Trade Tax (Gewerbesteuer) in Germany 2026: Calculation, Hebesatz and Who Pays
Almost every trade business in Germany pays trade tax. Here is how to calculate it, how the allowance and Hebesatz differ by legal form, and the real 2026 deadlines.
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- Taxes
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- Diana
Trade tax (Gewerbesteuer) hits almost every commercial business in Germany – from sole traders to the GmbH. But how much you pay depends heavily on legal form and location: sole traders get a €24,500 allowance, corporations get none, and the municipal Hebesatz decides the rest. This article covers the calculation, the allowances per legal form, the often-missed €200,000 add-back allowance, and the real 2026 due dates.
In brief
- Who pays? Every trade business – sole traders, partnerships, GmbH and UG. Members of the liberal professions (Freiberufler, § 18 EStG) are fully exempt.
- Allowance: €24,500 per year for sole traders and partnerships; GmbH and UG get no allowance – they pay from the first euro.
- Formula: Trading income × 3.5% (base rate) × municipal Hebesatz.
- How much? Effectively around 14–17% of profit. For sole traders, trade tax is largely credited against income tax under § 35 EStG; for a GmbH it is not.
- 2026 deadlines: advance payments on 16 Feb, 15 May, 17 Aug and 16 Nov 2026; the 2025 annual return by 31 July 2026 via ELSTER.
What Is Gewerbesteuer (Trade Tax)?
Trade tax is a municipal tax levied on a business's trading income (Gewerbeertrag), governed by the Trade Tax Act (Gewerbesteuergesetz). It flows to the municipality where the business is registered. It is the most important own revenue source for local authorities – which is why each municipality sets its own multiplier.
Because each municipality sets its own Hebesatz, the burden varies significantly. The statutory minimum multiplier is 200% (§ 16(4) GewStG) and the nationwide average is around 400%. In major cities it is considerably higher, in some suburban municipalities considerably lower.
Who Pays Trade Tax?
Every standing trade business is liable (§ 2 GewStG). Whether and how much you pay, however, depends decisively on your legal form:
| Feature | Sole trader / partnership | GmbH / UG | Freiberufler |
|---|---|---|---|
| Liability | on trading income above the allowance | from the first euro of profit | none |
| Allowance (§ 11 GewStG) | €24,500 per year | no allowance | – |
| Credit against personal tax | yes, § 35 EStG (income tax) | no | – |
| Base rate | 3.5% | 3.5% | – |
Sole Traders and Partnerships
Sole traders and partnerships (GbR, OHG, KG) benefit from an annual allowance of €24,500 (§ 11(1) GewStG). Only trading income above that is taxed. And even that is largely credited against income tax under § 35 EStG – at multipliers up to around 400%, trade tax is therefore effectively neutral for them. They pay it to the municipality but get most of it back via income tax.
GmbH, UG and Other Corporations
Corporations are deemed to be trade businesses by virtue of their legal form, regardless of activity (§ 2(2) GewStG) – even a doctors' or engineers' GmbH is liable. For them there is no allowance and no § 35 credit: trade tax is a real, standalone cost from the first euro of profit. More on this in the total tax burden section below.
Freiberufler (Liberal Professions)
Members of the liberal professions under § 18 EStG – doctors, lawyers, tax advisors, engineers, journalists, many creatives – carry out a professional rather than a commercial activity and are therefore not liable for trade tax at all. Whether you count as a Freiberufler or a trader is decided by the tax office based on your activity; the distinction is explained in Freiberufler vs Gewerbetreibender.
How to Calculate Trade Tax: Formula and Example
The calculation follows a straightforward formula:
Trade tax = Trading income × 3.5% (base rate) × Hebesatz
The base rate (Steuermesszahl) is 3.5% nationwide. Trading income is rounded down to the nearest €100. Example: your GmbH is based in Hamburg (Hebesatz 470%) and generates €100,000 in trading income.
- Base amount: €100,000 × 3.5% = €3,500
- Trade tax: €3,500 × 4.70 = €16,450
- Effective trade tax rate: 16.45% of profit
Note: since 2008, trade tax has not been deductible as a business expense (§ 4(5b) EStG). For GmbH and UG it also cannot be credited against corporation tax – unlike sole traders, who can use the § 35 credit against income tax.
Hebesatz 2026: A Comparison
The Hebesatz is the biggest lever on your actual burden. A location comparison for 2026:
| Municipality | Hebesatz 2026 | Effective rate | Trade tax on €100,000 |
|---|---|---|---|
| Munich | 490% | 17.15% | €17,150 |
| Cologne | 475% | 16.63% | €16,625 |
| Hamburg | 470% | 16.45% | €16,450 |
| Frankfurt am Main | 460% | 16.10% | €16,100 |
| Berlin | 410% | 14.35% | €14,350 |
| Grünwald (near Munich) | 240% | 8.40% | €8,400 |
Your registered seat is therefore worth thousands of euros a year. Some suburban municipalities – Grünwald or Oberhaching near Munich – deliberately attract businesses with low multipliers. But relocating solely for the Hebesatz only works if a genuine place of management is actually there: the tax office apportions trade tax to the true location of the permanent establishment (apportionment under § 28 GewStG), and a mere mailbox address is not recognised.
Add-backs and Deductions: the €200,000 Allowance
Trading income is not the same as your accounting profit. The Trade Tax Act adjusts profit through add-backs (§ 8 GewStG) and deductions (§ 9 GewStG). The most important and most frequently missed point concerns financing costs.
Add-back of financing components (§ 8 No. 1 GewStG): certain expenses reduce your profit but are partly added back for trade tax – the idea is to tax income independently of how it is financed. The following are captured pro rata:
- 100% of interest on debt
- 20% of rent and leasing charges for movable assets (e.g. company cars, machinery)
- 50% of rent and lease charges for immovable assets (e.g. office, warehouse)
- 25% of licence and concession fees
25% of the sum of these amounts is added back – but only to the extent it exceeds a €200,000 allowance. It is precisely this allowance that exempts the vast majority of small and medium businesses from any add-back.
Example: your business pays €90,000 in office rent and €30,000 in car leasing per year.
- Office rent: €90,000 × 50% = €45,000
- Leasing (movable): €30,000 × 20% = €6,000
- Sum of financing components: €51,000
- Less €200,000 allowance → €0 add-back
Only once the financing components exceed €200,000 in total is 25% of the excess added to trading income.
Deductions (§ 9 GewStG): working in the opposite direction is chiefly the simple property deduction – 1.2% of the assessed value of business-use real property reduces trading income. It prevents a double burden of property tax and trade tax.
Total Corporate Tax Burden
For GmbH and UG, trade tax is only one of several income taxes. At the level of the company they combine as follows:
| Tax | Rate | Burden on profit |
|---|---|---|
| Corporation tax | 15% of taxable income | 15.00% |
| Solidarity surcharge | 5.5% of corporation tax | 0.83% |
| Trade tax | 3.5% × Hebesatz (example 400%) | 14.00% |
| Total | ≈ 29.8% |
At company level a GmbH therefore pays roughly 30% tax on profit – the exact figure depends on the municipal Hebesatz. Only when profits are distributed to shareholders does personal-level taxation (capital gains tax / partial-income method) come on top. See our guides to corporate income tax for GmbH and UG and the solidarity surcharge for GmbH.
Advance Payments and Deadlines 2026
Trade tax is not paid once a year but through quarterly advance payments (§ 19 GewStG). If a statutory date falls on a weekend, the due date moves to the next business day (§ 108(3) AO). For 2026 that means:
| Statutory date | Actual due date 2026 |
|---|---|
| 15 February | 16 February (Mon) |
| 15 May | 15 May (Fri) |
| 15 August | 17 August (Mon) |
| 15 November | 16 November (Mon) |
The municipality sets the amount by assessment, based on the most recently assessed trading income. If you expect a significantly lower profit (e.g. in a difficult year), you can apply to the municipality or tax office to reduce the advance payments. If things go better than expected, a back-payment looms instead – plan reserves. Our guide to GmbH tax prepayments shows how to calculate and adjust them.
The annual trade tax return for 2025 is due by 31 July 2026 (a Friday). With a tax advisor the deadline is normally extended to the end of February 2027 (§ 149(3) AO); as 28 February 2027 is a Sunday, the effective date is 1 March 2027.
Filing Your Trade Tax Return
The trade tax return (form GewSt 1 A) is filed electronically via ELSTER with the competent tax office. The process in brief:
- Prepare your annual accounts or profit calculation and determine your profit
- Calculate trading income per the Trade Tax Act (apply add-backs and deductions)
- Complete and submit form GewSt 1 A via ELSTER
- Review the trade tax base assessment – the municipality then levies the actual tax by its own notice
The tax office first assesses only the base amount (Messbetrag); the municipality then levies the actual trade tax by its own notice. A detailed step-by-step walkthrough, including the most common mistakes, is in our trade tax return guide.
With Norman, bookkeeping and annual accounts are automated – the figures you need for the return are always available at a glance, and ELSTER submission is built in.
Frequently Asked Questions
Do members of the liberal professions pay trade tax?
No. Freiberufler under § 18 EStG carry out a professional, not a commercial, activity and are exempt from trade tax. The clean distinction matters: anyone who also runs a commercial activity alongside the professional one risks "infection" (Abfärbung) – then the entire profit can become liable for trade tax.
From what profit do you pay trade tax?
For sole traders and partnerships, on trading income above €24,500 per year. GmbH and UG have no allowance – they pay from the first euro. If the business makes a loss, no trade tax is due; a trade tax loss carry-forward can be offset against later profits.
Does a UG pay less trade tax than a GmbH?
No. UG (haftungsbeschränkt) and GmbH are identical for trade tax – the same 3.5% base rate, no allowance, the same Hebesatz at the registered seat. A UG is simply a GmbH with lower share capital.
Can I save trade tax by relocating?
In principle yes – the Hebesatz ranges from 240% to over 500%. But a move only works if the place of management or a genuine permanent establishment is actually there. With several establishments, the base amount is apportioned across the municipalities (§ 28 GewStG). A mere mailbox address is not accepted by the tax office.
How high is trade tax at a Hebesatz of 400%?
3.5% × 400% = 14% of trading income. On €100,000 of trading income that is €14,000. 400% is roughly the nationwide average.
Summary
Trade tax is an unavoidable but manageable cost for most businesses. Key takeaways:
- Every trade business pays – Freiberufler under § 18 EStG are exempt
- Sole traders get a €24,500 allowance and the § 35 credit; GmbH and UG get neither
- Formula: trading income × 3.5% × Hebesatz; effectively about 14–17% of profit
- On add-backs, the €200,000 allowance shields most small businesses
- 2026 advance payments: 16 Feb, 15 May, 17 Aug, 16 Nov; 2025 annual return by 31 July 2026 via ELSTER
Further reading: Corporate Income Tax for GmbH and UG | GmbH Bookkeeping 2026 | Trade Tax Return: Guide
Norman knows your trade tax before the tax office does
Norman keeps your bookkeeping automated and shows your running trading income in real time – including add-backs and deductions. You see your trade tax burden before the advance payment falls due, and you file the trade tax return with your annual accounts directly via ELSTER.