Tax reduction

A tax reduction is a reduction in the tax rate or the agreed tax amount . In the case of reducing the amount of tax we also speak of deduction or tax credit (especially in Austria).

Basics

The reduced tax amount ( ) is calculated from the assessment base ( ), the collective tax rate ( ) and the deductible amount ( ) as follows: ${\displaystyle S_{erm}}$ ${\displaystyle B}$ ${\displaystyle s}$ ${\displaystyle A}$

${\displaystyle S_{erm}=B\cdot s-A}$

The reduced tax rate ( ) results from this ${\displaystyle s_{erm}}$

${\displaystyle s_{erm}=s-{\frac {A}{B}}}$

Germany

• Example of income tax :
  The fixed income tax is reduced by the following tax deductions:
  • foreign taxes that are offset against German income tax,
  • by 50% of the donations to political parties, ... a maximum of 825 euros each.
  • In the case of income from commercial companies ... by 3.8 times (up to 2007: 1.8 times) the respective ... established trade tax base ...,
  • by a certain percentage of the expenses for household-related employment relationships and for the use of household-related services for maintenance and modernization measures up to a maximum of 1200 euros and for care and support services a maximum of 4000 euros applies
• Example of sales tax :

The sales tax is reduced to seven percent for the services from the activity as a dental technician but also for fresh cut flowers.

• Example trade tax :

The tax index is reduced to 56 percent for house traders

• Corporate income tax example :

The corporation tax is reduced by the foreign tax insofar as this corresponds to the German corporation tax.

Austria

• Example income tax :
  The deductible amounts are deducted from the calculated tax amount in accordance with Section 33 Paragraphs 4 to 6 EStG .

Difference Germany / Austria in income taxation

While in Germany the tax reduction can be at most as high as the tax to be paid (before the reduction) - i.e. the tax amount can shrink to zero at most, in Austria there is the possibility that the tax amount will be negative by applying the deduction amounts, which means that this is the case a refund. However, this reimbursement amount is capped in Austria in accordance with the provisions of Section 33 (8) EStG, Section 33 (8) EStG, which means that the deduction amount cannot be fully used in these cases.

See also

• Allowance , basic allowance
• Exemption limit
• Hardness compensation
• Household service
• Household craftsmanship
• Household employment

Web link

Wiktionary: Deduction amount  - explanations of meanings, word origins, synonyms, translations

Individual evidence

1. ↑ § 34c EStG
2. ↑ § 34g EStG
3. ↑ § 35 EStG
4. ↑ § 35a EStG
5. ↑ § 12 Paragraph 2 No. 6 UStG
6. ↑ § 14 UStG
7. ↑ § 11 Paragraph 3 GewStG
8. ↑ § 26 KStG