Calculate German trade tax with your municipal Hebesatz, Freibetrag for sole proprietors, and income tax credit.
What is the Hebesatz and how does it vary?
The Hebesatz is the municipal multiplier applied to the trade tax base amount (Steuermessbetrag). It varies significantly between municipalities: the legal minimum is 200%, but most cities set rates between 300% and 500%. Munich uses 490%, Berlin 410%, Frankfurt 460%, and Hamburg 470%.
Are Freiberufler exempt from trade tax?
Yes. Liberal professions (Freiberufler) as defined in section 18 EStG are entirely exempt from Gewerbesteuer. This includes doctors, lawyers, architects, engineers, tax advisors, journalists, artists, and other regulated creative or scientific professions.
How does the income tax credit work for sole proprietors?
Sole proprietors and partners can credit 3.8 times the Steuermessbetrag against their personal income tax (section 35 EStG). At a Hebesatz of up to 380%, this can fully offset the trade tax. Above 380%, there remains a net trade tax burden.
What is the EUR 24,500 Freibetrag?
Sole proprietors and partnerships receive a Freibetrag (allowance) of EUR 24,500 on their trade profit. Only profit exceeding this threshold is subject to Gewerbesteuer. Corporations (GmbH, AG) do not receive this allowance.
Disclaimer: These calculations are estimates based on 2025 German tax rules and should not be considered professional tax advice. Consult a Steuerberater for your specific situation.
How Gewerbesteuer is calculated, the Freibetrag, and Hebesatz by city
What is Gewerbesteuer?
Gewerbesteuer is a local tax paid by businesses to their municipality. It applies to all commercial businesses (Gewerbe) but not to Freiberufler. The rate varies by city based on the Hebesatz (multiplier). For sole traders, the first €24,500 of profit is exempt. For corporations (GmbH, UG), there is no exemption. It is one of the main sources of municipal revenue.
How is Gewerbesteuer calculated?
Calculation: (Profit - €24,500 Freibetrag for sole traders) × 3.5% Steuermesszahl × Hebesatz. Example: €80,000 profit in Munich (Hebesatz 490%): (€80,000 - €24,500) × 3.5% × 490% = €9,514 per year. In a rural town with Hebesatz 310%: same profit = €6,017. The city where your business is registered determines the Hebesatz.
Can sole traders offset Gewerbesteuer against income tax?
Yes, sole traders and partnerships can credit up to 4× the Gewerbesteuermessbetrag against their income tax. If your Hebesatz is 400% or less, the Gewerbesteuer is effectively free because the income tax credit equals or exceeds the trade tax. In cities with higher rates (Munich 490%, Frankfurt 460%), there is a net cost. This Anrechnung is a huge benefit for sole traders.
Which cities have the lowest and highest Hebesätze?
Lowest: some small municipalities in Bavaria have 200-250%. Monheim am Rhein famously offers 250%. Medium: most mid-sized cities 350-420%. Highest: Munich 490%, Frankfurt 460%, Berlin 410%, Hamburg 470%, Cologne 475%. Some small towns use very low rates to attract businesses. The difference can save or cost thousands per year.
When do you pay Gewerbesteuer?
Gewerbesteuer advance payments are due quarterly: 15 February, 15 May, 15 August, and 15 November. The municipality sets the amount based on your previous year tax. The annual Gewerbesteuererklärung is filed together with your income tax return. Differences between advance payments and the final assessment are settled with a Nachzahlung or Erstattung.
Does Gewerbesteuer apply to online businesses?
Yes, online businesses are subject to Gewerbesteuer if they are commercial activities (not Freiberufler). Your business is taxed at the Hebesatz of the municipality where your business is officially registered — usually your home address for home-based businesses. You cannot simply register in a low-tax municipality while actually operating elsewhere.
Bundesfinanzministerium-Aligned: Based on 2025 Bundesfinanzministerium rates and thresholds. For personal advice, speak to a qualified Steuerberater (tax adviser).
Disclaimer: This calculator provides estimates based on current German tax rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax adviser before making financial decisions. Read our terms
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