Accountable calculates your estimated income tax by applying your income tax rate to your net income before taxes, which is derived from your total turnover minus your operating costs, social contributions, financial expenses, and amortisation. You can review this estimate directly in the Taxes section of Accountable and in your profit and loss extract.
This article covers both the accounting logic behind the calculation and where to find the relevant figures in Accountable.
Please note that this article provides general guidance only. Tax rules may vary depending on your individual situation. When in doubt, ask your Tax Coach.
What is the income tax formula?
The way your income tax gets calculated is straightforward:
Total Turnover - Operating Costs (for example: goods for resale and raw and professional materials, subcontracting) - Social Contributions +/- Capital gains/losses - Financial Expenses - Amortisation = Income before taxes
Your relevant income tax rate (%) is then applied to your Income before taxes, giving you your estimated income tax.
Total Turnover = Sales revenue. Operating Costs = All your direct variable costs related to your business activity, plus fixed costs. Financial Expenses = Interest. Amortisation = Depreciation of your fixed assets over a given period.
To get an idea of the scope of operating costs, see the image below:
💡
In your income tax return, the Total turnover (i.e., turnover excluding VAT) reported in code 1600 is reduced by Operating Costs (e.g., goods for resale (Purchase of good for resale and raw materials) / subcontracting).
Ongoing expenses necessary for the proper functioning of the business (e.g., telephone, vehicle, electricity, etc.) are reported in code 1606 of your income tax return.
How does Accountable calculate your estimate?
You can compare these two locations in Accountable:
In the income tax declaration
Figure 1 shows the income tax submission screen in Accountable. You can find it in the Taxes section under your current, future, or past obligations. On the left side of the screen, you have various subsections to review and complete, such as income, professional capital gains, and review. The accumulated values of all the accounting figures mentioned above, plus figures related to your deductibility, are available here.
Profit and loss statement
Figure 2 shows an extract of your profit and loss statement. You can download it from the Data Export screen for the period of your choice (for example, 2021). This is where the accounting methodology is applied in Accountable. Your Estimated Income Tax appears after the Net Income before taxes line. To learn more, read the profit and loss guide.
The two amounts you can compare across these two documents are:
Estimated Income Tax from your profit and loss extract (Figure 2)
Total tax amount from your income tax submission screen, found under the Review section (Figure 1)
How are these accounting figures calculated?
When you record your expenses, invoices, and assets in Accountable, each entry is added under a specific accounting code assigned by the tax authorities. Each code corresponds to a section of the official tax declaration. These accumulated values are then linked to your income tax submission and your profit and loss extract.
Key takeaways
Your estimated income tax is calculated by applying your income tax rate to your net income before taxes (total turnover minus operating costs, social contributions, financial expenses, and amortisation).
You can find your estimated income tax in both the income tax submission screen and the profit and loss extract in Accountable.
The two figures to compare are the Estimated Income Tax (profit and loss extract) and the Total tax amount (Review section of the income tax submission screen).
Every expense, invoice, and asset you record in Accountable is assigned an accounting code that feeds directly into your income tax calculation.
Need help? Chat with us or email support@accountable.eu, we're happy to help.