030 555 721 370
anfrage@guhr-steuerberatung.de
Auerstr. 14, 10249 Berlin
How is trade tax calculated?
The calculation works in three steps: the trade earnings (profit per Income Tax Act or Corporate Tax Act, adjusted for statutory add-backs and deductions) are multiplied by the tax rate of 3.5 % to produce the assessment amount. That assessment is then multiplied by the municipal multiplier (Hebesatz) – only at this stage do you arrive at the actual trade tax payable.
- Determine trade earnings (profit + statutory add-backs − deductions).
- Assessment amount = trade earnings × 3.5 %.
- Trade tax = assessment amount × municipal multiplier (typically 200–490 %).
Add-backs and deductions
To preserve trade tax's character as an objective tax on the business itself, profit is adjusted by certain items. Add-backs include 25 % of debt interest, 5 % of rent for movable assets, 12.5 % for real estate and 6.25 % for licences – to the extent the total exceeds the €200,000 allowance. Deductions include 1.2 % of the assessed unit value of owned property and dividends from qualifying participations.
Crediting against personal income tax (§ 35 EStG)
Sole proprietors and partners in partnerships can credit four times the trade tax assessment amount against their personal income tax. With a multiplier up to about 400 %, this effectively neutralises the trade tax. Above 400 %, an actual residual burden remains – and that is the point at which many entrepreneurs seriously consider relocating or switching to a GmbH.
Location check
Check the multiplier before it costs you.
Comparing your current location's multiplier against realistic alternatives takes 20 minutes – and can be worth five-figure savings per year. We will model the numbers for your specific situation.
The most expensive mistakes in practice
- Choosing a location without comparing multipliers – the most common six-figure mistake in mid-sized businesses.
- Underestimating add-backs: long-term rental agreements can push trade earnings up more than expected.
- GmbHs often forget that trade tax is not deductible at the distributing entity (§ 4 (5b) EStG).
- Losing the extended real-estate deduction through a single commercial side activity – a classic bug in property GmbHs.
Frequent questions
What clients ask about this most often
- No. Those exercising a liberal profession within the meaning of § 18 EStG (doctors, lawyers, architects, advisory business economists, etc.) earn non-commercial income and therefore are not subject to trade tax.
- For partnerships, it usually pays off only above a multiplier of around 400 %, because the credit under § 35 EStG fully absorbs the burden below that. For corporations, every percentage point of the multiplier is a definitive cost – every point counts.
- Pre-payments can be adjusted on request if earnings have visibly changed. The final assessment follows on the basis of the annual trade tax return.
Your next step
How does Trade tax (Gewerbesteuer) impact your business specifically?
Theory is one side – your concrete numbers are the other. In a 30-minute introductory call we will show you which lever fits your situation. Free, written offer included.
030 555 721 370