Fixed expenses 2013

Since 2013, the Slovak government has planned to change the tax rules for small sole-trader businesses. Instead of itemised deductions, flat-rate expenses of 40% of gross income up to 420 EUR will apply.

Calculate the effective flat-rate expense percentage for a sole trader with a gross income of 1569 EUR.

Final Answer:

x =  26.8 %

Step-by-step explanation:

$$\begin{gathered} b=1569\text{Eur} \\ q=40\%=\frac{40}{100}=\frac{2}{5}=0.4 \\ v=q\cdot b=\frac{2}{5}\cdot 1569=\frac{2\cdot 1569}{5}=\frac{3138}{5}=627.6\text{Eur} \\ {v}_2=\min (420,v)=\min (420,627.6)=420\text{Eur} \\ {x}_1=\frac{v_2}{b}=\frac{420}{1569}=\frac{140}{523}\doteq 0.2677 \\ x=100\cdot x_1=100\cdot \frac{420}{1569}=\frac{100\cdot 420}{1569}=\frac{42000}{1569}=26.8\% \end{gathered}$$

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