How is the trade tax calculated?
February 6, 2022 | 40,00 EUR | answered by Simon Schaaf
Dear Sir or Madam,
my name is Gabriele Klett and I am the owner of a small craft business in the region. In recent years, I have been intensively involved with the topic of taxes, but I have encountered some uncertainties when calculating the trade tax.
Currently, my business generates a profit of about 50,000 euros per year. My company is registered as a GmbH and we are subject to trade tax. So far, I have always calculated the trade tax as a lump sum tax of 15% on my trade income. However, I have now heard that there are also individual municipal multiplier rates that influence the amount of trade tax.
I am concerned that I may be paying too much trade tax or too little and therefore have problems with the tax office. That is why I would like to know exactly how trade tax is calculated and what factors play a role in this. Are there ways to optimize the trade tax burden and potentially save taxes?
I would greatly appreciate a detailed explanation to deepen my knowledge in this area and better assess my financial situation.
Kind regards,
Gabriele Klett
Dear Ms. Klett,
Thank you for your inquiry regarding the calculation of trade tax for your craft business. I am pleased to be able to assist you with this and provide you with a detailed explanation.
Trade tax is a tax levied on companies based on their profit. It is a municipal tax, which means that municipalities set individual tax rates that are multiplied by the trade income to determine the tax amount. The current nationwide trade tax rate is 3.5%. However, municipalities can increase or decrease this rate, leading to variations in the trade tax burden depending on the company's location.
To calculate the trade tax for your company accurately, you should determine your trade income. This consists of the operating result before trade tax and the additions and reductions according to the Trade Tax Act. The trade income is then multiplied by the tax rate of the respective municipality to determine the amount of trade tax.
There are various ways to optimize the trade tax burden and save taxes. Firstly, you can check if you can benefit from the various additions and reductions in the Trade Tax Act. These can reduce the trade income and thus reduce the trade tax to be paid. Secondly, you can also consider whether it is advisable to relocate your company to take advantage of a lower tax rate.
It is also advisable to consult with a tax advisor who can help you optimize your tax burden. A tax advisor can provide you with individual tips and recommendations to optimize your trade tax and save taxes.
I hope this explanation has been helpful to you. If you have any further questions or would like individual advice, I am at your disposal.
Sincerely,
Simon Schaaf
