All commercial enterprises in Germany are subject to a commercial tax regardless of their legal form. The tax rate is determined individually by the municipalities and can therefore vary from one municipality to another but is generally the same for all companies within a municipality.
The respective business tax rate is dependent on two components:
The company's taxable income is multiplied by the tax rate (3.5%), resulting in the so-called tax base amount.
This tax base amount is then multiplied by the respective municipal commercial tax rate and thus gives the amount of commercial tax due. The commercial tax rate is set individually by each municipality. On average, it is between 350% and 400%, but not less than 200%. The assessment rate in urban areas tends to be higher than in rural areas. There is no statutory limit for the rate, but it is currently no more than 490% even in large metropolitan areas.
An annual commercial tax exemption amounting to EUR 24,500 is available for partnerships. No solidarity surcharge is levied on the commercial tax.
Partnerships may offset parts of the commercial tax paid on income tax - equivalent to 3.8 times the tax base amount.
In effect, this means that no effective commercial tax is levied on companies in municipalities with an assessment rate below 380%. Although a commercial tax has to be paid to the municipalities, it can be offset against income tax.