Gewerbesteuer: Vorauszahlung am 15. November, Freibetrag und Anrechnung

The last trade tax prepayment of the year is due on 15 November. If you run a commercial business, check now whether your assessed instalments still fit your profit. We explain how trade tax is calculated, which allowance applies to you and why you can largely offset it against your income tax.

Who pays trade tax?

Trade tax (Gewerbesteuer) is paid by commercial businesses: sole proprietors, partnerships and corporations such as a GmbH. Freelancers such as consultants, doctors or journalists are not subject to trade tax. Whether your activity is commercial or freelance is ultimately decided by the tax office.

How trade tax is calculated

1. Trade income: The starting point is your profit from the business, adjusted by add-backs and reductions (sections 8 and 9 GewStG). Trade income is rounded down to full 100 euros.
2. Allowance and base rate: For individuals and partnerships, an allowance of 24,500 euros is deducted (section 11(1) sentence 3 no. 1 GewStG). The tax office applies the base rate of 3.5 percent to the remainder (section 11(2) GewStG). The result is the trade tax base amount.
3. Municipal multiplier: Your municipality multiplies the base amount by its multiplier (Hebesatz, section 16 GewStG). It is the same for all businesses in the municipality but differs a lot between towns. You find it on your municipality's website.

Example: sole proprietor with 80,000 euros of trade income

After the allowance, 55,500 euros remain. 3.5 percent of that is a base amount of 1,942.50 euros. At a multiplier of 400 percent, trade tax is 7,770 euros; at 480 percent it is 9,324 euros.

Add-backs: when does it get more expensive?

Certain expenses are added back to profit for trade tax purposes, for example interest, rent and leases (section 8 no. 1 GewStG). One quarter of the sum of the listed items is added back, but only to the extent the sum exceeds 200,000 euros. For small businesses this usually does not matter.

Credit against income tax under section 35 EStG

As a sole proprietor or partner you usually do not bear trade tax in full. Under section 35 EStG your income tax is reduced by four times the trade tax base amount. Two limits apply:

• The reduction is limited to the trade tax actually payable (section 35(1) sentence 5 EStG).
• There is a maximum reduction that depends on the share of your business income in your total positive income (section 35(1) sentence 2 EStG). If you pay little income tax, the credit may not be used in full.

In the example, the credit is 4 times 1,942.50 euros, i.e. 7,770 euros. At a multiplier of 400 percent it offsets the trade tax arithmetically. At 480 percent, an extra burden of 1,554 euros remains, provided your income tax is high enough.

Prepayments: dates and adjustment

You pay trade tax quarterly in advance, on 15 February, 15 May, 15 August and 15 November (section 19(1) sentence 1 GewStG). Each prepayment is in principle one quarter of the tax from the last assessment (section 19(2) GewStG). The municipality may adjust prepayments to the expected tax (section 19(3) sentence 1 GewStG). A prepayment is only set if it is at least 50 euros (section 19(5) sentence 2 GewStG).

What to do now

• Project your profit: If your 2026 profit is clearly below the assessed year, you can apply to have the prepayments reduced.
• Plan liquidity: VAT and possibly income tax also fall due in December.
• Check the credit: Ask your tax adviser whether the maximum reduction fully applies to you.
• Watch the multiplier: Moving your business to another municipality can change your tax burden noticeably.