Some businesses will have to charge value-added tax (VAT) on some products and services. If your initial predictions were incorrect, you may be required to pay more tax, or entitled to a refund. When you register with the tax office, you will be sent a schedule of tax pre-payments on the basis of your turnover predictions.Īt the end of the financial year, you can calculate your actual tax liability by completing an annual income tax return, just as if you were working in Germany as an employee. Instead of paying corporation tax, freelancers, one-person businesses and partnerships in Germany are taxed on their profits via income tax ( Einkommensteuer).
Businesses must complete an annual trade tax return ( Gewerbesteuererklärung), either on paper or via ELSTER. Trade tax is a local tax, levied annually and payable to local authorities. Trade tax obligations commence as soon as business operations begin (for one-person businesses and partnerships) or as soon as the business is entered into the commercial register (for corporations). Payroll tax ( Lohsteuer - if you have employees)Īll commercial businesses in Germany (with the exception of freelance professions and non-profit making organisations) are liable to pay trade tax ( Gewerbesteuer).
If you are self-employed in Germany, you will pay some or all of the following kinds of tax, depending on the type of business you run and your annual turnover: To avoid unexpected costs, entrepreneurs should acquaint themselves with the main types of taxes that businesses in Germany have to pay. Paying business taxes is a necessary part of starting your own business or being a freelancer in Germany.
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