Can I as a freelancer also have to pay trade tax?
March 2, 2024 | 40,00 EUR | answered by Simon Schaaf
Dear Mr. Dörr,
I am working as a freelancer and generate income from my self-employed activities. So far, I was under the impression that as a freelancer, I do not have to pay trade tax because I did not register a business. However, I recently learned that freelancers can also be subject to trade tax under certain circumstances.
My concern now is that I may have to pay trade tax retroactively and I would like to know under what conditions freelancers can be liable for trade tax. Are there specific criteria that need to be met for trade tax liability to apply?
Furthermore, I am interested in knowing how high the trade tax usually is for freelancers and if there are ways to minimize this tax burden. What tax planning options are available to freelancers to reduce trade tax liability?
I would greatly appreciate a detailed explanation on this topic as I would like to take all necessary measures in a timely manner to prevent any potential tax liabilities.
Thank you in advance for your help.
Sincerely,
Leon Dörr
Dear Mr. Dörr,
Thank you for your inquiry regarding the trade tax liability for freelancers. It is correct that freelancers can be subject to trade tax under certain circumstances, even if they have not registered a business.
In general, freelancers are exempt from trade tax as they are not considered to be engaged in trade. However, trade tax liability for freelancers can apply if you also earn commercial income in addition to your freelance activity. This may be the case if you have income from a commercial business or from renting out property alongside your main freelance activity.
Another reason for trade tax liability could be if your freelance activity is carried out to such an extent that it is classified as commercial. This may be the case if you engage in regular and profit-oriented transactions, have an organized business activity, or employ personnel on a larger scale.
The amount of trade tax for freelancers depends on various factors, including the trade income and the local tax rate. The tax rate typically ranges between 200 and 500 percent. To minimize the trade tax burden, freelancers can use various tax planning strategies, such as investing in business assets, creating reserves, or using loss carryforwards.
It is advisable to consult a tax advisor early on to avoid potential tax liabilities and to optimize tax planning strategies. I am happy to assist you with further questions and provide individual advice.
Best regards,
Simon Schaaf
