Trade Tax Calculator

Trade Tax Calculation

1. Tax Base: The tax base is determined by the business’s profit, calculated from the annual profit and loss statement.
2. Base Tax Rate: A uniform base tax rate of 3.5% is applied to the tax base.
3. Municipal Multiplier (Hebesatz): Each municipality sets its multiplier, which varies significantly across the country. This multiplier is applied to the base tax amount to determine the final trade tax due.

Example

Let’s say a business in Berlin has a profit of €100,000:

• Tax base: €100,000
• Base tax amount: €100,000 × 3.5% = €3,500
• Berlin’s Hebesatz (2023): 410%
• Trade tax due: €3,500 * 410% = €14,350

Key Points For Businesses

• Local Variation: Because of the variable multipliers, the trade tax rate varies greatly between municipalities. This is something that businesses should think about while deciding where to locate.
• Tax Deductibility:A percentage of the trade tax paid can be deducted from the company’s income tax liability, lowering the total tax burden.
• Exemptions and Allowances: Some businesses, such as agriculture and forestry, may be exempt from paying trade taxes. The annual trade tax-free allowance for sole proprietorships and partnerships is €24,500.
• Payment Schedule: Trade taxes are normally paid in quarterly payments.
• Tax counsel: Because trade tax calculations are complex and local legislation vary, enterprises should seek professional tax counsel.