The main purpose of tax planning is to legally reduce or defer the amount of payable tax and use that money to generate income and adjust cash flow.
Consistent and proper planning can save or delay payment of many of the taxes you pay: value-added, profits, or personal income. Proper preparation and consistent execution generally do not pose a tax risk to the company or the account manager.
Strategic approaches in relation to the situation
No taxpayer has exactly the same requirements. The individual circumstances of the taxpayer must, therefore, be taken as a basis for tax planning appropriate to the situation.
Strategic approaches for optimal tax planning in relation to the respective situation of the client can be above all:
- the choice of the legal form for the respective entrepreneurial purpose, and
- the reduction of the assessment base for income taxes including the indirectly associated shifting of income and expenses or payments and disbursements to other assessment periods.
Nevertheless, there are certain tax planning criteria, general tax planning options:
- change of residence;
- for the sake of completeness.
The relevance of the tax strategy
Planning your taxes has many advantages:
First, you reduce your taxes in a natural way and acquire a new mindset at the same time. Basic knowledge and understanding of the Spanish tax system, your own money, and what happens with it are the cornerstones of being able to reduce taxes and save money. Not infrequently, tax planning and the resulting tax strategy is life-changing: you decide for yourself how much tax you want to pay and do not voluntarily hand over more than half of your profit to the state. Compound interest can, therefore, result in a high seven-figure differential after 30 to 40 years.
Tax planning is an important element of overall corporate planning. Tax planning has to be subordinate or embedded in overall corporate planning. In concrete terms: Sustainable strategic corporate decisions must never be motivated solely by tax considerations; they must also be meaningful on the basis of all entrepreneurial considerations.
The advantages of the tax strategy at a glance:
- Natural reduction of the tax burden;
- Considerable savings from the first year onwards;
- Basic knowledge of the tax system;
- Structured tax planning, adapted to your phase of life;
- More decision-making power: Control your tax payments yourself.
For whom is strategic planning suitable?
In addition, the tax strategy can also be relevant for start-ups or new businesses, since it sets the right course from the outset and a later change of name can often be expensive and time-consuming. Depending on the initial situation, tax advisors always check whether the tax strategy is the right one for you.
Tax planning step by step
Tax planners analyze your financial ‘status quo’ – honestly, openly, and accurately. They take your growth targets into account and develop the optimal tax strategy for you. Then they work out a detailed tax strategy for you according to your wishes and ideas, which is certainly tailored to your needs.
Every decision of entrepreneurial significance has tax consequences. At the same time, tax laws also influence this decision. Therefore: Play through the tax consequences in advance of every important decision and look for tax-optimal alternatives. We support you in this demanding task with our experience and expertise. Contact us by email or phone.