Trade office / trade tax

Trade office / trade tax (=business tax) are a very specific German topics. There are two types of businesses under German tax law.

1. Trade office / trade tax – Trade professional or freelancer ?

Either you are considered a trade professional or a freelancer. If you are a trade professional, you will have to get registered at the trade office and pay trade tax. You are a freelancer if you are working in an area which needs a university diploma (physicians, lawyers, tax consultants and similar). In some cases that determination is not straight forward, for example if you are consulting or providing IT-services. In these cases, it is very important to name the arguments as to why you should be considered as a freelancer. You must be careful, as some principals will ask you to get registered at the trade office, because they do not know about this difference. You should ask a tax consultant first, because once you are registered it is a lot harder to convince the administration staff that you are a freelancer.

2. Trade office / trade tax – Need a special business license ?

If you are to be considered a trade professional, you will need to ascertain whether the activity is subject to approval (e. g. gastronomy, crafts, banking). In these cases, you need to obtain a business license.

3. Trade office / trade tax – Registration

To get registered you just go to the business registration department with your passport and the sheet of the Commercial Register (Handelsregisterauszug) or alternative with the notary documents. You will have to pay approx. EUR 20 registration fee. You can also fill out the documents online and send them to the trade office. They will send you the invoice afterwards. Just be aware that the trade office is not the tax office. It is a little confusing because there are three institutions: the local tax office (Finanzamt), the local tax department of your town (Steueramt) and the trade office (Ordnungsamt).

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Krischan TreydePlease contact me if I may give you further explanations.
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Best regards

Krischan (Kris) Treyde (CV)
Lawyer and Tax Consultant