Trade Tax (Gewerbesteuer) Germany 2026: Allowance, Rates

Key facts

• Allowance 2026 and 2027: €24,500 of trade income a year for sole traders and partnerships (§ 11 (1) GewStG). A GmbH or UG has none.
• From when: trade income is rounded down to the full €100, so tax starts at €24,600 of trade income. Freelancers in a liberal profession never pay.
• Formula: trade income × 3.5% × multiplier. At 410% (Berlin) that is 14.35% of the taxed income.
• Sole traders deduct four times the base amount from their income tax (§ 35 EStG). Up to a multiplier of about 400%, almost nothing is left.
• Deadlines: prepayments on 15 Feb, 15 May, 15 Aug and 15 Nov; the 2025 return by 31 July 2026, the 2026 return by 2 August 2027.
• New from 2027: minimum multiplier 280% instead of 200% (§ 16 (4) GewStG). At the end of 2024, 43 municipalities were below it.

When do you pay trade tax?

The answer depends on your legal form, not on turnover. Every commercial business is subject to trade tax (§ 2 GewStG). How much you pay and whether you must file a return is set by § 11 GewStG and § 25 GewStDV:

The tax office decides from your activity whether you are a Freiberufler or a trader. The article Freiberufler vs Gewerbetreibender explains the line with examples. A GmbH always pays trade tax, even when doctors or engineers work in it (§ 2 (2) GewStG).

In the year you start, prepayments follow the profit you estimate in the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung). A prepayment is only set if it is at least €50 (§ 19 (5) GewStG). If your estimate is below the allowance, you pay nothing during the year; the tax then comes with the assessment for the year, if the income turned out higher.

The 2026 allowance is not a threshold

The €24,500 allowance is always deducted, also when you are above it. You only pay on the part above it. The amount is unchanged for 2026 and 2027.

Two points are often mixed up:

• Profit is not trade income. The starting point is the profit from your EÜR or balance sheet. Add-backs (§ 8 GewStG) are added and deductions (§ 9 GewStG) are subtracted. For most small businesses both are zero, so trade income equals profit.
• Turnover does not count. The turnover limit of the small business scheme (€25,000 in the previous year) applies only to VAT. A Kleinunternehmer still pays trade tax if trade income is above the allowance.

Calculating trade tax: sole trader versus GmbH

The formula is the same for everyone:

Trade tax = (trade income rounded down to €100, minus allowance) × 3.5% × multiplier

An example with €60,000 of trade income in Berlin (multiplier 410%), without add-backs:

The sole trader pays €5,094.25 to the municipality, but her income tax falls by €4,970. €124.25 remains, because Berlin's 410% is just above the factor of 4. The credit is capped at the income tax that falls on the commercial income. With very small profits or large other deductions it can therefore be lower.

The GmbH pays the full €8,610. On top come 15% corporate income tax and the 5.5% solidarity surcharge on it. Since 2008 trade tax is not a deductible business expense for any legal form (§ 4 (5b) EStG).

The trade tax calculator does this for your profit and your municipality's multiplier.

Multipliers: location decides

Every municipality sets its own multiplier (§ 16 GewStG). The range is wide. As of 31 December 2024, according to the regional database of the statistical offices (table 71231-03-01-5):

The median multiplier of the 10,754 municipalities was 380%, with a range from 200% to 700%. You find your municipality's rate in the trade tax calculator or on your last assessment.

From 2027: at least 280%

From the 2027 assessment period the multiplier is at least 280% (§ 16 (4) sentence 2 GewStG, amended by the act of 29 June 2026). Until then the floor was 200%. At the end of 2024, 43 municipalities were below 280%, among them Grünwald and Oberhaching. For a business there, the cost per €10,000 of income rises from €840 to at least €980. Sole traders feel little of this, because the credit covers up to 400%. For a GmbH it is real money.

Moving to a cheaper municipality only works with a real place of business. With several places of business the tax office splits the base amount by payroll (§ 28 and § 29 GewStG). A letterbox address does not count.

Add-backs and deductions

For most small businesses they change nothing. Check them anyway if you pay a lot of rent, leasing or interest.

Add-backs (§ 8 no. 1 GewStG): part of these expenses counts as income again:

• interest on debt at 100%
• rent and leasing for movable assets (car, machines) at 20%, for fully electric vehicles until 2030 at 10%
• rent for an office, shop or hall at 50%
• licence fees at 25%

25% of the total is added back, but only the part above €200,000. An example: €90,000 office rent gives €45,000, €30,000 leasing gives €6,000. The total of €51,000 is far below €200,000, so the add-back is €0.

Deduction for own real estate (§ 9 no. 1 GewStG): since the 2025 assessment period you deduct the property tax (Grundsteuer) you booked as a business expense for real estate in your business assets. The old deduction of 1.2% of the assessed value (Einheitswert) no longer applies. If you only rent an office, there is nothing to deduct here.

Deadlines 2026 and 2027

Prepayments are due on 15 February, 15 May, 15 August and 15 November, each a quarter of the last assessed tax (§ 19 GewStG). If the day falls on a weekend or public holiday, the next working day applies (§ 108 (3) AO):

If the year goes worse than planned, ask the tax office for a lower base amount for prepayments. If it goes better, the extra payment comes with the assessment for the year. The article GmbH tax prepayments shows how to plan them.

The trade tax return: who assesses what?

You submit the return (form GewSt 1 A) electronically through ELSTER to the tax office. The tax office only assesses the base amount (Messbetrag). The municipality then sends the trade tax notice with the multiplier and the amount you pay to it. An objection to errors in the income therefore goes against the base amount notice at the tax office, not to the municipality.

The steps in the ELSTER form and the most common mistakes are in the article Trade tax return in Germany.

What mistakes cost

• Prepayment paid late: 1% late payment surcharge for each month started, on the amount rounded down to €50 (§ 240 AO). Bank transfers get three days of grace.
• Return filed late: the tax office can set a late filing surcharge (§ 152 AO) and estimate your trade income.
• Loss carryforward left out: the assessed trade loss of the previous year only reduces income if you enter it in the return (§ 10a GewStG).
• Freelancer with a commercial side business: without separated activities, the whole profit can become commercial (§ 15 (3) EStG). Separate accounts and invoices protect you.

How to do it with Norman

Norman books automatically, shows your taxes in real time and takes the trade tax return to ELSTER in five steps. For a GmbH or UG, the forecast in Tax autopilot shows the trade tax during the year, projected from your bookings.

1. In Norman, open Taxes and the Trade tax submission card for the year.
2. Under Business details, Norman fills in the multiplier of your business location.
3. Sole traders take the profit under Business profit from the EÜR that Norman builds from their bookings. For a GmbH or UG, Norman takes the profit from the locked annual close, plus interest, rent, leasing and licences from the mapped accounts.
4. Under Prepayments, enter what you already paid for the year. An assessed trade loss goes into the loss carryforward field.
5. Norman shows the base amount, the trade tax and the remaining payment. You check the preview and submit via ELSTER. The receipt arrives by email.

The preview is free on every plan. The self-employed file from €9 a month billed yearly, EÜR and income tax included. A GmbH or UG files in the Max plan at €39 a month billed yearly, together with annual accounts, E-Bilanz and corporate tax. What else Norman does for your taxes is on the page Taxes for the self-employed. For a GmbH or UG it is the page Taxes for companies.

Further reading: Corporate income tax for GmbH and UG · Solidarity surcharge for a GmbH · Trade registration step by step