GmbH Tax Prepayments in Germany 2026: Corporate Tax and Trade Tax Explained

Running a GmbH in Germany means paying taxes not just once a year, but in quarterly instalments. The tax office (Finanzamt) collects prepayments on corporate tax (Körperschaftsteuer) and trade tax (Gewerbesteuer) four times per year. Missing a payment triggers late surcharges; underestimating the amount leads to a painful catch-up payment in spring. Here is what every GmbH managing director needs to know.

The Essentials at a Glance

• Your GmbH makes four prepayments a year on corporate tax plus solidarity surcharge (to the tax office) and trade tax (to the municipality).
• They fall due on 10 March, 10 June, 10 September and 10 December.
• The amount is the most recent tax assessment divided by four.
• If profit drops, you can file a reduction request at any time, retroactively up to 15 months after the year ends.
• Underpaying triggers interest of 1.8 % per year from month 16 onward; late payments a 1 % per month surcharge.

What Are Tax Prepayments?

Tax prepayments (Steuervorauszahlungen) are advance instalments on the expected annual tax liability. The tax office sets them automatically once your GmbH has filed its first tax return, basing the amount on the most recent tax assessment. At the end of the year the actual liability is calculated: if prepayments were too low you owe the difference; if too high you receive a refund, but only after the annual return is processed, which can take months.

Which Taxes Does a GmbH Prepay?

A GmbH prepays two taxes: corporate tax (Körperschaftsteuer) and trade tax (Gewerbesteuer). They differ in rate, base and (a point that is easy to miss) in who receives them:

Trade tax depends on the local multiplier (Hebesatz): at the national average of 400 % the effective rate is around 14 %; Munich and Berlin charge up to 17 %. One point specific to corporations: unlike sole traders and partnerships, a GmbH gets no €24,500 trade-tax allowance; trade income is taxed from the first euro. Combined, a GmbH typically pays 29–33 % of its profit in taxes.

Quarterly Deadlines

Both corporate tax and trade tax prepayments fall on the same four dates each year:

If the 10th falls on a weekend or public holiday the deadline shifts to the next business day. Payment must arrive at the tax office or municipality within three banking days of the due date (a grace period). A late-payment surcharge of 1 % per month applies once that grace period is exceeded.

How Prepayments Are Calculated

The tax office divides the tax liability from the last assessment by four. In the first year, before any return has been filed, it estimates based on your own projections in the tax registration questionnaire or a flat-rate assumption. Example for a GmbH with €120,000 taxable profit and a 400 % trade tax multiplier:

The trade tax here is €120,000 × 3.5 % base rate = €4,200 assessment amount × 400 % multiplier = €16,800. If your municipality's multiplier is higher, the quarterly burden rises accordingly.

When Does the Tax Office Even Set Prepayments?

Not every GmbH receives a prepayment notice. The tax office only sets prepayments if they reach at least €400 per calendar year and at least €100 per due date (§ 37 (5) EStG, applied to corporate tax via § 31 KStG). Below that threshold you pay only with the annual assessment. Trade tax has its own provision (§ 19 GewStG), but the due dates are identical to corporate tax.

Requesting a Reduction When Profits Drop

If current-year profits are tracking below the prior year, you can submit an informal request to your tax office to reduce prepayments (Herabsetzungsantrag, § 37 (3) EStG). Such a request is possible at any time, even retroactively up to 15 months after the calendar year ends. It needs a brief explanation and a profit forecast for the current year.

Common reasons for a reduction:

• Revenue decline or loss of major clients
• Exceptional expenses or major investments in the current year
• End of a large project with no follow-on revenue

The strongest supporting document is an up-to-date BWA (management report) showing that actual profit is running below the prior year. The tax office has discretion in granting the reduction: the more convincing the forecast, the more likely the approval.

Risks of Underpaying

If prepayments fall short of the actual liability, the tax office charges interest of 1.8 % per year (0.15 % per month, § 233a AO) on the shortfall. This interest only starts after a 15-month grace period following the end of the tax year, so a shortfall for 2026 is not charged interest until April 2028 at the earliest.

A large catch-up payment in spring can also squeeze liquidity, especially when quarterly VAT payments land at the same time. Sound GmbH liquidity planning means setting the tax instalments aside monthly rather than funding four large payments from current cash flow. Overpaying, on the other hand, needlessly ties up working capital. The goal is accurate calibration, which requires current bookkeeping data.

Frequently Asked Questions

Does a newly founded GmbH already owe prepayments in its first year? Only if the tax office sets them. At first it estimates the expected liability from your entries in the tax registration questionnaire, often low or zero. After the first annual assessment, prepayments are adjusted to the actual level.

Who do I pay the trade tax prepayment to? Trade tax goes to the municipality where your GmbH has its place of business, not to the tax office. Corporate tax including the solidarity surcharge is paid to the tax office.

Can I have prepayments increased voluntarily? Yes. If you know your profit is well above the prior year, you can request an increase. This avoids a large catch-up payment plus interest the following year.

What happens if I pay an instalment late? Once the three-day grace period lapses, a surcharge of 1 % per month applies to the rounded outstanding amount. Repeated lateness can prompt the tax office to require a direct-debit mandate.

Conclusion

Tax prepayments are a fixed item in the GmbH financial calendar. Knowing the deadlines, understanding the calculation and acting promptly when profits fall are the three levers that prevent expensive surprises. Good GmbH tax filing starts with the monthly numbers you need to stay ahead. Norman's tax tools for GmbH and UG automate bookkeeping and keep your liability estimates current year-round.