Who is within trade tax
Commercial sole traders, partnerships and corporations are generally within the system. Genuine liberal-profession income is usually outside it. Corporations are commercial by legal form.
Why location matters
The tax base is multiplied through a municipal factor. The same profit can therefore produce a different trade-tax burden in different municipalities.
- Business classification.
- Permanent establishments by location.
- Add-backs and deductions.
- Municipal assessment factors.
Interaction with income tax
Individuals and partners may receive income-tax relief for trade tax within statutory limits. Corporations do not receive that personal relief.
Frequently asked
Do Freiberufler pay trade tax?
Genuine liberal-profession income generally does not.
Does a GmbH pay trade tax?
Yes. A corporation is generally treated as commercial.
Can trade tax be credited against income tax?
For eligible individuals and partners, relief can apply within the legal calculation.
This guide is general information on German tax law, not advice on your individual case. Rules and figures change with each tax year.