Trade tax; receipt of the assessment notice

The starting point is the profit under income and corporation tax law, which is, however, modified by additions and deductions. Trade tax is levied by the municipalities.

The tax is determined in a staged procedure.

• In the first stage, the tax authorities determine the trade income and multiply this by a percentage, which is referred to as the tax base. The result is the so-called tax assessment amount, which is determined by the responsible tax office in a separate notice, the so-called tax assessment notice.

• The respective municipality applies a multiplier (assessment rate) to these tax assessment amounts determined by the state tax authorities, which it must specify in a local bylaw. This multiplication results in the trade tax to be paid, which the municipality determines in the trade tax assessment notice. The municipality has broad discretion in determining the level of the assessment rate. With effect from the 2004 tax period, the law of December 23, 2003 (BGBl I p. 2922) stipulated a minimum assessment rate of 200% (Section 16 (4) sentence 2 GewStG).

For taxable commercial enterprises, there is a tax declaration obligation to determine the tax assessment amount. The state assessment notice and the municipal trade tax assessment notice may have to be contested separately. The deadlines specified in the respective information on legal remedies must be observed. It should be noted that the municipality is bound by the state assessment notices and that objections to the state assessment notices can generally no longer be considered in the context of municipal tax collection once the state assessment notices have become final.