Accountancy

Summary The VAT ID (USt-IdNr) identifies businesses across the EU for B2B transactions. It is required for companies trading goods or services within the EU, except for those under the small business regulation (Kleinunternehmerregelung). The German VAT ID begins with DE followed by nine digits. It must appear on invoices and the company imprint and …

Summary For a GmbH, bookkeeping is mandatory: Every invoice and receipt must be processed according to double-entry principles and documented in the annual financial statement. The key decision is whether to manage the books yourself or use a tax adviser. DIY bookkeeping requires time, accounting expertise, and proper digital record-keeping, while mistakes can lead to …

Summary The input VAT deduction (Vorsteuerabzug) allows businesses in Germany to offset the VAT they pay on purchases against the VAT they collect from customers. Only invoices that meet the legal requirements under §14 UStG and §33 UStDV qualify. The deduction can be claimed when the goods or services are performed, not when paid. However, …

Summary Effective tax optimisation as an entrepreneur in Germany often involves setting up a holding structure to reduce taxes on dividends and capital gains. Under German law, distributions from an operating company to its holding entity are typically 95% tax-exempt, which can push the effective tax rate down to around 1.6%. Establishing such structures demands …

Summary Double-entry bookkeeping records each transaction twice as debit and credit, ensuring both sides balance. It separates balance sheet accounts and profit and loss accounts to reflect assets, liabilities, income and expenses. It is mandatory for registered merchants and most corporations such as GmbH or UG, depending on size thresholds. Core outputs include journal, general …

Summary The simplified profit-and-loss statement called profit and loss statement 💬Einnahmenüberschussrechnung (EÜR) is designed for freelancers and small businesses in Germany that are not required to use full bookkeeping. It is based on the cash-in/cash-out principle, where only actual payments count, and it calculates profit as income minus expenses. Certain thresholds for turnover and profit …