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How is the trade tax determined?

Trade tax is levied on the trade income. This is the profit from business operations minus or plus certain amounts. It reflects the earning power of your business. Profit is determined according to the rules of the Income Tax Act and the Corporation Tax Act.

The tax office calculates the tax assessment amount. This amounts to a uniform 3.5 percent of the trade income for all trade businesses. In the case of natural persons and partnerships, the tax office reduces the trade income beforehand by the tax-free amount of 24,500 euros. In addition, 4 times the trade tax assessment amount (up to and including 2019: 3.8 times the trade tax assessment amount) is credited against income tax as part of a maximum amount calculation.

The tax office sends the tax assessment amount to you and the municipality in which you have your place of business.

The municipality then multiplies the determined tax assessment amount by an assessment rate. The result is the trade tax amount, which is determined for you in a notice. The assessment rate varies from municipality to municipality, but is at least 200 percent.

The income from the trade tax flows to the municipalities, for which the trade tax is their own most important source of tax.


The tax office divides the tax assessment amount according to a certain distribution key if you

  • a commercial enterprise
  • with several branches
  • in different municipalities

have. The trade tax is then levied in partial amounts by the individual municipalities. The same applies if you have moved your business to another municipality within one year.


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