Every year, in November or December, we hear the same question from managing directors: “Can we still do anything about our taxes?” The honest answer: something is almost always possible. But by then, many effective options are already limited.
The better time for the tax strategy meeting is July. For one, the half-year figures are in – you can see where the year is heading, both economically and fiscally. For another, investment decisions are still open: those who plan and act early secure more months of depreciation in the current year. With declining-balance depreciation, the month of acquisition already counts – the earlier the purchase, the greater the tax effect this year can be.
Compensation models can also be reviewed with foresight. Bonus arrangements for shareholder-managing directors should be agreed in advance, properly documented and actually implemented. Retroactive changes at year-end are easily challenged.
And then there is a decision that is often discussed too late: distribute or retain earnings? The right answer depends not only on your personal tax situation, but also on the company's liquidity needs and investment plans.
Our advice: block two hours with your tax advisor in July – not for a review, but to shape things. What remains in December is often administration. What is still possible in July is strategy.
