Setting up a business - Ways to self-employment

You have to pay trade tax [Gewerbesteuer] once you have registered a trade. As a rule, the (liberal) professions and agriculturalists are not considered to be conducting a trade.

Trade tax according to individual location

The trade tax is dependent on the company’s profit, with natural personal and non-incorporated companies being able to claim a tax exemption of 24,000 euros per annum. This forms the basis for complicated tax calculations. The municipal authorities then multiply the result of these calculations with an internal percentage (collection rate). This varies according to individual location. Thus, the choice of location can save you thousands of euros a year.

Paying trade tax

As a rule, you have to pay trade tax to your municipal authority every quarter in advance. An annual statement of trade tax ensues with your trade tax return at the end of the calendar year.

Trade tax and income tax

For non-incorporated companies, trade tax can be credited to income tax as a lump sum.