Gewerbesteuer is Germany's municipal trade tax, levied on the profits of commercial businesses (Gewerbebetriebe). It is charged by the local municipality, so the effective rate varies by location. Independent liberal professionals classified as Freiberufler are exempt.
The tax starts from a base rate of 3.5% applied to trade profit, which is then multiplied by the municipal collection rate (Hebesatz), typically between 250% and 500%. This produces an effective burden of roughly 14% to 17%. Sole traders and partnerships benefit from a tax-free allowance of EUR 24,500.
Example: a trader with EUR 100,000 profit deducts the EUR 24,500 allowance, leaving EUR 75,500. Applying 3.5% gives a base amount of EUR 2,642.50; with a Hebesatz of 400% the trade tax is EUR 10,570, an effective rate of about 10.6% of the original profit.
- Base rate: 3.5% x municipal Hebesatz
- Allowance: EUR 24,500 for individuals
- Freiberufler are exempt
Use the German business calculator, or learn who avoids this tax as a Freiberufler.