22 January 2019

Direct and indirect taxes: how they affect your business

Inheritance tax, corporation tax and personal income tax (IRPF) are examples of taxes on inheritance, corporate income tax and personal income tax. direct taxation. Unlike other types of taxation, such as VAT (Value Added Tax), which is an indirect tax that sets the rates of taxation according to the object taxed, in the case of direct taxes, it is the individual's particular circumstances that determine the amount to be contributed to the levy.

Characteristics of indirect taxes

Returning to the comparison with the best-known direct tax, VAT, the moment of tribute is a characteristic that defines direct taxation.

Just as with VAT payments, the sole condition is the moment a taxable transaction occurs, such as the purchase of a good or the contracting of a service, in The case of indirect taxes sets a specific time limit in which the obligated subject shall comply with the payment they are due to make.

Another unique feature of indirect taxes is their progressive nature.. With VAT, the differences are established based on the object, For example, essential items have a lower tax rate. So, when you buy eggs, you pay 4%, whereas the percentage for buying a car is 21%. However, Indirect taxes are structured so that those who earn more and have more money must contribute a larger amount.

Types of indirect taxes

There are different indirect taxes, The following six of which stand out:

Income Tax (Personal Income Tax).
Tax on Economic Activities (IAE).
Non-Resident Income Tax.
Inheritance or Gift Tax.
Corporate income tax.
Wealth tax.

How to boost savings with proper management

There are solutions available to large companies, SMEs, and freelancers that help boost savings by promoting better management.. These include the following:

Fuel Ticket. This is a solution designed to help companies reduce their fuel costs. In addition to being associated with direct discounts on refuelling at different petrol stations, it also It makes it easier to deduct indirect taxes on petrol expenses, as it centralises all invoices into one, which simplifies VAT deductions.
Corporate. It is a solution that seeks to encourage savings and provide greater control over management for organisations. It is designed as a comprehensive tool that facilitates the digitisation of expense notes, simplifying the VAT deduction process. Among its advantages are simple integration with the company's accounting system and its convenient and intuitive app.

While these solutions cannot reduce the amounts payable for direct taxes, they do help to avoid missing out on even a single euro in deductions. in terms of indirect taxation, which drives savings in the company.