Filing your Gewerbe tax return is the key to peace of mind and running your business smoothly in Germany. Submit your business income declaration on time so you can freely grow your company or provide services without stress. If you fail to file your return within the required deadline, the Finanzamt may impose a financial penalty of up to €25,000!
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Gewerbe is the German form of business activity, equivalent to a sole proprietorship in Poland. It can be registered by any individual, including Polish citizens working independently in Germany. Gewerbe is registered at the local business office (Gewerbeamt) and involves the obligation to keep accounting records and fulfil tax responsibilities.
People running a Gewerbe in Germany must remember to submit tax returns regularly – every entrepreneur is legally required to do so. Depending on income level and taxation method, they may be taxed under general rules or benefit from tax reliefs. Sole traders must settle income tax (Einkommensteuer) and business tax (Gewerbesteuer if annual profit exceeds €24,500). VAT obligations (Umsatzsteuer) depend on turnover – if the company exceeds €22,000 per year, VAT must be declared.
In Germany, entrepreneurs running a sole proprietorship such as Gewerbe are required to file their annual tax return by July 31st of the year following the tax year in which they conducted their business. This is a crucial deadline that must be met to avoid potential penalties. If the entrepreneur uses the services of a licensed tax advisor (Steuerberater), the deadline may be automatically extended, usually until the end of February of the second year after the tax year ends. This means that for the 2024 tax year, the standard deadline is July 31st, 2025, and if the entrepreneur works with a tax advisor, the deadline may be extended to February 28th, 2026. It is worth remembering, however, that German tax offices (Finanzamt) may sometimes require an earlier filing by sending an official notice.
Even if the entrepreneur did not generate any income in a given year or incurred a loss, they are still required to submit a tax return. In Germany, the tax authorities expect full financial transparency, and the absence of income does not exempt you from formal obligations. Late filing may result in financial penalties (Verspätungszuschlag), calculated depending on the length of the delay and the amount of tax due. In extreme cases, the Finanzamt may also assess the tax on its own, which often leads to higher amounts than the actual tax liability.
Please note that Gewerbe owners are entitled to a tax-free allowance in Germany, which in 2025 amounts to €12,096.
Entrepreneurs running a business in Germany but having their centre of life interests in Poland may also be required to declare their income in Poland. This means filing a tax return in the country of tax residence, even if the main source of income comes from abroad. The key factor determining where you pay tax is tax residency, which in most cases is established based on place of residence and the number of days spent in a given country. If the entrepreneur stays in Poland for more than 183 days a year or has family, property, or other significant economic ties there, they may be obliged to settle their income with the Polish tax office as well.
To avoid double taxation, the provisions of the Poland–Germany double taxation treaty must be applied. Currently, the exemption with progression method is in force, meaning that income earned in Germany is not taxed again in Poland, but it may affect the tax rate applied to other income earned in Poland. Entrepreneurs operating in Germany should also remember the obligation to inform the Polish tax office about foreign income and any advance income tax payments made in Germany. It is worth seeking support from a tax advisor to settle your income correctly and avoid mistakes that may lead to financial penalties.
For more information, please see our blog post: Gewerbe settlement in Poland – how to handle formalities while running a German business.
Entrepreneurs who run a business in Germany but are tax residents in Poland are required to report their foreign income to the Polish tax office. This means filing a PIT-36 tax return along with the PIT/ZG appendix, which is used to show income earned in Germany and the tax paid there. This applies to entrepreneurs whose income is taxed according to the progressive tax scale.
The PIT-36 return for a given tax year must be filed by April 30th of the following year – for example, income for 2024 must be settled by April 30th, 2025. You can submit the return in several ways: electronically via the e-Deklaracje system or Twój e-PIT on the Ministry of Finance website, in person at the tax office, or by mail (the postmark date counts). To avoid errors and potential penalties, it is worth using the support of a tax advisor who will help complete the return correctly and apply the relevant double taxation rules.
To correctly settle business income earned in Germany with the Polish tax office, you need to collect appropriate documents confirming your income and taxes paid. The key document is the annual German income-and-expense summary, i.e., the Einnahmen-Überschuss-Rechnung (EÜR), or full financial statements if full accounting is kept. It is also worth preparing the Steuerbescheid, i.e., the German tax assessment notice confirming the final amount of tax liabilities in Germany. If the entrepreneur paid advance payments for income tax, proof of transfers to the Finanzamt will also be required.
Another important document is a certificate confirming tax paid in Germany, which may be required by the Polish tax office to correctly apply the double taxation treaty. Additionally, if the entrepreneur paid social and health insurance contributions in Germany (e.g., to AOK, TK, or a private insurance system), it is worth attaching confirmation of contributions, as they may affect the taxable base. You should also keep all sales and expense invoices, which may be required in the event of a tax audit.
Entrepreneurs running a business in Germany (Gewerbe) are required to file several key tax returns. In addition to the annual income tax return (Einkommensteuererklärung), if the entrepreneur is a VAT payer, they must also submit a VAT return (Umsatzsteuererklärung). Depending on the turnover, VAT may be settled monthly, quarterly, or annually. Entrepreneurs exempt from VAT (so-called Kleinunternehmer, whose annual turnover does not exceed €22,000) do not have to submit VAT returns, but they are still required to keep revenue records.
Additionally, entrepreneurs earning more than €24,500 per year are subject to trade tax (Gewerbesteuer), which is assessed by the local municipal office (Gewerbesteueramt). Therefore, they must file a trade tax return (Gewerbesteuererklärung).
When filing taxes in Germany, two documents are essential: Gewerbe Anmeldung, i.e., the confirmation of business registration, and Steuernummer, the individual tax number assigned by the tax office (Finanzamt). Gewerbe Anmeldung is the official proof that the business is registered and is required for all settlement-related formalities. Steuernummer is necessary for filing tax returns, including income settlement and any taxes such as VAT (Umsatzsteuer) or trade tax (Gewerbesteuer). Without these documents, a correct Gewerbe settlement is not possible.
When settling Gewerbe in Germany, entrepreneurs can deduct many expenses related to running the business, but it is crucial that these expenses are justified and directly connected with the work performed. The nature of the business explains which costs can be deducted – for example, a caregiver will not be able to include the purchase of construction tools, while a construction worker can. However, there is also a group of expenses that can generally be treated as deductible business costs regardless of the industry. These include commuting costs (tickets, fuel receipts), office expenses (purchase of a laptop, printer, and office supplies), telecommunications costs (phone and internet bills, as well as the purchase of a phone), advertising and promotion expenses, and fees for accounting services and tax advice.
Before including a particular expense in the tax return, it is worth carefully assessing whether the deduction is justified and whether it can be documented in case of a Finanzamt audit. All expenses should be properly documented – invoices, receipts, and contracts should be kept to confirm their connection to the business activity.
Running a Gewerbe in Germany comes with many tax obligations and formalities that can be complicated, especially for those who are not experienced in the German tax system. From registering the business, through filing tax returns, to correctly settling costs – every step requires precision and knowledge of the rules. You do not have to handle this on your own. Borsuk Podatki specializes in tax settlements for Polish entrepreneurs running a business in Germany. With us, you can be sure that all documents will be prepared correctly and your settlement will comply with the applicable regulations, helping you avoid mistakes and potential penalties from the Finanzamt.
Whether you have been running Gewerbe for years or are just starting out, you can count on our support. We help with preparing the tax return, using tax reliefs, and optimizing costs. Contact us and we will handle all formalities, saving you time and stress. Do not risk mistakes in your settlement – get in touch with Borsuk Podatki and make sure your finances are in good hands.
