Tax changes for 2023 – Everything you can expect

Tax changes for 2023

Towards the end of the year, you always have an incredible amount to do. Tax issues in particular are perhaps not the favorite for a contemplative end of the year. Nevertheless, many important areas are affected here that should not be ignored. Even if it doesn’t necessarily affect your invoices, as an easybill customer you know our special service very well. We would also like to inform you beyond (our) nose about the most important tax changes for 2023.

Inflation Compensation Act

This primarily affects the income tax rates for 2023 and 2024.

  • The basic tax-free allowance will be increased by 561 euros to 10,908 euros from 2023.
  • Child benefit will also be uniformly increased to 250 euros per child.
  • The child allowance will be increased from 2,730 euros to 3,012 euros per child and per parent.
  • The top tax rate will be raised from the current 58,597 euros to 62,810 euros in 2023.

Temporary tax rate adjustment for Luxembourg

To counteract the current inflation a little, Luxembourg has decided to reduce (almost) all tax rates for the time limit of the coming year. Thus, the following tax rates apply from 01.01.2023 up to and including 31.12.2023:

  • The standard VAT rate drops from 17 percent to 16 percent,
  • the medium rate drops from 14 percent to 13 percent, and
  • the reduced rate (especially for gas and electricity) decreases from 8 percent to 7 percent.

Only the heavily reduced tax rate remains untouched. For online retailers: In easybill, you do not have to make any changes in this regard, as the system automatically switches to this. You should only check the delivery thresholds and tax rate categories that have been entered.

Entrepreneurs with company headquarters in Luxembourg who generate manual invoices in easybill, please change the VAT rates via the settings.

Tax reduction Spain on basic food products

Since Spain has also spontaneously decided on a tax reduction, you would actually have to take action here. Since only products from the “basic foodstuffs” segment are affected, easybill cannot make a fundamental reduction in the system, unlike for Luxembourg. Again, please refer to our Help Center post tax rate categories for more information.

Continuation of the tax reduction in the gastronomy sector

A sigh of relief for all restaurant and catering operators: the corona-related tax cut will continue in 2023. It remains at the reduced tax rate, except for beverages. The tax relief is now also intended to somewhat offset the additional expense for the increased energy costs.

More support for renewable energy

A fantastic outlook is definitely that many smaller photovoltaic systems will benefit from tax changes. A considerable amount of bureaucracy will be eliminated when no sales tax is payable from 01.01.2023. Anyone who has hesitated to date as to whether it is worth registering as a small business or directly via standard taxation in order to contribute to the expansion of renewable energies will now receive strong backing.

The costs for a small photovoltaic system can also be claimed retroactively for the year 2022 via the income tax return. You can read more detailed information here. A decision in this regard is expected this week.

More tax changes?

Even more for your tax declaration

Is your study the so-called “center of your entire professional activity”? If so, as a taxpayer you can currently claim the full deduction of income-related expenses. If it is not your entire center of activity, but you do not have an alternative workplace, you can still claim an income-related expenses deduction of up to 1,260 euros. Proof of all costs incurred is no longer necessary here.

The home office flat rate was actually a temporary relief in the wake of the pandemic. Now, however, the decision has been made not to impose a time limit, and the flat rate will continue to be offered. In addition, it will even be increased to six euros per day. It can be claimed for up to 210 days.

Employees beware – do not lose vacation entitlement

In Germany, vacation entitlements are generally subject to a limitation period of three years. However, it is important to note that the limitation period does not start to run until the boss informs the employee that vacation days have not yet been taken. If he forgets this crucial information, the employee’s vacation is retained. This was decided by the European Court of Justice on September 22, 2022.

Time tracking for employees

You do not yet use time recording in your company? Here, too, there was a ruling from the Federal Labor Court in 2022 (13.09.2022). The Federal Labor Court once again confirms that entrepreneurs or employers are obliged to systematically record the working time of their employees.

In easybill, you can very easily record your projects and times within the company and invoice them to your clients, for example. Of course, this does not compensate for working time recording, but who knows what innovations will follow here in 2023.

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