Good & Cheap - How much does a tax advisor cost?

Published on 20.12.2018 from Anke Telle

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Most people only think about how expensive a tax advisor is once a year, when they have to prepare their tax return. Tax advisors offer even more services for entrepreneurs, however, which can pay off in the long run: in addition to balance sheets for annual financial statements or profit calculations, accounting matters can also be handled by tax advisors. The legislator sets specific limits for the fee of a tax advisor, which depend on the activity and the value of the matter. The flexibility for the fee charged allows the tax advisor to take the specific effort required for processing into account in the price.

How much does tax advice cost and what does the fee consist of? When is it worth hiring a tax advisor and how can you save money? In this guide, we describe how the fee for tax advice is calculated and give examples of how you can estimate the costs yourself in advance.

Tax consultant fees are regulated by a fee schedule

Do you need help with your tax return and are wondering how much a tax advisor would cost? The Remuneration Ordinance for Tax Advisors, Tax Agents and Tax Consulting Firms (StBVV) can give you a rough idea. This sets minimum and maximum prices for how much can be charged for certain tax consulting services. Deviations from this fee framework are only permitted following a previously negotiated agreement recorded in writing.

What is the fee of a tax advisor?

The total invoice amount of a tax consultant is made up of several parts; the largest single item is the so-called value fee. The value fee for a tax consultancy activity is calculated according to the amount of your income and the type of service. In the appendix to the remuneration regulations, the full fee can be found in tables, staggered according to the value of the object (for example, according to the amount of total income). However, only fractions of this can actually be included in the fee as a value fee. The proportion of the full fee that is incurred depends on the exact service.

Prices for a tax return: sample calculation

For example, if your gross annual income is 48,000 euros, the value of the matter falls into the category "between 45,000 and 50,000 euros", so the full fee according to Table A is 1,098 euros. StBVV §23 paragraph 1 stipulates that 1/10 to 6/10 of the full fee may be charged for preparing the income tax return without determining the individual income. This means that your tax advisor's fee for this work may be between 109.80 and 658.80 euros. [1]

You have to compare the tax consultant costs with the amount of a potential tax refund. For 2017, the Federal Statistical Office reports an average tax refund of 935 euros, which in this example is just above the maximum cost of tax consulting. [2]

What does a tax advisor charge?

The value fee for preparing a tax return is between one and six tenths of the full fee, which is within the tax advisor's wide discretion. For an averagely complicated case, the average fee is usually used. This is exactly in the middle between the minimum and maximum amount of the permissible fee, i.e. 3.5 tenths of the full amount for a tax return. In the example above, this results in an average fee of 384.30 euros. If your tax advisor charges you higher costs than the average fee, he must be able to provide a plausible justification for this , for example if you have multiple sources of income from different activities. [3]

Additional expenses may increase costs

In addition to the value fee charged for a matter, expenses can also be charged, such as for telephone calls and post or travel expenses. However, business correspondence with you does not count as general business expenses. Instead of an exact list of the costs for postal and telecommunications services, a flat rate of 20 percent of the total fee can be charged, but not more than 20 euros per matter.

In addition to the value added tax and the costs for expenses, the invoice amount also increases by the sales tax of 19%.

Are there different rates for tax advice?

If you need tax advice on a matter that is not included in the tables in the appendix to the remuneration regulations, the tax advisor's fee is calculated based on the hourly rate. The hourly rate is between 30 and 70 euros for every half hour or part thereof. The hourly rate is normally calculated, for example, for checking a tax assessment that has been received, preparing an income statement or more complex work when preparing bookkeeping.

Alternative: a flat rate covers all costs

If you do not just ask your tax advisor to prepare your annual tax return, but instead engage him on a regular basis for various matters, you can also negotiate a flat fee. This is useful, for example, for entrepreneurs who are looking for support with bookkeeping in addition to the actual tax advice. If, for example, the bookkeeping is to be updated monthly, you pay your tax advisor a flat fee that is the same every month, regardless of the actual work involved. In months when the tax advisor has to do more work, you have paid a comparatively low price for him; if the work involved is below average, the flat fee will mean that your costs are higher than actually necessary.

The monthly costs for bookkeeping are set out in Section 33 of the Remuneration Ordinance. They amount to between two and twelve tenths of the full fee. The annual turnover is used as the value of the matter. For a longer collaboration, you should regularly review the flat-rate remuneration with your tax advisor, for example by collecting and comparing the working hours, current value of the matter and the calculated fee once a year.

Free services: Initial consultation to get to know each other

If you are looking for a good tax advisor and want to get a better idea of different tax offices, a telephone call and a short initial meeting is a good idea. In a personal meeting, you can get to know each other quickly and more easily assess whether you can imagine working together. Because tax advisors also know the importance of such initial meetings and are looking for clients who fit the firm's profile, many offices offer such initial meetings free of charge. But that doesn't always have to be the case. Section 21 of the Remuneration Ordinance stipulates that a fee of up to 190 euros can be charged even for an initial consultation. However, if this initial meeting is linked to another activity for which the tax advisor charges a fee, the price of the initial meeting will be deducted from this.

How much does tax advice cost for entrepreneurs?

For private individuals, tax matters are usually limited to the annual preparation of the tax return, and for employed people in particular, this is a fairly simple task for a tax advisor. For self-employed people and entrepreneurs, tax offices offer a much more diverse range of services, such as preparing the accounts, drawing up annual financial statements with a profit and loss statement or calculating the income surplus. The remuneration regulations list the fees that can be charged for a large number of specific matters. Below we will show you a few examples of how you can estimate the price for a job with a tax advisor yourself.

Example: Fees for a revenue surplus statement

If you receive income from self-employment, you must also submit an income surplus statement as part of your tax return, in which you compare your income and expenses from self-employment and thus calculate your profit. The fee calculation for determining this income surplus is described in Section 25 of the Remuneration Ordinance.

First, you need to determine the object value. According to the regulation, this is the sum of the operating income or the sum of the operating expenses, whichever is higher. Ideally, your income is of course higher than your expenses, so you have to calculate the total operating income as the object value. For example, if your company has generated 50,000 euros in income and expenses of 20,000 euros, the object value is 50,000 euros.

In the appendix to the value of the matter, you can then look up the full fee for this amount in Table B (the so-called final table) in the appendix to the remuneration regulations. There you will find that for a value of the matter up to and including EUR 50,000, the full fee is EUR 221.

Now you can look in the text of the regulation to see how high the rate is that a tax advisor can charge you for calculating the income surplus. In Section 25 Paragraph 1, this is set at between 5 tenths and 20 tenths of the full fee. In our example with a full fee of 221 euros, the value fee would therefore be between 110.50 euros and 442 euros. If the tax advisor has an average amount of work, you can assume the average fee, which is exactly between the minimum and maximum value, i.e. 276.25 euros. However, the remuneration regulation explicitly states that for necessary preparatory work that goes beyond the usual scope, a time fee of 30 to 70 euros per half hour can be charged. You should therefore already have your documents on income and expenditure in as much order as possible to prevent your tax advisor from demanding a surcharge.

Calculating the costs of tax advice: further examples

In many cases, you can use the principle described in detail above to calculate in advance how much a tax office service will cost. First, you need to look for the keyword in the remuneration regulations and find the paragraph in which the fees are set. This also states what you need to use as the value of the object and in which table you can look up how high the corresponding full fee is. From this, you can then calculate the fee range by multiplying the full fee by the tenths that can be charged for the respective activity.

Below you will find some examples of requests and the paragraphs and tables in which the fees are set out:

Reports, applications, tax returns: §§ 22, 23, 24; Table A (advice table)
Income statement, profit determination, annual financial statements: §§ 25, 26, 35; Table B (closing table)
Accounting: Section 33; Table C (accounting table)
Accounting and annual financial statements for agricultural and forestry enterprises: Section 39; Table D
Extrajudicial legal remedies, administrative enforcement proceedings: Section 40; Table E (legal remedies table)

The full fee is calculated according to the consultation table (Table A) even if no application is to be submitted and no tax return is to be written, but only a simple consultation is carried out. For advice and information from a tax office, for example regarding tax optimization of your business structures, between one and ten tenths of the full fee is charged according to Section 21.

Save costs on tax advice

A visit to a tax advisor is not worthwhile for everyone: in many cases, the costs incurred could equalize or even exceed the benefits. However, the remuneration regulations give you a helping hand in estimating what price you would have to pay for professional tax advice. If you keep a few things in mind, you can also find affordable support in tax matters.

Careful preparation saves time and money

For almost all frequently requested matters, the remuneration regulations specify ranges within which the charged fee must lie. These leeways are very large: for a simple tax return, the maximum price is six times the lowest price that can be charged. In an averagely complicated case, your tax advisor is required to charge an average fee, the median fee. However, if the amount of work required to process the case differs from an average case, the amount charged will also change.

You can ensure that you do not have to pay more than the average fee by disclosing all the necessary information after placing the order and providing the required documents and receipts in an organized manner. For a typical tax return, this includes not only your income tax certificate, but also any certificates for insurance and pension benefits as well as receipts for expenses that could be claimed as business expenses or extraordinary expenses. Prepare your documents for your visit to the tax advisor to keep your costs low!

Equipped with the appropriate power of attorney, a tax advisor can request most documents himself. However, this takes time and therefore delays the processing of your order, increases the effort and thus the applicable value fee, and can also be reflected in higher reimbursement claims for expenses, such as the telecommunications and document fee.

Low earners pay a higher relative price

A look at Table A in the appendix to the remuneration regulations for tax consultants shows that the full value fee for help with tax returns increases non-linearly with your income: for an object value of 5,000 euros, the full fee is currently 316 euros. However, for ten times the object value, i.e. 50,000 euros, the full value fee is only 1,098 euros, i.e. only about three times as much as for 5,000 euros. This non-linearity continues for higher and lower incomes. This means that the lower your income, the higher the relative costs of a tax consultant. Professional tax advice is therefore particularly worthwhile for entrepreneurs with high turnover and high earners with income from several different sources.

Tax consultant costs can be deducted from taxes

There is a small consolation when you look at the invoice for preparing your tax return: you can deduct part of the fee for the tax advisor from your tax for the next year. However, this only applies to costs incurred in determining your income. This includes income from an employment relationship, income from renting out residential property, from capital gains, agriculture and forestry and pensions (Annexes N, V, KAP, L, R). Business owners and freelancers (Annexes G, S) can also claim their tax advice as advertising costs, in particular this applies to the income surplus statement (Annex EÜR). However, because expenses for children and family as well as pension provision are not included in the determination of income, expenses for tax advice in these matters cannot be deducted as advertising costs. Therefore, ask your tax advisor to list the individual items separately on the invoice so that you can claim as much as possible on your next tax return. [4]

Alternatives to tax advisors

As an entrepreneur, you are often dependent on the expert knowledge of a tax advisor, and when international orders or capital investments have to be taken into account, laypeople lack the necessary specialist knowledge. However, if you just need help with your tax return as a private individual, you don't necessarily have to spend a lot of money on a tax advisor. Instead, it may be worth taking a look at tax software or becoming a member of a tax assistance association.

Software offers affordable help with tax returns

Tax offices have now also entered the electronic age, and with ELSTER you can fill out and submit an electronic tax return on your computer. The ELSTER user interface is already tidy and guides you step by step through all the necessary forms. It is particularly helpful to save last year's tax return so that you only have to update changes from the previous year. [5]

In addition to the official Internet form for your electronic tax return, there is also additional professional software that supports you in collecting and sorting your tax-relevant data and makes it easier for you to prepare a tax return. There are several programs that offer this kind of functionality. The consumer magazine Finanztip recommends programs such as Quicksteuer , Wiso Steuer-Sparbuch or Smartsteuer . [6]

When making your selection, make sure that the tax software covers all the functions that you actually need. Private individuals who are employed need fewer functions than entrepreneurs with several employees. It is particularly important that your tax program is up to date : the tax calculation can be changed every year, and the optimization of your tax return only works properly if the software knows the current legal situation and can apply it.

Tax advice from the wage tax assistance association: an alternative?

Instead of hiring a tax advisor to prepare your tax return, you can also contact a tax assistance association. These are also authorized to offer support in tax matters. However, the prerequisite is that you do not receive any income from self-employment. This alternative is therefore not an option for freelancers and tradespeople. A tax assistance association provides self-help: advice from employees for other employees. Tax advice from a tax assistance association is not free either; you have to be a member and therefore usually pay a membership fee. The amount of the membership fee is not set by law and depends on the association in question; there is also a staggered amount based on income. Typical contributions are between 100 and 200 euros per year.

Sources

Editor: Anke Telle

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