How much is the trade tax?
If you as an entrepreneur have to pay trade tax, then pay this tax to your municipality or city administration. First, check whether you are legally obliged to do so. Then calculate how much the tax will be.
Trade tax only applies to traders. As a freelancer or as a farmer and forester, you do not have to pay any trade tax. Therefore, check which professional category you fall into. In case of doubt, you can obtain information from the tax advisor, finance or trade office.
How high the trade tax is depends on your municipality
- So before you start a self-employed professional activity, make it clear whether you are considered to be a trader or a freelancer for tax purposes.
- How high the trade tax to be paid depends on the trade tax index set by the tax office in your district and is given as a percentage.
- On this tax basis, your municipality or City administration the business tax assessment.
- The amount of a trade tax is calculated by multiplying the trade tax assessment amount with the trade tax multiplier set by your municipality.
- The trade tax rates of the various municipal administrations differ considerably in some cases. Sometimes it can make sense to do that Business to be located in a municipality that charges a low assessment rate.
From when is trade tax? - How to calculate correctly
Even if you are heading towards zero profit from your commercial activity ...
The amount of business tax also depends on the tax exemption
- With regard to trade tax, you can use an allowance of € 24,500. This applies to a sole trader as well as to a partnership, but not to a GmbH.
- When calculating the commercial income, commercial financing costs are sometimes added and other items are deducted. These reductions include, for example, part of the unit value of your business property for which you have already paid property tax. This is to avoid multiple taxation.
- A rough calculation of how high the trade tax will be for you is shown here briefly in an example: Your trade income after adding and reducing is € 200,000. From this, the allowance according to § 11 GewStG in the amount of € 24,500 is deducted. The remaining € 175,500. From this, the trade tax index of, for example, 3.5% is calculated for the trade tax base. This equates to € 6,142. From this, the trade tax multiplier of, for example, 490% is now calculated. This then results in trade tax of € 30,098.25.
How helpful do you find this article?
