The trade tax taxes businesses and their objective earning power. The income from the trade tax goes to the municipalities.
The operating profit is the basis of the trade tax, i.e. the profit from the business plus or minus certain amounts. Profit determination is based on the rules governing Income Tax Law and Corporation Tax Law.
Note: For the purpose of Income Tax Law, businesses include all commercial companies. No trade tax has to be paid for agricultural and forestry activities, professions and other self-employment.
The trade tax return has to be submitted to the responsible tax authority.
Tip: You can find the forms for the trade tax online on the website of the Inland Revenue.
The responsible tax authority first of all calculates the base value for tax purposes. From 2008 it is 3.5 percent of the operating profits.
Until 2007, the calculation was different depending on the legal form:
- for corporations: five percent of the operating profit
for sole traders and partnerships:
- for the first 24,500 euros: zero percent (tax allowance)
- for the next 12,000 euros: one percent
- for the second 12,000 euros: two percent
- for the third 12,000 euros: three percent
- for the fourth 12,000 euros: four percent
- from 72,500 euros, the normal base value for tax purposes of five percent.
The responsible municipality multiplies the determined base value with a so-called “Municipal Rate”. This municipal rate differs from municipality to municipality, however it is at least 200 percent.
The advance payment instalment is a quarter of the tax amount arising from the last tax assessment. Accordingly the trade tax return for the current year could result in a subsequent payment or a credit amount.
Note: If a business has several subsidiaries in different municipalities, then the base value is divided onto the individual municipalities in accordance with a specific allocation formula and the trade tax is charged in partial amounts by the individual municipalities.
The trade tax return for the previous calendar year respectively has to be submitted by 31st May of each year.
You have to pay an advance payment on the trade tax every quarter on the following dates:
- 15th February
- 15th May
- 15th August
- 15th November
There are no procedural costs.