Trade tax and allowance

In short: Trade tax is a municipal tax on the trade income. Sole proprietors have an allowance of 24,500 euros. For small profits no trade tax is therefore due.

In more detail: The tax is calculated as trade income × base rate (3.5%) × the municipality’s multiplier. 24,500 euros are deducted from the trade income, then the tax office calculates the assessment amount. The tax office issues the assessment notice and the municipality the trade tax notice. Part of the trade tax paid is credited against income tax.

In detail

• Return: traders usually file a trade tax return, even when nothing is due.
• Multiplier: set by the municipality, at least 200%.
• Liberal professions: do not pay trade tax (Trade or liberal profession?).
• No link to the chamber: chamber fees and trade tax are separate.
• In practice: whoever stays below 24,500 euros of trade income pays nothing but should still file the return.

See also: Income tax for small businesses, Chamber of commerce membership and fee