How can I influence the level of my taxes?

Your taxes can be influenced by various factors. Learn more here.

How can I influence the level of my taxes?

Your taxes can be influenced by various factors. Learn more here.

As a business owner, you have to pay tax each year on your income. Is there a way to pay less (or more) taxes? Sometimes there is, but every situation is different. Some of the factors that can influence your taxes include your type of business, your tax pre-payments, any VAT exemption and your business expenses.

Differences between business types

Personal income tax

In the case of sole traders, taxes are calculated based on their net professional income. You are required to pay personal income tax if your income is higher than the tax-exempt minimum. As you earn more, you will move into a higher tax bracket.

Corporation tax

In the case of a company, taxes are calculated based on its profits. These are determined by deducting substantiated expenses from the income. In the case of personal income tax, the rate can increase, but with corporation tax, you work with a uniform rate. Corporation tax rates are generally considerably lower than personal tax rates. The higher the profits, the more attractive corporation tax becomes.

Pre-payments

Paying tax in advance can be beneficial for both companies and sole traders. Four times a year, you pay a quarter of the tax for which you will be liable that year. This is not compulsory, but if you do not do it, you risk having to pay a tax surcharge.Voorafbetalingen kunnen voor zowel vennootschappen als eenmanszaken voordelig zijn. Je betaalt vier keer per jaar een vierde van de belastingen die je voor dat jaar verschuldigd bent. Het is geen verplichting, maar als je het niet doet, riskeer je een belastingvermeerdering.

Learn more about the Tax Pre-Payment Plan

VAT exemption for small businesses

If the annual turnover of your business does not exceed 25 000 euros, you can obtain exemption from VAT. Exempted businesses are not required to charge VAT on their invoices and may not deduct VAT from their purchases.

Business expenses

Another way to reduce your tax bill is to declare your business expenses. You incur costs in the course of your business and you may deduct these costs from your earnings. This reduces your taxable income. Keeping your taxable income as low as possible means you will have to pay less tax.

In tax terms, therefore, there are differences depending on the extent to which various factors are taken into account. Sit down with your accountant to see whether you can minimise your tax liability and how you should best go about it.

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Is it important to pay tax in advance?

  • How can I avoid a tax surcharge?
  • How much should I pay in advance?
  • How do I calculate my tax surcharge?
Is it important to pay tax in advance?
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