Earnings before taxes

The profit before tax (also: profit before tax, profit tax, in English: earnings before taxes, EBT) is a business management code and results from the profit and loss account of a company.

It is calculated as

• Operating profit plus financial income and extraordinary items, or
• Net income plus net tax expense.

A distinction between tax law, commercial law (HGB) or be imputed for a different accounting procedures such as IFRS or U.S. GAAP profit and loss account. Depending on the process, the profit before tax for the same company can vary high, making it difficult to compare different companies prepare their accounts.

The tax -tax profit is the basis for the calculation of the tax payments of the company and the reported tax expense in accordance with HGB, but not for the tax expense under international accounting standards.

Application in controlling and financial analysis

In contrast to net income, income before income taxes is independent of tax effects, such as tax payments or the tax benefits of loss carryforwards. It is therefore - assuming a uniform accounting - better for the comparison of the profit of different accounting periods or companies of the net income.

Pre-tax profit in relation to sales ( gross revenue) provides tax- independent statements about a company's profitability.