Tax deduction for risk capital (or "notional interests") is a mechanism allowing your company to reduce its tax base by deducting a percentage of its total equity.

Let’s take an example: End 2010 your company has 10mln € equity. On your 2010 profit, you can deduct 10 mln € x 4,473 % = 447.300 €. If your profit before tax is 800.000 euros. Your company won’t be pay tax on this amount, but on 800.000– 447.300 = 352.700. Corporate tax standing at 33,99%. Without notional interests your company would have paid a corporate tax of 800.000 x 33,99% = 271.920 €. Thanks to this tax mechanism, you only pay 352.700 x 33,99% = 119.883 €. Twice lower in this case .

You record a tax saving of 152.037 €.

This tax measure is in application since 2007 (tax year 2006). Its main goals are to promote equity financing within belgian companies and to support and thus keep decision and coordination centers on Belgian territory.

Mainly thanks to this measure Belgium have reached in 2010 the 4th place of most attractive country to foreign investment in world’s ranking. [1].

Categories : Advices, Studies | Tags : Tax | 0 commentaire associé

Over the past years, most companies decreased their costs of goods sold (‘COGS’). However, mostly this is not the case for the sales, general and administrative (‘SG&A’) expenses. The following graph depicts the SG&A and COGS of the S&P500 index between 1998 and 2008.

 [2]

The SG&A slope shows only a marginal decrease. Too bad, at Bridgewater Consulting we know that a well structured cost reduction program can save your company tens of thousands. Key to this approach is the question: how to reduce costs, not how much. If your company focuses on the short-term, it will try to diminish costs by a certain percentage. On the other hand, if you focus on the long-term, your company will look beyond the current situation and cost reduction opportunities open up.

External benchmarks matter. Too often we see CFO’s who believe their current cost situation is ‘optimal’. That is, until we discover their situation is not so efficient after all and then we advise them other options.

Categories : Studies | Tags : General expenses | 1 commentaire associé