Are you an individual and generate a trade income of more than EUR 24,500 with your domestic business? Then you are above the tax-free amount and must submit an electronic trade tax return to your tax office. In it, you declare how high your trade income was in the tax period - i.e. in the previous calendar year.

In addition, based on your profit or loss - income minus expenses - you declare further additions or deductions.

You also state the municipality in which you operate your business. You will then receive a notice from the tax office about the so-called trade tax assessment amount.

The tax office determines the trade tax assessment amount by multiplying the trade income by the tax assessment rate of 3.5 percent. This measurement amount is the basis for the amount of trade tax.

The tax office informs the municipality in which you operate your business about the trade tax assessment amount. You will then receive a notice of the trade tax you have to pay or the trade tax to be refunded to you by the municipality.

The municipality calculates the trade tax from the trade tax assessment amount of the tax office multiplied by the trade tax assessment rate of the municipality. Each municipality determines its own assessment rate.

The municipality also decides on the advance payments of trade tax to be paid by you in the future for the following assessment period with the trade tax assessment notice.

Do you run a business (trade) in Germany and earn more than EUR 24,500 per year?
Then you are obliged to submit a trade tax return to your tax office. In it, you declare how high your trade income was in the previous calendar year (assessment period). You submit a trade tax return for each assessment period in which you operated your business (annually). You must submit the declaration electronically, for example via www.Elster.de. In doing so, you declare further additions or deductions based on your profit or loss (simplified: income minus expenses).
You also state the municipality in which you run your business.

The tax office will send you a notice of the trade tax assessment amount by post.
The tax office calculates the trade tax assessment amount by multiplying the trade income by the tax assessment rate of 3.5 percent. This measurement amount is the basis for the amount of trade tax.

The tax office informs the municipality in which you operate your business about the trade tax assessment amount.

The municipality will send you a notice by post about the trade tax that you have to pay or that the municipality has to reimburse to you.
The municipality calculates the trade tax from the trade tax assessment amount of the tax office multiplied by the trade tax assessment rate of the municipality. Each municipality determines its own assessment rate.

The municipality also decides on the advance payments of trade tax to be paid by you in the future for the following assessment period with the trade tax assessment notice. You will receive a notice by post about the advance payments to be made for trade tax.

You pay the amounts specified in the notice of trade tax and/or advance payments for trade tax to the municipality on the date specified therein.

Trade tax is a real tax (also known as property tax) and is based solely on the taxable object, without taking into account the personal circumstances of the tax debtor (e.g. their ability to pay). The taxable object of trade tax is the business and its objective earning power. The trade tax debtor is the entrepreneur. The entrepreneur is the person for whose account the business is operated.

Profits from sole proprietorships and partnerships are subject to trade tax if they generate income from business operations or from corporations.

Trade tax returns must always be submitted to the tax office in electronic form. The federal and state tax authorities have developed a procedure for the electronic transmission of tax return data (ELSTER) for this purpose. The free ElsterFormular software is available for business tax returns.

The tax office determines a trade tax assessment amount on the basis of the trade tax return submitted, which is communicated to the taxpayer by means of a notice. This trade tax assessment notice is the basis for the assessment of trade tax and advance trade tax payments by the cities and municipalities.

The trade tax is calculated by multiplying the trade tax assessment amount by the assessment rate to be determined by the municipality entitled to levy the tax. The assessment rate is 200 percent if the municipality has not set a higher assessment rate.