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

Turning to the comparison with the best known direct tax, VAT, the timing of taxation is a defining characteristic of the direct taxation.

As with the payment of VAT, the only determining factor is the time at which a taxable transaction occurs, such as the purchase of a good or the contracting of a service, in in the case of indirect taxation, a specific time limit is laid down in which the obliged party must comply with the payment due to it.

Another uniqueness of indirect taxes is their progressive nature.. With VAT, the differences are established on the basis of the object, for example, basic necessities are taxed at a lower rate. Thus, when buying eggs, one pays 4% while the rate for the purchase of a car is 21%. However, Indirect taxes personalise the amount so that those who earn more and have more money have to contribute more.

Types of indirect taxes

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

1. Personal Income Tax (IRPF).
2. Tax on Economic Activities (IAE).
3. Non-Resident Income Tax.
4. Inheritance or Gift Tax.
5. Corporate income tax.
6. Wealth tax.

How to boost savings with proper management

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

• Petrol Ticket. It 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 is also makes it easier to deduct indirect taxes on petrol expenditure by centralising all invoices into a single invoice, which makes it easier to deduct VAT.
• Corporate. It is a solution that seeks to promote savings and provide greater management control to organisations. It is designed as a comprehensive tool that facilitates the digitalisation of expense notes, simplifying the VAT deduction process. Among its advantages are its easy integration with the company's accounting system and its convenient and intuitive app.

While these solutions cannot reduce the amount of direct taxes payable, they do help to ensure that not a single euro is not deducted. in terms of indirect taxation, which drives savings in the company.