This is how the trade tax assessment rate works

The assessment rate for trade tax is a factor that the tax liability of a business with regard to trade tax by multiplying it by the tax base amount . How high the trade tax to be paid depends on the level of this factor and the trade profit in a taxation period. Municipalities in Germany have the opportunity to directly influence their budgets through the assessment rate and trade tax.

The legal basis for the assessment rate can be found in Section 16 GewStG (Trade Tax Act) . Accordingly, the municipalities are entitled to determine
assessment rate It is used to determine the trade tax liability. In principle, a tax rate of 200 percent applies if the municipality does not set a higher factor. Corresponding decisions on the determination must be made by June 30th of a calendar year. The terms for the validity of the determination are also regulated in the Trade Tax Act.
There is a legal minimum value in Germany for

Companies pay trade tax quarterly in advance. At the end of the financial year, companies submit a trade tax return , on the basis of which the final billing is made. The tax base amount is the amount to which the assessment rate is applied. How high the trade tax will ultimately be depends on the amount of the measurement. To obtain the measurement amount, the trade income is multiplied by the tax figure. This is set out in Section 11 Paragraph 2 GewStG and amounts to 3.5 percent.

Calculation example
‍ First, (§ 8 GewStG) and reductions (§ 9 GewStG) . The commercial income is then reduced to a full 100 euros (Section 11 Paragraph 1 Sentence 3 GewStG) . For partnerships (GbR, OHG, KG, partner company) the exemption amount of 24,500 euros must be taken into account (Section 11 Paragraph 1 No. 1 GewStG). This allowance does not apply to corporations (GmbH, KGaA, AG):

For companies, the assessment rate has a high value as a location factor . Those who can offer lower rates than competing municipalities appear more attractive to companies because the tax burden in terms of trade tax is lower. Especially in newly developed commercial areas, municipalities can decide to introduce low assessment rates in order to speed up the establishment of businesses.

If a municipality is successful with this strategy, the revenue can ultimately be higher than would have been the case if the trade tax rates were higher. This works when successful companies come to the region and taxation is based on high sales.

In principle, municipalities with better infrastructure in particular have higher assessment rates. Companies use this infrastructure and may therefore be willing to pay more for it. This is also one reason why it can be worthwhile for a company to consciously move to a community with higher assessment rates and benefit from better infrastructure there.

The assessment rate is of less importance with regard to the attractiveness of the municipalities for small companies and partnerships. Due to the applicable exemption amount of 24,500 euros, partnerships often pay no trade tax at all. This means that the assessment rate becomes less important. Trade tax is a significant cost factor,

especially for corporations located in high-tax communities such as Munich (490%) In our co-working communities, trade taxes are very low, despite an excellent location close to Munich. In the Grünwald office the assessment rate is 240, in the Gräfelfing office it is 250 and in the Taufkirchen office it is also 250.