation – Contact us now for a customised tax strategy!
What is tax planning?
Tax planning refers to the strategic planning and implementation of measures aimed at minimising a company’s tax burden within the scope of the law. This is a proactive and deliberate approach that aims to optimise the use of tax advantages and deploy financial resources efficiently. The aim of tax structuring is to improve the company’s financial situation through targeted tax optimisation while at the same time ensuring legal certainty.
Differences to tax evasion
It is important to make a clear distinction between tax planning and tax evasion. While tax planning is legal and involves the use of legal regulations and room for manoeuvre, tax evasion operates in other legal areas:
- Tax evasion is illegal and involves the deliberate concealment of income or the presentation of false facts to the tax authorities. This leads to criminal penalties and considerable financial disadvantages.
In contrast, tax planning is based on a solid foundation of tax law and financial planning. Companies make use of the legal options provided for tax optimisation in order to reduce their tax burden while remaining on the safe side legally.
Tax structuring offers companies the opportunity to utilise their financial resources more effectively and gain strategic advantages.
Tax planning for GmbHs, GmbH & Co. KGs and sole proprietorships
For companies, tax planning offers a wide range of opportunities to reduce the tax burden and utilise financial resources efficiently. Targeted measures can be used to realise tax advantages that contribute to improving the financial situation. Entrepreneurs benefit from strategies that can have both short-term and long-term effects.
Common structuring options include
- Utilising tax benefits: Companies can utilise tax incentives by investing in certain areas such as research and development.
- Optimising the corporate structure: The establishment of subsidiaries or the use of holding structures can offer tax advantages.
- Relocation of functions: International companies can benefit by relocating functions to more tax-favourable countries.
- Transfer pricing: Tax optimisation can be achieved by setting arm’s length transfer prices for the exchange of goods and services within the company.
At LW-P Lüders Warneboldt, we develop customised strategies that are precisely tailored to the needs of your company. Our team of experts in the fields of tax consultancy, legal advice and auditing will work closely with you to identify and implement the best structuring options. We take into account all relevant factors, from the current tax situation to long-term corporate goals.
Domestic tax planning
Domestic tax planning refers to the use of tax strategies and measures within a country to minimise a company’s tax burden. These strategies are specifically geared towards compliance with national laws and regulations and offer companies a wide range of options for optimising their tax burden.
Choosing the right legal form forms the basis for effective tax planning. Each legal form has specific tax consequences. Conversion can open up tax advantages. These allow, for example, a separation of operational business and asset management, which facilitates tax optimisation.
Organisational options:
- Formation of a GmbH & Co. KG for partnerships
- Implementation of a holding structure for corporations
- Utilisation of reorganisation tax law for restructurings
The tax group is a powerful instrument for tax planning. It enables several legally independent companies to be combined for tax purposes. This allows profits and losses to be offset within the tax group.
Advantages of the tax group:
- Immediate loss equalisation between the parent company and its subsidiaries
- Avoidance of trade tax charges for intra-group services
- Facilitation of group financing
The targeted management of profits and losses offers considerable potential for tax optimisation. For limited liability companies in particular, there are specific options for reducing taxable profits and utilising losses effectively for tax purposes.
Strategies for reducing profits:
- Creation of provisions for future expenses
- Utilisation of special depreciation and increased depreciation
- Optimising the use of losses carried forward
Cross-border tax planning
Cross-border tax structuring opens up additional optimisation potential for companies with an international focus. However, it requires an in-depth understanding of the complex legal and tax frameworks of different countries.
Challenges and opportunities in an international context:
International tax structuring offers opportunities to utilise tax disparities between countries. The relocation of a company’s registered office can bring tax advantages under certain circumstances. At the same time, different tax systems and rates pose challenges for companies.
Compliance and legal framework conditions:
Compliance with national and international tax regulations is essential. Current developments such as the OECD ‘s BEPS action plan aim to curb aggressive tax avoidance practices. Companies must adapt their tax organisation to these changing framework conditions.
Measures:
Various types of cross-border tax structuring make it possible to optimise the overall tax burden. These include:
Transfer prices regulate the valuation of intra-group transactions. Strategic structuring can optimise the tax burden of the group as a whole. It is important to comply with the arm’s length principle in order to minimise tax risks.
DTAs prevent the double taxation of income in different countries. Through targeted structuring, companies can benefit from favourable regulations in DTAs, for example in the taxation of dividends, interest or royalties.
Tax arbitrage exploits differences in the tax systems of different countries. Through clever structuring, tax rates can be optimised and tax relief can be combined in different jurisdictions.
Reporting obligations Tax structuring and structuring abuse
Tax structuring is not a legal vacuum. On the contrary: in recent years, legislators have significantly tightened the requirements for transparency and documentation of tax arrangements.
Companies are obliged to report certain arrangements to the tax authorities. These reporting obligations serve to uncover and prevent tax structuring abuse.
Violations of the reporting obligations can have considerable consequences, including fines and possible back tax payments. Errors in the implementation of tax arrangements can also lead to undesirable consequences.
It is therefore important to know and observe the legal requirements in detail. Careful documentation of your decisions and close cooperation with your tax advisor are essential in order to minimise legal risks.
LW-P Lüders Warneboldt supports you in fulfilling your reporting obligations and making your tax planning legally compliant. We provide you with comprehensive advice on the legal requirements and help you to avoid potential pitfalls. This allows you to concentrate on your core business and protect your assets.
Tax consultants for tax planning: when professional help makes sense
Given the complexity of tax law and the potential risks of incorrect tax planning, professional support is often essential.
Working with an experienced tax advisor offers you numerous advantages:
- Expertise and experience: tax advisors know the current laws and regulations and can provide you with comprehensive advice on all tax structuring issues.
- Customised solutions: You receive customised strategies that are tailored to your specific situation and objectives.
- Risk minimisation: Tax advisors help you to avoid mistakes and minimise legal risks.
- Time savings: You can concentrate on your core business while your tax advisor takes care of your tax affairs.
- Relief from communication with the authorities: Your tax advisor takes over communication with the tax office and represents your interests during audits.
Consultancy services from LW-P Lüders Warneboldt in detail
Our team of experienced tax advisors, specialist tax lawyers, auditors and business consultants offers you a comprehensive range of tax structuring consultancy services:
- Analysis of your tax situation: We prepare a detailed analysis of your current tax structure and identify optimisation potential.
- Development of customised tax strategies: We develop customised concepts that are tailored to your specific needs and objectives.
- Implementation and support: We support you in implementing your tax strategy and provide you with ongoing support for all tax-related issues.
- Representation vis-à-vis the tax office: We take care of communication with the tax office and represent your interests in audits and proceedings.
At LW-P Lüders Warneboldt, we attach great importance to personal and trusting co-operation with our clients. We take the time to listen to your concerns and work with you to develop solutions that will bring you long-term benefits.
Conclusion
Tax structuring for companies offers opportunities to optimise the tax burden and strengthen the financial position. A well thought-out strategy takes into account both domestic and cross-border aspects and effectively utilises the legal scope for structuring.
- Tax structuring includes legal measures for tax optimisation
- Choice of legal form and corporate structure form the basis of successful tax planning
- Cross-border tax planning requires special care and expertise
- Reporting obligations and the risk of structuring abuse must be taken into account
- Professional advice helps to exploit opportunities and minimise risks
Every company needs a customised tax strategy that is tailored to its needs, objectives and framework conditions. Such a strategy makes it possible to optimally utilise tax benefits without taking legal or financial risks. It forms the basis for sustainable business success and financial stability.
FAQ - Frequently asked questions on the topic of tax planning
Companies and private individuals can significantly reduce their tax burden through targeted organisational measures. This includes a variety of strategies, such as choosing the optimal legal form, the skilful use of depreciation, the utilisation of tax allowances and benefits as well as the transfer of income to lower taxed jurisdictions. The utilisation of losses carried forward to reduce future taxable profits is also effective. It is crucial that all measures comply with the applicable tax laws in order to avoid legal consequences.
There are specific tax planning strategies for sole traders that can help to minimise the tax burden:
- Utilising the income tax rate: Optimising taxable income by deferring income and expenses over time.
- Utilise investment deductions and special depreciation allowances: These make it possible to make investments in a tax-favourable way.
- Utilise allowances: Find out about personal allowances and other deductions and utilise them in full.
- Plan profit-reducing expenses: Make targeted use of costs for further training, company pension schemes or other professionally necessary expenses.
Yes, private individuals can also reduce their tax burden through targeted measures. Possible strategies include
- Asset transfers: Gifts or inheritances can utilise tax-free allowances and reduce the tax burden.
- Capital investments: Investments in tax-favoured capital investments offer tax advantages.
- Planning income and expenditure: Managing income and expenditure can help to minimise the tax burden.
- Special expenses and extraordinary expenses: Costs for medical treatment, care or education can be tax-deductible under certain conditions.
- Property investments: Depreciation and tax benefits for rented property offer attractive tax advantages.
