Is it possible to ask the German trade tax office to reduce the quarterly pre-payments due to the bad economic situation?

Yes, there is a way to request a reduction in quarterly pre-payments due to a bad economic situation. In Germany, this process is called applying for a "Herabsetzung der Vorauszahlungen" (reduction of advance payments).

Here are the general steps involved:

Contact the Finanzamt (Tax Office): You'll need to contact your local tax office (Finanzamt) to initiate the process. You can do this by phone, in writing (letter or fax), or in some cases, even online through the official tax portal (Elster).

Provide Evidence: You'll need to provide evidence to support your claim of a bad economic situation. This could include:

• Financial statements or balance sheets showing decreased income or losses
• Documentation of canceled orders or contracts
• Proof of reduced sales or customer base
• Any other relevant information demonstrating the negative impact on your business
  
  

Estimate Future Income: You may need to provide an estimate of your expected income for the current year, demonstrating that it will be significantly lower than the previous year.

Await Decision: The tax office will review your application and supporting documents and make a decision. This may take some time, so it's important to apply as early as possible.

Important Notes:

• It's advisable to consult with a tax advisor or accountant to help you with the application process and ensure you provide all the necessary information and documentation.
• The tax office has the discretion to approve or deny your request based on the evidence provided and their assessment of your situation.
• Even if your request is approved, you may still be required to make some pre-payments, but the amount will be reduced.
• If your economic situation improves later in the year, you may need to adjust your pre-payments upwards to avoid a large tax bill at the end of the year.

Additional Tip:

• If you're facing temporary financial difficulties, you might also consider requesting a deferral of payment (Stundung) instead of a reduction. This allows you to postpone your tax payments to a later date.

Should you have any inquiries or require further assistance, please feel free to reach out to us at accounting@consultinghouse.eu.