How governments calculate business tax rates

Information on business tax

Every standing business is subject to trade tax.

A commercial enterprise is to be understood as a commercial enterprise within the meaning of Section 15 (2) of the Income Tax Act. To be accepted as a commercial enterprise, the following characteristics must be present:

  • Independence,
  • Sustainability,
  • Profit-making,
  • Participation in general economic traffic,
  • no self-employed activity, exercise of a free occupation or agriculture and forestry.

Partnerships, e.g. the civil law company, the OHG or the KG, are always and in full as a commercial enterprise if they carry out a commercial activity. Regardless of their activity, partnerships are fully classified as commercial operations in which only one or more corporations are personally liable partners and only these or persons who are not partners are authorized to manage the company, e.g. GmbH & Co KG.

The activities of the corporations (e.g. the GmbH or the stock corporation), the trade and business cooperatives and the mutual insurance associations are always and fully considered to be a commercial enterprise.

Furthermore, the activities of other legal entities under private law and non-legal associations, insofar as they maintain an economic business operation (with the exception of agriculture and forestry), are also considered to be commercial operations.

The trade tax liability can, however, be partially or wholly through the exemption provisions of ยง 3 GewStG to be disabled.