Do I have to pay trade tax as a freelancer?
January 27, 2024 | 40,00 EUR | answered by Isabel Möller
Dear tax consultant,
I am Tobias Schlattmann, a self-employed freelancer in the IT consulting industry. Over the past few years, I have successfully built up my business and am generating a stable income. Now, I am wondering whether as a freelancer I also have to pay trade tax.
So far, I have only dealt with income tax and value-added tax and am unsure whether trade tax is relevant for me as a freelancer. Most of my income comes from consulting services and I run my business alone, without any employees.
I am concerned that I may have to make tax payments if I do not correctly pay trade tax. Therefore, it would be helpful if you could explain to me whether freelancers like me also have to pay trade tax and how it is calculated. Are there any specific tax-free amounts or exceptions that I can take advantage of?
I want to make sure that I fulfill my tax obligations correctly and do not experience any unpleasant surprises later on. Therefore, I would be very grateful for your expert advice on this matter.
Thank you in advance.
Sincerely,
Tobias Schlattmann
Dear Mr. Schlattmann,
Thank you for your inquiry regarding trade tax as a freelancer in the IT consulting sector. It is understandable that you are concerned about your tax obligations and want to ensure that you are paying everything correctly. I will be happy to explain to you whether freelancers also have to pay trade tax and how it is calculated.
Basically, freelancers are exempt from trade tax as long as they do not carry out commercial activities. Since you mainly provide consulting services as an IT consultant, which are considered freelance activities, you are usually not subject to trade tax. Freelancers such as doctors, lawyers, architects, engineers, and artists are considered tax-law freelancers and are generally exempt from trade tax.
It is important to note that the distinction between freelance and commercial activities is not always clear-cut. However, if you mainly provide consulting services and do not sell or produce goods, the likelihood is high that you are considered a freelancer and therefore exempt from trade tax.
If you are unsure whether your activity is classified as freelance or commercial, I recommend contacting your tax advisor or requesting a binding ruling from the competent tax office. It is better to clarify things in advance to avoid potential tax arrears.
Regarding exemptions or special regulations for freelancers in terms of trade tax, there are no specific provisions. However, if you are required to pay trade tax, the general exemptions and regulations that apply to all business owners will be applicable. Trade tax is calculated based on the trade profit, which is determined from the profit and loss account as well as other tax adjustments.
I hope that this information has been helpful to you. If you have any further questions or require more detailed advice, I am at your disposal. Please do not hesitate to contact me again.
Best regards,
Isabel Möller
