CYPRUS – MESI COURSE (ENGLISH) - Vifin Course Creator

Introduction – Taxes

As we have learnt before, in Germany every company has to have a tax number. But this is not the only thing you need to know about. If you know about the most important taxes in Germany you are very well prepared to start your business.

Why does it make sense to already deal with the topic of taxes before starting a company?

There are mainly three reasons for this:

If you have a small business you do not pay value-added tax (VAT) [Umsatzsteuer] to the tax office. Depending on the company and customer base, this may or may not make sense. It is best to talk to your tax advisor about this,
the issue of taxes plays an important role before launching your company. You may have already bought office equipment, goods or operating resources in advance. If you made this you have to pay input tax. It is shown as VAT on all bills you pay. So keep these receipts well,
and of course you have to clarify tax questions when you choose the legal structure.

The tax office calculates your income tax rate for the first year of your independence taking the information that you have provided about your expected profit in the course of tax registration. The tax office sets a certain amount each year, which you have to transfer quarterly as an advance payment.

Taxes – Overview

In connection with your company you should know about these taxes which will be explained on the following slides:

Value-added tax (VAT) [Umsatzsteuer]
Input tax [Vorsteuer]
Income tax [Einkommensteuer]
Trade tax [Gewerbesteuer]
Corporation tax [Körperschaftsteuer]

Taxes

Value-added tax (VAT) [Umsatzsteuer]

As an entrepreneur you have to charge VAT to your customers. Always when you do a revenue VAT has to be paid: this means by selling goods or services. The standard rate is 19% and a the reduced rate is 7%. The reduced tax rate of 7% you pay for instance for food, books and for overnight stays in hotel. For which revenues the reduced tax rate of 7% applies you can find in §12 Umsatzsteuergesetz (Value Added Tax Act).

You have to state the VAT explicitly on all invoices you sent to your customers. Here for please take in to consideration the requirements made by law for invoices.

Input tax [Vorsteuer]

You pay input tax for (almost) all company-related purchases. Be careful and aware that on all bills you pay the input tax is clearly indicated as VAT. This input tax you can later deduct with the VAT that you had to pay to the tax office.

Income tax [Einkommensteuer]

Anyone who generates or receives an income must pay income tax. This is important for freelancers because they do not pay the corporation tax. The tax rate you have to pay depends on your personal profit minus your expenses. The tax office will check your income and if it is higher than initially expected, you will have to pay tax debt the following year.

Taxes

Trade tax [Gewerbesteuer]

If your business is in the sector of trades, crafts, services or industry you have to pay trade tax each quarter to your municipality.

Freelancers do not have to pay trade tax.

Corporation tax [Körperschaftsteuer]

The corporation tax is another tax you have to pay when you have chosen the legal form of corporations [Kapitalgesellschaften: GmbH, AG]. The corporation tax has to be paid only for a profit generated by your corporation. Corporation tax has to be paid every quarter in advance to your tax office.

Taxes – Small entrepreneur regulation

There is one exception in Germany when you do not have to pay VAT. This exception is called small entrepreneur regulation. This regulation applies under two conditions:

your turnover including payable tax did not exceed €17,500 in the previous calendar year and
your turnover plus payable tax is not expected to exceed €50,000 in the current year.

This is why you must clearly and realistically evaluate your total expected profit before starting a business.

Thoughts and reflections

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Kursus oversigt

Introduction to MESI platform

Introduction to modules and platform implemented

Glossary implemented

Module 1: Introduction to entrepreneurship - entrepreneurial attitudes and skills

Introduction to module implemented

Entrepreneurship implemented

Traits and attitudes of an entrepreneur implemented

Developing your own business idea implemented

Assessing your business idea implemented

Developing a Business Plan implemented

Module 1: Quiz 13 out of 14

Module 2: Legal and regulatory framework

Introduction to module implemented

1 Introduction and requirements under the residency law implemented

2 Legal structures and regulatory framework implemented

3 Formalities and public authorities implemented

4 Taxes implemented

5 Insurances implemented

6 Legal regulations & Contracts implemented

Module 2: Quiz 8 out of 9

Module 3: Strategic planning and project management

Introduction to module implemented

1 Introduction implemented

2 Strategic planning – creating vision and goals implemented

3 Strategic planning – analyzing possibilities implemented

4 Project management implemented

5 Time management implemented

Module 3: Quiz 13 out of 14

Module 4: Access to markets

Introduction to module implemented

Introduction – from idea to market implemented

Understanding your market implemented

Understanding your customers implemented

Developing your products or services implemented

Marketing and sales implemented

Module 4: Quiz 16 out of 17

Module 5: Understanding the local business culture

Introduction to module implemented

Introduction implemented

Communicating across cultures implemented

Verbal communication etiquette in business 6 out of 7

Non-verbal communication etiquette in business implemented

Active listening and empathy not started

Module 5: Quiz not started

Module 6: Funding and fundraising

Introduction to module implemented

Introduction implemented

Funding your business idea implemented

Different types of funds implemented

NABC implemented

Investor Pitch not started

Module 6: Quiz not started

For trainers / teachers

Inspirational material implemented