Commercial tax - submission of declaration
Commercial tax is charged on business revenues. This is the profit from the commercial business, minus or plus certain amounts. It reflects the revenue generating power of your business.
Profit determination is based on the rules governing Income Tax Law and Corporation Tax Law.
The income from the trade tax goes to the municipalities.
the tax authority, in whose area the business is located
All commercial businesses which are operated in Germany are subject to commercial tax.
You are operating a business if
- you work independently, sustainablyand intend to make a profit,
- your activities are not to be considered as the performance of
- agriculture and forestry,
- an independent profession
- other self-employed work
- or the administration of private assets and
- you participate generally in the economy in the sense of competitive activities.
Further information can be found in the text "self employed or commercial activities".
Note: Capital companies (for example GmbH, AG) are considered as commercial businesses due to their legal form. The type of activity is not relevant. The same applies in respect of commercially orientated partnerships such as GmbH & Co KG.
Partnerships only maintain one commercial operation. Should a partnership also carry out other activities alongside those of a commercial nature, these activities are also considered to be commercial.
You must authenticate your corporation tax return and send it electronically to the tax office. The same applies to the relevant
- balance sheets and
- profit and loss accounts.
The information you send will be authenticated by the ELSTER certificate. This certificate serves as an electronic signature and as a form of security. Its purpose is to
- keep the information sent confidential,
- protect the sender's identity and
- ensure that the content of the
data transmitted cannot be changed.
In order to obtain a certificate, you must register with the ELSTEROnline portal. The registration process involves several steps (e.g. sending the registration data, sending a confirmation mail via the ELSTEROnline portal, sending the activation code by letter). Register well in advance so that you can send your tax return on time. You can use the Elster programme to send it electronically free of charge.
Further information can be found on the pages of the Elster electronic tax declaration.
On the basis of the commercial revenues, the tax office will calculate the tax which is due. For all commercial businesses, this amounts to 3.5% of revenues.
In case of natural persons and partnerships, the tax office shortens the amount of revenues by the allowance of 24,500 euros. In addition, 3.8 times the calculated commercial tax amount is set off as tax relief against income tax within the framework of a maximum amount calculation.
The calculated tax amount is forwarded by the tax office to you and the municipality in which your business is located.
Then, the municipality will multiply the calculated tax amount by a collection rate. The result is the commercial tax amount which is set in relation to you by means of a notice. The collection rate varies according to municipality, however it amounts to at least 200%.
Note: Should you
- have a commercial business with
- more than one branch
- in various municipalities,
the tax office will notify the individual municipalities of the calculated tax amount in accordance with a specific allocation key. The individual municipalities will then charge the partial amounts of the commercial tax which are due for their areas. The same applies if your business was relocated to another municipality during the last year.
The corporation tax declaration for the previous year must be submitted by 31 May of each year.
You must make an advance payment towards corporation tax on the following dates four times each year:
- 15 February
- 15 May
- 15 August
- 15 November
The advance payment rate per date is one quarter of the tax which the tax office has calculated for the previous year. Accordingly during the corporation tax declaration for the current year, you must make subsequent payments or you will receive a credit note.
Note: In case of sole traders and partnerships the corporation tax obligation starts at the time of commencing commercial activities and ends when the operation is closed down. In case of corporations the corporation tax obligation regularly starts from the time of entry in the commercial register and does not end until all activities have ceased.
The German original version of this text was drafted in close cooperation with the relevant departments. The Finanzministerium, represented by the Oberfinanzdirektion Karlsruhe, released it on 17.05.2017. Only the German text is legally binding. The Federal State does not assume any liability for the translated texts.
In cases of doubt or if you have any questions or problems, please contact the relevant authorities directly.