Who has to pay business tax and when is it due? (Gewerbesteuer)

About business tax (Gewerbesteuer)

It is a tax that is levied on the profitability of a company. Basis for collecting this tax is to determine the profit of a company. The background for this is that companies represent financial burdens for the region. Conversely, this implies that the community demands financial compensation.

The term “Realsteuer” is more familiar in the vernacular. This is rather a personal tax and, in principle, has nothing in common with the business tax (Gewerbesteuer). The mistake is made due to the fact that partnerships can also be subjected to business tax.

When does business tax apply (Gewerbesteuer)?

The tax is due from the point at which the business enterprise began. This is especially the case when the company has participated in commercial transactions for the first time with commercial services. Entry in the commercial register (Handelsregister) itself does not constitute business tax liability (Gewerbesteuerpflicht).

What is a business enterprise (Gewerbebetrieb)?

A business is an independent, sustainable activity that aims to generate profits. Agricultural and forestry activities do not belong in this category. Even freelancers are not affected by business tax (Gewerbesteuer).

When does the business tax (Gewerbesteuer) have to be paid?

In principle, the business tax (Gewerbesteuer) is transferred every quarter to the local municipality. The payment is made in advance. It is always the 15th of the following month that is the deadline:

• February
• May
• August
• November

In addition, a one-time business tax return (Gewerbesteuererklärung) must be submitted each calendar year. However, the tax assessment notice (Steuerbescheid) is sent from the community in which the taxes must be paid.

Business tax allowances (Freibeträge Gewerbesteuer)

Business tax (Gewerbesteuer) is not due up to a certain limit. Natural persons (natürliche Personen) as well as partnerships (Personengesellschaften) benefit from a tax allowance (Freibetrag) of € 24,500 per calendar year. Amounts of up to €72,500 are tax-favored. The tax to be paid is based on this season’s scale.

Note: Corporations (Kapitalgesellschaften) do not benefit from the exemptions (Freibetrag).

Calculating business tax (Gewerbesteuer)

The basis for the calculation of tax liability (Gewerbesteuer) is, according to the Income Tax Act (Einkommensteuergesetz), the calculated profit from the business enterprise. This is then adjusted by various a and reductions. This results in the business income (Gewerbeertrag). If necessary, the allowance (Freibetrag) is deducted from this business income.

Based on a so-called control measure Steuermesszahl currently 3.5%), the tax assessment amount is multiplied by a tax rate set by the community. This then results in the business tax (Gewerbesteuer) to be paid.