Gewerbesteuer (Trade Tax) in Germany
Effective Gewerbesteuer Rates in Top 10 German Cities
The Gewerbesteuer is a municipal trade tax paid by businesses operating in Germany. It’s based on profits and applies in addition to corporate income tax. The federal base rate is 3.5%, and each municipality applies a Hebesatz (local multiplier), resulting in different total rates across the country. This makes Gewerbesteuer in Berlin, for example, different from Gewerbesteuer in Munich or Gewerbesteuer in Düsseldorf.
How is Gewerbesteuer in Germany Calculated?
The formula used across Germany is:
Trade Tax = 3.5% × Hebesatz
The Hebesatz rate is set by the local municipality and varies from city to city. The result is that businesses in different cities face different effective trade tax rates — a key factor to consider when choosing where to locate your company.
Effective Gewerbesteuer (Trade Tax) Rates in 10 German Cities
We’ve calculated the effective Gewerbesteuer rates in ten major cities to give you a direct comparison. Each city applies a different Hebesatz, which significantly impacts what you’ll actually pay.
See below for specific Hebesatz rate and resulting tax for each location in Germany:
- Gewerbesteuer in Munich: Hebesatz rate Munich = 490 → Effective tax: 17.15%
- Gewerbesteuer in Cologne: Hebesatz rate Cologne = 475 → Effective tax: 16.62%
- Gewerbesteuer in Hamburg: Hebesatz rate Hamburg = 470 → Effective tax: 16.45%
- Gewerbesteuer in Nuremberg: Hebesatz rate Dresden = 467 → Effective tax: 16.34%
- Gewerbesteuer in Frankfurt: Hebesatz rate Frankfurt = 460 → Effective tax: 16.1%
- Gewerbesteuer in Leipzig: Hebesatz rate Leipzig = 460 → Effective tax: 16.1%
- Gewerbesteuer in Bremen: Hebesatz rate Bremen = 460 → Effective tax: 16.1%
- Gewerbesteuer in Düsseldorf: Hebesatz rate Düsseldorf = 440 → Effective tax: 15.4%
- Gewerbesteuer in Stuttgart: Hebesatz rate Stuttgart = 420 → Effective tax: 14.7%
- Gewerbesteuer in Berlin: Hebesatz rate Berlin = 410 → Effective tax: 14.35%
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Why Do Hebesatz Rates Differ by City?
Municipalities in Germany set their own Hebesatz rate, depending on local infrastructure costs, economic goals, and budget priorities. That’s why Hebesatz in Berlin is lower than Hebesatz in Munich, and why Hebesatz in Frankfurt may differ from Hebesatz in Cologne. These differences create strategic opportunities for foreign entrepreneurs.
For example:
- A tech startup may choose Berlin for access to talent and a relatively moderate Gewerbesteuer rate.
- A finance-oriented business might opt for Frankfurt, even if the Hebesatz rate Frankfurt is higher, because of its proximity to key partners and financial institutions.
Does Lower Trade Tax in Germany Mean a Better Location for your business?
Not necessarily. While some small cities might offer lower trade tax rates, the full decision involves more than taxes.
Consider:
- Access to workforce
- Availability of office or industrial space
- Infrastructure and transportation
- Support for residence permits for business founders
- Industry clusters and local incentives
Let Nexus-Europe GmbH Help You Plan the Right Way
Nexus-Europe GmbH helps foreign entrepreneurs go beyond the numbers. Our Business Operations & Compliance Roadmap is designed to help you:
- Choose the right city (based on more than tax)
- Understand all legal and tax requirements
- Successfully register your business
- Plan your immigration and residence permit strategy
- Ensure early-stage compliance
- Avoid common legal and operational mistakes
You don’t have to navigate the complexities of the German market alone. Our roadmap connects tax planning with location strategy, immigration goals, and business development.
See how it works: Business Operations & Compliance Roadmap
Choosing a city for your business in Germany means balancing tax obligations with practical needs. Gewerbesteuer in Germany varies widely depending on location, due to the Hebesatz set by each municipality. Cities like Berlin, Munich, Hamburg, and Frankfurt all offer different combinations of tax rates and business environments.
But while the effective trade tax rate is important, it’s just one part of your success strategy. Let Nexus-Europe GmbH help you make the right decisions.